CHAPTER 2

Business model set of planned activities designed to result in a profit in a

market

business plan describe a firm's business model

E-Commerce Business Models a business model that aims to use and

leverage the unique qualities of the internet and WWW

Value proposition - define how a company's product or service fulfills

the needs of customers
- understand why customers will choose to do business with the firm
instead of another company

successful e-com value propositions include + personalization and

customization of product offerings
+ reduction of product search costs
+ reduction of price discovery costs
+ facilitation of transactions by managing product delivery

Revenue model describe how the firm will earn revenue, produce profits,
and produce a superior return on invested capital

5 revenue model
Advertising
Subscription:
Transaction fee
Sales revenue model
Affiliate revenue model

Advertising - Not online offers content, goods and services, also provide
forum for advertisement and receive fees from advertisers.
- Companies that are able to attract the greatest viewership or have highly
specialized, differentiated viewership and are able to retain user attention
are able to charge higher advertising rates
Subscription - Providing its content or services and then charge a
subscription fee for access to some or all of its offerings (perceived as high-
value-added)

Transaction fee - Company receive a fee for enabling or executing a

transaction

Sales revenue model - A company derives revenue by selling goods,

information, or services
Subscription-based sales revenue

Affiliate revenue model Companies that steer business to an "affiliate"

receive a referral fee or percentage of the revenue from any resulting sales

free revenue model a locked version for certain time -> the user can
choose to subscribe to access longer time or wait next month

freemium revenue model offers users a basic service for free and then
charges a premium for upgrades or advanced features

Marketspace area of actual or potential commercial value in which the

company intends to operate

Realistic market opportunity defined by revenue potential in each market

niche in which company hopes to compete

market strategy the plan that you put together that details exactly how you
intend to enter a new market and attract new customers

competitive advantage an advantage over competitors gained by offering

greater customer value, either by having lower prices or providing more
benefits that justify higher prices
Important concepts of competitive advantage asymmetries, first-mover
advantage, complementary resources, unfair competitive advantage,
leverage, perfect markets

competitive environment Refers to the other companies selling similar

products and operating in the same marketspace

competitive environment is influenced by Number and size of active

competitors
Each competitor's market share
Competitors' profitability
Competitors' pricing

a large number of competitors in any one segment market is saturated

a lack of competitors an untapped market, market niche

organizational development plan that describes how the company will

organize the work that needs to be accomplished

management team Employees of the company responsible for making

the business model work
A strong management team may not be able to salvage a weak business
model, but the team should be able to change the model and redefine the
business as it becomes necessary.

Distinguish Value proposition & Competitive advantage Value

proposition: a statement or promise that communicates the unique value or
benefits that a product or service provides to its target customers
Competitive advantage: broader strategic concept; unique set of attributes
and strengths that enable a company to outperform its competitors and
achieve superior performance in the marketplace
-> Value proposition doesn't need uniqueness while competitive advantage
needs
I - commerce (1 way)
+ buying computer, installing internet
+ using email to communicate
+ building a website to introduce products
+ registering on the portal/ e-exchange: alibaba.com; ecvn.com

Portal gateway to the internet. It offers users powerful Web search

tools, an integrated package of content and services all in one place (read
news, find entertainment, meet other people)
ex: Yahoo, MSN, AOL

T-commerce (2 ways) Intranet, E-contract, E-payment

Intranet a TCP/IP (core communication protocol for the Internet)

network located within a single organization for purposes of
communications and information processing

TCP Transmission Control Protocol - provides reliable, ordered, and error-

checked delivery of a stream of packets on the internet. TCP is tightly
linked with IP and usually seen as TCP/IP in writing.

