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.