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Business models of online Retailing

Online Business Models Create Value

A business model is not a plan for how you will run your business, it determines how you will create value – for your customers. Once you create this value, then you can decide the best way to generate corresponding revenue.

In the offline world, value is created by the goods and services on offer. Customers see value for themselves in a particular offering, and they are willing to pay to obtain this value. The classic offline model is the physical store where these transactions take place. Catalogues, mail order and telephone sales have added additional offline channels.

With the arrival of online e-commerce, possibilities for new ways of selling have expanded. Online stores can take many different forms and use different methods for conducting sales. In fact, in the online world customer value can be created by the business model itself. The books that Amazon sells are the same as the books in a retail store, often at similar prices, yet customers find value in the way Amazon conducts its sales.

Two new factors make online business models more compelling and more powerful:

Customers can Add Value

Because the Internet allows easy two-way exchange of information, customers now respond quickly and easily to business offerings. The information provided by customers is used to improve existing goods, correct service errors, and design new offerings. For example e-commerce websites routinely add customer reviews to their sites, knowing that reviews are powerful motivators helping new customers make a buying decision.

Multiple Models at Once

An online business can use several business models at one time, each contributing to the overall revenue. A site selling website designs, also provides hosting services, as well as shows advertisements for complimentary products and services. Startup companies frequently begin using multiple models, since they are not sure which will work in the long term. Those which do not meet objectives can be quickly ended, and the successful ones can be expanded.

Online Business Models

There are many ways to categorize business models, especially online. Here is a list based on who is funding the operation.

Channel Pays

For channel pays, the end user does not pay, at least directly. A third party is willing to pay in order to have access to the end user.

Praeger Web 2.0 and Beyond: Understanding the New Online Business Models, Trends, and Technologies
Book (Praeger)

At least we agree on Costco

by trancedancefactory

I am also a big fan of Costco. However, I disagree with your premise that Mom & Pop businesses can still make a go if it. My experience is that Mom & Pop retail pays less than minimum wages to the owners. Mom & Pop and the kids work extended hours and the return is minimal at best. Like it or not independent single-unit retail distribution of non-specialty products is no longer a viable format.
Overseas labor will contnue to displace US workers, Massive companies will continue to roll-up independent and regional formats. Individuals will either create intellectual property or compete in the global marketplace for task-oriented jobs at low wages

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McGraw-Hill The McGraw-Hill 36-Hour Course: Online Marketing (McGraw-Hill 36-Hour Courses)
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LAP LAMBERT Academic Publishing Applying Online Behavioral Models in Internet Retailing: Understanding Consumer Behavior in Online Marketing
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Springer Consumer-Driven Demand and Operations Management Models: A Systematic Study of Information-Technology-Enabled Sales Mechanisms (International Series in Operations Research & Management Science)
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