IP Internet Protocol - provides the Internet's addressing scheme and is

responsible for the actual delivery of the packets

C-business (multi way)

Allow outside parties to get acess to enterprise network and information
Banks, suppliers, customers, state agencies

Extranet are formed when firms permit outsiders to acess their network
(Dell, General Motors): Customer, Supplier, Manufacturer (Intranet), Carrier

Dell's business procedure Ordering on Dell's website -> Suppliers or

directed to Dell's Assembly and distribution -> Suppliers will notify to Dell's
Assembly and distribution -> Delivering to customers -> Back to Dell's
website
EDI Electronic Data Interchange - structured transmission of data
between organizations by electronic means

E-CRM E - Customer relationship management: help companies

approach and build customer relationships through online channels such as
websites, email, etc...

E-ERP E - Enterprise resource planning: software designed to manage

and integrate the functions of core business processes like finance, HR,
supply chain and inventory management in a single system.

E - SCM E - Supply chain management

Ecom business model by sectors e-education, e-banking, e-custom

Ecommerce Business Models by participant G2G

G2B
G2C
B2G
B2B (Alibaba)
B2C (Amazon)
C2G
C2B
C2C (eBay)

participants of B2B
sell side
buy side
e-exchange: an digital independent e-marketplace where hundreds of
suppliers meet their commercial purchasers

4 main types of pure net marketplace

e-distributor
e-procurement
e-exchange
industry consortium

e-distributor independently owned intermediaries' website that

supplies products and services directly to individual businesses; online
version of retail and wholesaler store
ex: Grainger, Amazon Business...

e-procurement e-procurement firms create and sell access to e-market

for indirect inputs (online catalogue, software to handle catalogue creation,
shipping, insurance and finance)
operate in a horizontal market

e-exchange independently owned vertical digital marketplace for direct

inputs
ex: go2paper

industry consortium industry owned vertical marketplace that serve

specific industries such as the automobile, chemical, floral

Revenue model of E-distributor Sales of Goods

Revenue model of E-procurement fees for market making services, supply

chain management, and fulfillment services

Revenue model of E-exchange fees and commissions on transaction

Revenue model of Industry Consortium fees and commissions on

transaction

7 B2C business models

1. E-tailer
2. Content provider
3. Service provider
4. Community provider
5. Transaction broker
6. Market creator
7. Portal

E-tailer online retail store

ex: Amazon, Itunes

Service provider offer services online rather than product

Ex: VisaNow, RocketLawyer

Content provider distributes information content, and entertainment content

Ex: Wall Street Journal, VNExpress

Transaction broker process online sales transactions for consumers

normally handled in person, by phone or email such as stockbrokers and
travel agents
Ex: E*trade, Travelocity

Market creator builds a digital environment where buyers and sellers can
meet, display products, search for products, and establish a price for
products
ebay, priceline, amazon

Community provider creates an online environment where people with

similar interests can transact (buy and sell goods); share interests, photos,
and videos; communicate with like-minded people; and receive interest-
related information
Ex: facebook, twitter, pinterest

Portal
Horizontal/general: offers an integrated package of content, content-
search, and social network services (yahoo, facebook, MSN...)
Vertical/specialized: offers services and products to specialized
marketplace (Sailnet)

Revenue model of E-tailer Sales of Goods

Revenue model of content provider advertising, subscription, sales of

digital goods

Revenue model of service provider Sales of service

Revenue model of community provider advertising, subscription, affiliate

referral

Revenue model of transaction broker transaction fee

Revenue model of market creator transaction fee

Revenue model of portal advertising, subscription, transaction, affiliate

referral

Example of C2C ex. Etsy, Craigslist, Ebay

CHAPTER 1
Pros of eCommerce in Customers
Time saving
Convenience
A variety of products
Personalization
Lower Cost

Cons of eCommerce in Customers

Quality concern
Shipping concern
Privacy concern
Technology problems
Wrong decision
Lack of interaction

Pros of eCommerce in Business

Wider market
Shorter sale journey
Data collection
24/7 availability

Cons of eCommerce in Business

Competitive
Cost of online operating
Complicated refund and return
Damaged reputation

Business model of Shopee/ Laz/ Tiki

Shopee: previously C2C, turn into B2C2C hybrid model now
Lazada: B2C2C hybrid model
Tiki: B2C and Marketplace model

