Forms and Classification of Online Business
Forms and classification of online business According to (Adam, Z. R. ), the major different types of e-commerce (B2B) Business-to Business, (B2C) Business-to-Consumer, (B2G) Business-to-Government, (C2C) Consumer-to-Consumer and M-commerce which is mobile commerce. Business-to-business is simply e-commerce that is present between two businesses. It is said that it is the fastest growing type of e-commerce, much faster than B2C. It is a type of e-commerce wherein two businesses transact with each other online. About 80% of online businesses are of B2B type. Business-to-consumer is e-commerce between companies and consumers.
It is the second largest in growth and numbers among the types of E-commerce. It basically is interactions between consumers whether they transact online or offline or just gather information about products that are being offered by the company. Examples of such companies that are of B2B are Amazon and Costco. Business-to-government is e-commerce between companies and the public sector. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations Consumer-to-consumer is e-commerce between private individuals with their fellow consumers.
This type of e-commerce is characterized by online markets and online auctions wherein these sites serve as a medium for consumers to transact with other consumers. This type of e-commerce is said to have huge potential of growth out of all the types of e-commerce. Consumer-to-business is e-commerce that is likened to reverse auction. It is basically the opposite of selling wherein a company would respond to a consumer’s need. This type of e-commerce is rarely encountered. However, e-bays report that there is a large number of this type of e-commerce wherein they earn millions of dollars every day.
Mobile commerce is e-commerce wherein transactions from businesses to consumers are done through wireless networks through the medium of PDA’s and portable handheld devices. Business Models used on the Internet According to (Starting an internet business- we make it simple), there are numerous ways on making money in the internet. There are business models on which they are differentiated on how they execute and return profit. Some of these are retail while some use the power of information to sell. Affiliate Marketing – the most common type of Internet business around.
It objective is to market and sell someone else’s product. There are various ways to market the brand both on and offline. Passive (or niche sites) – sites designed to market advertising and/or products that require little to no maintenance. These sites can be focused on small subjects or some are built to be big multi-subject sites. The main intention here is build, promote and forget. Information Sites – this could fall into the category of passive. These sites are built for advertising; they target a narrow subject and are intended to make money primarily from advertising.
Once set up and promoted, they only require occasional maintenance. Other specific business models are Product creator wherein creating one’s product be it a fashion line, shoes, and etc as long as it’s an original product and not someone else’s. Its difference with affiliate marketing is that Product creator makes one’s products and sells it as well. Email Marketing or more commonly called List building makes use of Email marketing wherein one has to build relationships with its customers and is particularly effective in building targeted traffic. It is the most highly rated way of making money in the Internet.
Services are providing services such as weight loss program, quit smoking plan and etc. This provides more consumer interaction and is recommended if one excels in interacting with people. There are also more specific types of business models and more recognizable which is the Retail and Wholesale which is like an online store version of a store such as SM, Costco or Walmart. The main difference between them is that one is whole sale and the other is not. This requires a higher investment compared to other business models since additional cost through shipping products, payment processing, customer service and etc are accumulated.
Creating a website for online business According to Poo (2008), in creating one’s website for business purposes, the first step is to determine one’s goals on what will one use the site for? Is it for retailing or purely marketing website? These are some things that need pondering before designing a website to make it an effective website. By brainstorming and finding out the main goals, determining the genre of the website is the next step. This will determine the pros and cons of the website. There are four genres of websites which are the sales or retailing, marketing, information and a web-based application.
Poo (2008) describes that retailing or sales website it focuses much on a lot of pictures, sporadic text on product descriptions and these sites are very user friendly and easy to navigate. However, one disadvantage of retail websites is that they are not usually recognized by search engines and one way of counteracting that and bringing in traffic is making use of affiliate programs. Marketing websites compared to retailing websites is that it is designed to sell a product and one product only. Marketing website is very easy to design which feature mostly text and a few images.
What is great about marketing websites is that it is perfectly positioned to make money through advertisements and affiliate programs and they are better optimized for search engines which are a huge advantage in getting traffic into the site. Information website compared to marketing and retailer is that its purpose is mainly to inform the consumers of its products or what is its trying to sell. Although some corporate websites such as Nokia, Honda, Sony, and etc. are information websites that can also sell, they are primarily designed to inform its consumers.
Information websites are only recommended for businesses that has a national or international presence since local businesses that only has a local presence only gets a few visits on its website while having a business that has a nationwide presence gives off many visits and informs its consumers well on its products. Web based application works like traditional programs but the difference is that web based application is accessed through the web unlike traditional programs which are installed beforehand. It’s basically computer based application that is hosted in a browser-controlled environment.
This type of business venture requires a team of programmers who are creative and persevering. The payoff is very profitable but this type of business is not recommended for the newcomers. Efficiency of Online Business compared to Traditional Business According to (Nielsen, 2008), about over 85% of the world’s online population has used the internet to make a purchase which is a staggering 875 million people. Reason why there is a huge percentage of the online community using internet for purchasing is that the internet is unrivaled for its convenience when it comes to researching and shopping.
Consumers nowadays would rather stay at the comfort of their homes shopping than travel and find their desired product which is very tiring compared to single click buying. In Philippine context, about 45% of Filipino online population has purchased through online means. Compared to other countries like South Korea which hails to be the number 1 in frequency of using internet for shopping, Philippines is near the bottom list of infrequent use of online shopping.
However, for a third world country like Philippines this is a new innovation that is newly tapped into by consumers and in a few years the trend would be increase in use of online shopping could be observed just like what is observed in the Global population which jumped 40% for only two years. In matters of what people look for in an online shop, according to (Nielsen, 2008). “In selecting sites on which to shop, one-third used a search engine or just surfed around to find the best online store. One in four relied on personal recommendations. It is said that once an online shop captures the hearts and loyalty of its consumers about 60% of these consumers would tend to stick to the same shop in buying its products since consumer relationship has been playing a large role in making these online businesses successful. Furthermore, recommendations from fellow consumers also play a huge role in making an online site successful. Feedback is one important aspect in closing transactions in online businesses especially businesses on online auctions or social networking sites that seem to make 1st time online shoppers reluctant to purchase.
Using Social Networking for Business According to (Brown of Inc. Technology), online social networking sites are new grounds for profiteering through online means. It is said that two out of every three internet user has used or visited a social networking site according to internet research company Compete. These numbers alone show the potential of what social networking has to offer for business opportunities. Among social networking sites, Myspace, multiply, facebook and etc. are the popular ones while there are other networking sites that have been primarily geared towards entrepreneurs such as LinkedIn, Ryze and Spoke.
One of the main strengths and factor in making a successful social networking business is to focus on building networks. First is to find the niche and build the appropriate networks that fit the desired business niche. This is the essential step if not the key step in establishing a successful online business through social networking sites. References: Adam, Z. R. (2003). E-commerce and e-business. Manila, Philippines: United Nations Development Programme. Brown, D. (2009). Using Social Networking for Business. Retrieved March 14, 2010, from the World Wide Web: http://technology. nc. com/internet/articles/200611/interneticebreakers. html Nielsen (2009). Trends in Online Shopping. Retrieved March 14, 2010, from the World Wide Web: http://th. nielsen. com/site/documents/GlobalOnlineShoppingReportFeb08. pdf Poo, C. (2007) Build Website Online. Retrieved March 14, 2010, from the World Wide Web: http://www. cessypoo. com/build-website-online. html Starting an internet business- we make it simple (2010). Types of Business Models- Step 2. Retrieved March 14, 2010 from the World Wide Web: http://biggbucksonline. com/2009/08/25/types-of-internet-business-models/