The Importance of an E-Commerce Business Model

An article came out on Knowledge@Wharton talking about how important it is to have a business model in addition to just having a revenue model. Some go and start their online business quickly thinking they'll just start making money but forget the importance of having a business model in order to stay in business long term.

One particular thing the article talks about is something called the "eValue framework" which was created by Professor Amit and Zott. This framework consists of four "key value drivers" which are elements that should be included in every e-business model.

These are the four key value drivers:

Efficiency- using the internet to simplify and accelerate the buying process. Finding more efficient was to reduce search costs, transaction speed, reduce distribution costs, and reduce inventory costs.

Complementaries- Joining with other suppliers to bundle your product offerings with theirs. This increases your exposure and gives you a business partner who can help you business grow and succeed.

Lock-In- Finding a way to lock customers to wanting or needing your products and increasing repeat purchase.

Novelty- Offering new and interesting products to spark customer interest which will keep them wanting more.

One e-business plan factor that I think is important is using social networking sites to get the word out about your company and products and using it to increase traffic to your site. This would probably fall under the complementaries key value driver since it would involve collaborating with a site that offers their own particular services. Here is a website with real life success stories of businesses that have grown using social networking sites. With so many sites to choose from it can be a great way to increase visibility and online traffic and all at little to no cost.

Advertisers tracking your online data?

Have you ever noticed while browsing through websites that you happen to get advertisements related to things you had recently Googled? You're not seeing things. Online companies can now use consumer data such as your demographic and socioeconomic info. and also what you click on and purchase through your browser to cater their advertisements to you. This is called "Behavioral advertising." For more on behavioral advertising I recommend the site ClickZ. Some may view this as an invasion of their private information but it could also be viewed as a way to see more advertisements that fit you as a consumer. Well now there is a new program that would place an "Advertising Option Icon" (seen on the right) next to advertisements or the parts of a website that collect personal data. This image would link to a webpage where people can learn more about how their personal data is collected by marketers, what behavioral advertising is, and how to choose not to allow their data to be collected. This program was driven by the same industry doing the marketing and advertising in order to prevent the government from passing laws that would be even more restrictive of their methods of collecting data.

I don't think that consumers at the beginning would know what this icon means but with time they will catch on like anything else that is new at first. I don't think consumers would click on the icon unless they were explained beforehand what the icon is and to click on it. I believe this is smart on the industry's part because if someone complains or files a lawsuit they can say the icon was there. But it is so ambiguous that the consumer may not pay attention to it and then not opt out of their data being collected which is favorable to the industry. In other words, I feel the industry is purposely making the icon and hyperlink contained within it ambiguous so it's harder for consumers to figure out what it is.

I think that companies would sign up for this program in order to prevent future lawsuits or complaints. The icon serves as an ambiguous disclaimer. I don't believe that the sponsoring organizations will oversee if the companies that sign up for the program are actually complying with it. I say this because the program is driven by an industry which favors deregulation and since it's a non-governmental organization I don't think they would feel pressure to govern strongly. I don't think the "Advertising Option Icon" will be prominent in the future. It looks so vague and the letter I to me stands for information and that could mean any type of information. I think overtime people will complain more and more and I don't think the government will trust that the organization is doing it's job so government legislation will follow.

I personally have been annoyed by the collection of my data. I did just one Google search about graffiti laws in Miami, FL because I have a friend in the art program at FIU that was thinking of becoming a street artist. And all of the sudden I would see the same advertisements on Youtube and forums saying "Need Legal Help in Miami?" and "Looking for a Lawyer?" And of course I had already found the info. I needed and the ad made me laugh because it made me feel like I was the one in legal trouble needing an attorney when that was not the case.

Beware the prying eyes of the internet

A firm called Internet Eyes from the UK is allowing people to watch customers and employees through a real-time webcam. If they see something suspicious they push an alert button and if a crime ends up being prevented the person gets paid.

A prospective spy needs to register with the company and of course sit monitoring for who knows how long until they find something worthy of pushing the alert button for.

I think this is smart on the part of the business because they only have to pay someone when a crime occurs. Hiring 24/7 security watchers can get expensive but having anyone play security for as long as they want and only pay them when something goes down is a good deal to me.

Now from the perspective of the customers and employees I find this a bit of an invasion of privacy. If a business wants to monitor you then you can trust their intentions are professional. On the internet, however, anyone can register for any reason to watch anyone. You cannot control who would want to register for this and for what reason. And I doubt anyone would freely monitor a webcam for free for long periods of time thinking there is money to be made off of this. I personally feel this would attract voyeurs in addition to people who truly just want to "work" for free.

I also think it could be used to stalk someone. If you know someone who works in or frequents the store that is being monitored you can see what they are doing while they are there at all times. And you could screen capture the live feed or record it and spread it to anyone anywhere via the internet. The site makes the user agree to the following:

"I will not attempt to copy or use images seen on Internet Eyes for any other purpose. I understand that misuse of personal data may be a crime under Data Protection laws." For more on Data Protection laws in the UK visit http://www.legislation.gov.uk/ukpga/1998/29/contents.

If only people were to not improperly use images or video knowing they could be charged for it. Most people feel the internet is so free and unregulated they can get away with anything. I can think of a recent case involving improper streaming video which led to a suicide that is now leading to the responsible parties being charged with a crime.


In my opinion, businesses should hire their own professional security personnel. At least they screen them through the application process. Either that or pay the person monitoring the webcam some rate and/or have a strong application procedure in order to better screen who is wanting to join.