Customers of Shopee/ Laz/ Tiki

Shopee:
- Buyers: Retail customers, Young people who like cheap price (mostly
women) in big cities
- Sellers: Global brands, Retail sellers, small and medium enterprises
Lazada:
- Buyers: Mostly male in the mid 20s who are interested in technological
devices
- Sellers: Big global brands, small and medium enterprises
Tiki:
- Buyers: 17-31 years old, students, white collars

Payment of Shopee/ Laz/ Tiki

Shopee: ShopeePay, internet banking, e wallet, COD
Lazada: LazadaWallet, internet banking, e wallet, COD
Tiki: COD, e wallet, internet banking

Definition of eCommerce
- digitally enabled commercial transactions between organizations and
individuals
- the buying or selling over electronic means and telecommunication
network

electronic means operates based electrics , electronic, digital, magnetic,

wireless

telecommunication network
telephone network
television network
LAN
Intranet
Extranet
Internet

Intranet a private, internal network within an organization that utilizes

internet technologies to facilitate secure information sharing and
collaboration among its members

Extranet A private electronic network that links a company with its

suppliers and customers
Internet A global network connecting millions of computers, making it
possible to exchange information via Internet Protocol

Wifi A wireless network that connects nearby devices with each others
and share Internet via hotspot

Transmission of Internet via predefined TCP/IP Protocol

Transmission of Wifi via radio frequency

Device of Internet routers, switchers, modem

Device of Wifi routers, DSL devices

cellular network telecommunicational network: to and from end nodes is

wireless & the network is distributed over land areas (cells)

Development of mobile network

First Generation (1G) basic voice calls, limited capacity and applications

2G from analog to digital cellular system

- SMS (Short Message System)
- Data Services: primarily for basic applications like email and simple
browsing
- Digital voice transmission:

3G - Faster Data Speed: allowing for more advanced data services such
as video streaming, web browsing, and multimedia applications.
- Mobile Internet: access websites, download files, and use more advanced
internet-based applications.
- Video calling

4G - Increased Data Speed

- Lower Latency
- Enhanced Multimedia Support
- Advanced Applications

I in IMBSA I-Infrastructure: Initial requirements for the development of e-

commerce are basically the same as for the development of Internet usage
-> telecommunications infrastructure (Internet and web development

M in IMBSA M-Message: develop tools for standardization and legal

validity of electronic messages that will be exchanged in the process of
ecommerce transaction
Although this is basically an "international function" (messages need to be
exchanged globally), Governments have a critical role to play in their
adoption and dissemination

B in IMBSAB-Basic rules: international nature

trade rules (WTO), intellectual property rule (WIPO), generic regulations on
the content of electronic messages, AEC (Association for Electronic
Commerce)

S in IMBSASectoral Rules: Các quy tắc riêng trong từng lĩnh vực

A in IMBSAApplications: các mô hình kinh doanh thương mại điện tử cần

được điều chỉnh, cũng như đầu tư, khuyến khích để phát triển, trên cơ sở
đã giải quyết được 4 vấn đề trên

Internet development 1961-1974: Innovation phase -> basic idea and

infrastructure were developed
1975-1994: Institutionalization phase -> Idea was brought to life
1995 - Now: Commercialization -> Private companies brought technology
to people worldwide

History of Ecom
1995-2000: Invention - period of explosive growth and extraordinary
innovation
- key ecom concept: developed & explored
- Thousands of dot-com companies. Ex: Amazon, Ebay, Netflix, Yahoo,
Google
- period which was characterized by experimentation (trải nghiệm),
capitalization ( tư bản hóa) and hyper-competition (cạnh tranh)
- first widespread use of the web to advertise products
=> Create Friction Free commerce (nearly perfect competitive market)

2001-2006: Consolidation - Invention of smart phones

- A more business-driven approach rather than technology-driven.
- Strengthen became more important than creating new things
+ phase 1: SME/ Start ups are major participants -> then becomes large
firms and come to phase 2
+ phase 2: Large firms' operation needed to be adapted -> developed in
phase 2
Financing shrunk as capital markets shunned start- up firms. => Sau phase
1 họ không sẵn sàng đầu tư nữa

2007 - Now: Reinvention invention of Internet technology

discovery of new business model based on co-generated cont, social
networking and virtual online life

8 unique features of e-commerce - ubiquity

Internet/web available everywhere
- global reach
Technology reaches across national boundaries
- universal standards
One set of technology standards; namely Internet standards
- information richnessVideo,audio,text messages can integrate into a single
marketing message - interactivityTechnology works through interaction with
the user- information densityTechnology reduces information costs and
raises quality - personalization/customizationAllows personalized
messages to be sent to individuals or groups- social technology User
content generation and social networkingLO
brick and mortar A business that operates out of a physical facility (instead
of online)

virtual store (Click and browse) Collection of all the pages of

information on the retailer's Internet site

Click and mortar businesses sell products both on Internet and in stores

pure ecommerce everything happen on the Internet

partial ecommerce Instead of conducting the entire transaction online,

certain elements may be digitalized while others remain offline or follow a
different process.

e-commerce vs e-business E-commerce primarily involves transactions

that cross firm boundaries.
E-business primarily involves the application of digital technologies to
business processes within the firm.

Overview of ecom in VN 2005:

+ ECVN portal was hosted by the Ministry of Trade and Industry
+ Law on E-transactions was approved in 11/2005 and effected from
3/2006
2006:
+ published Law on information technology
2007:
+ VN E-com Association was established
2008:
+ establish Root Certification Authority -> CA -> Enterprise Implement Trust
Vn program
2009:
+ launch E payment gateway "Smartlink - MasterCard"
Law on telecommunication: approved
+ implement the master plan on Ecom Development for the 2011-2015
period & 2016-2020 period
B2C the type of ecommerce between a business and customer. E.g
Amazon.com

B2B the type of e-commerce that conducting electronic transaction

between two businesses. E.g SHOPEE

C2C the type of e-commerce that conducting electronic transactions

between the customer and another customer. E.g Mudah.com or auction
website.

B2G the type of e-commerce that conducting electronic transactions

between business and the government. E.g Businesses Paying taxes

WWW The world wide web is one set of software services running on
the internet

Tangible benefits of e-commerce 1. Increase sales - new customers

2. Reduce cost - no printing distribution
3. Reduce supply chain cost - fast processing order.
4. Improved productivity of staff- efficient business processes.

Intangible benefits of e-commerce 1. Improved customer service

2. Feedback from customers
3. Improved customer satisfaction
4. Improve brand image

commercial activities activities for the purpose of generating profits,

including: sale and purchase of goods, provisions of services, investment,
commercial promotion, and other activities for the profit purpose

MSDP Marketing/Research/Advertising -> Website/ Brochureware

Sale/Contract -> Ecom enabled website
Delivery -> digital delivery (MP3) or link with supplier
Payment -> E-payment or link with third party (credit card)
CHAPTER 4
E marketing takes the marketing principles and techniques and applies
them through electronic means and telecommunications networks

Similarities of e-marketing & online marketing the objective is to build

customer relationship so that the firm can achieve above-average returns
(both by offering superior products or services and by communicating the
brand's features to the consumer)

Differentiation of e-marketing vs online marketing personalized,

participatory, peer-to-peer, communal

Advertising network specialized marketing firms that present users with

banner advertisements based on database of user behavioral data
(intermediaries: connect publishers with advertisers/ marketers)

permission marketing marketing strategy in which companies obtain

permission from consumers before sending them information or
promotional messages
Agree to receive: opt-in
Deny: opt out

affiliate marketing one website agrees to pay another website a

commission for new business opportunities it refers to the site
viral marketing the process of getting customers to pass along a
company's marketing message to friends, family and colleagues
Marketing through WOM

Search Engine Marketing a tactic used to gain online presence and

traffic by paid and unpaid search engines such as GG, Bing and Yahoo

15 SEO (Search Engine Optimization) tips 1. Optimize page titles and

meta description
2. Create SEO friendly URLs (Uniform Resource Locators)
3. Add breadcrumb to your internal pages
4. Add internal links to your content
5. Use headings and formatting options to make your pages easier to read
6. Customize your 404 page
7. Optimize your images
8. Improve your page speed
9. Get backlinks from other websites
10. Make sure that your website is mobile friendly
11. Create an XML sitemap and User sitemap
12. Improve the quality of the content
13. Update your website with fresh content
14. Check for broken links
15. User GG webmaster tools and analytics

Blog marketing blogs, like ordinary websites can be used to display both
branding ads not geared towards sales, as well as advertising aimed at
marketing sales

why blogs are ideal platforms to start viral marketing campaign bc blogs
are based on the personal opinions of the writers

why advertising networks that specialize in blogs provide some efficiency in

placing adsbc do blog networks - a collections of small number of popular
blogs, coordinated by a central management team, can deliver a larger
audience to advertisiers

Social network marketing based on the idea that consumers will tend to
buy what their friends buy and recommend

online tools for market rs primary information

secondary information

primary information personal interview

group interview
observation
testing
survey and investigation

Online Consumer Behavior awareness - need recognition

search
evaluation of alternatives
purchase
post-purchase behavior - loyalty

Conversion Rate Optimization (CRO) the practice of increasing the

percentage of users who perform a desired action on website
all the key hooks -> SEO (traffic) -> experience sales conversion funnel ->
buyers

Conversion Rate Optimization process Define value proposition and

revenue model
Choose ecom platform
Choose channels and marketing approach

8 types of online market segmentation behavioral

demographic
psychological
technical (use information gathered by shopping technology)
contextual
search (consumer's explicity expressed interest at this moment)

Online marketing communication tools online advertising

email marketing
online catalogs
social marketing
mobile marketing

online advertising display ads

video ads
search engine advertising
sponsorship

display ads banner ad

pop up ad
pop under ad

Rich media/video ads video ads

Interstitial ads: placing a full page message between the current and
destination pages of a user
superstitial ads: preloaded into a browser's cache and doesnt play until fully
loaded and the user clicks to another page

search engine advertising organic search

keyword advertising
network keyword advertising

organic search inclusion and ranking of site depend on unbiased

application of a set of rules imposed by the search engine

keyword advertising merchants purchase keywords through a bidding

process at search sites, and whenever a consumer searches for that word,
their advertisement shows up somewhere on the page
network keyword advertising network of publishers accept ads placed by
search engine on their websites and receive a fee for any click-through
from those ads

sponsorship a paid effort to tie an advertisers' name to information, an

event, or. a venue in a way that reinforces its brand in a positive yet not
overly commercial manner

4 principal types of marketing emails promotional emails

product update emails
digital newsletters
transactional emails

promotional email advertise company's product and service, often by

promoting sales, discounts, seasonal events,...

product update emails inform customers about new or updated product

digital newsletter inform customers by providing interesting articles or

relevant news

transactional email follow up email or confirmation email

online catalog full-page spread

grid display

social marketing adopts many-to-many model >< one-to-many model of

traditional advertising: a central broadcaster sends the same message to
millions of pp

mobile marketing benefits high ability to reach target customers

a fast and powerful marketing tool

mobile marketing tools SMS (text)

MMS (MULTI MEDIA SERVICES) (image, audio, video)
Bluetooth
WAP (WIRELESS APPLICATION PROTOCOL) (download, games,
ringtones, applications)
Call phone (audio, calls)

management of spam in mobile marketing opt in model: only sent when

the recipient accepts to receive
opt-out model: sent until the recipient refuses

paid media internet media, such as display ads, sponsorships, and paid
key word searches, that are paid for by an advertiser

owned media Internet sites, such as websites, blogs, Facebook, and

Twitter accounts, that are owned by an advertiser.

earned media word-of-mouth or buzz using social media where the

advertiser has no control