Quiz eBusiness 08/03/07

OTHER than core revenue sources:-sale of goods and services-advertising-subscription
Please list 3 additional revenue sources in e-commerce.


Benefiting from the « Long tail eBusiness model »
You sell some star products which you use to attract customers on your site. But customers coming to your site have also access to similar products less known or services or other people’s preferences. As a matter of fact they become exposed to a whole lot of unknown, interesting probably products and services. So the total sale of these products account for an interesting part of the company’s business. That’s what’s called the long tail effect.

Benefiting from the Vente-privée concept
You can also create network of chosen customers who are looking for discounted brand products. These customers will in turn recruit others to the network with the possibility to register online to become a member. So membership is important here in this model and brands just push the products to vente-privée businesses without stock problems or image damage on discount operations. No competition with offline business where full price is practised. Brands pay to be there with their logo published. Also retailers do not need to have discounts and are preserving image and retail pricing on offline businesses.

2. If "market segments are dead", how are segments replaced? Why is it important to the digital economy?

Today on the internet we see new waves which have replaced segments:

- Community of customers is created according to tastes, common points, preferences, motivations, hobbies, habbits,…

- Referral network of users (mouth to ear, sponsorship, recruitment, ) are generated

What’s important today is who buys what, who is clicking, who is referring,….


3. How can 'free' generate revenue for an online business? Please include your favorite example.


By offering for free some services and products you can acquire a lot of customers.Once they become “addicted” or loyal to the service and knowing that they would want more you propose them for a premium price some value added services / products, more sophisticated / enhanced version of the free service, or an extension (functional or quantitative). The initial customer loyalty and attraction is very important. This is how he will be willing to pay for extra service since he know the quality of the basic product and has been using it for some time. The psychological effect is “Now I’ll pay for it since I used to benefit from it and I can see the real value !”In this way you have a return on investment for both the basic and the enhanced servicesShareware or open source software (Linux) use such a model. For example anyone can download a version of Linux from the internet. But once you are using the software you may need support and maintenance services as well as add ons.
Free tend to attract and keep loyal customers.Then the customer base composed of loyal customers start to pay off for extra service. Revenue is then generated which covers the company initial development effort. They see the value and is willing to pay now.I work for an IT company (CA) and we used to have such practice. We give limited, trial copies for free. We also give free pre-sales service to install the software in the customers environment to have proof of concept on our solutions. But once the solution is tested and approved and the customer want to enroll it on a larger basis or functionnal perimeter then full price is charged with access to upgrades, support and maintenance !Examples of online businesses that are successfully using this model.1) Boursoramahttp://www.boursorama.com/palmares/palmares.phtmlPeople go on boursorama to look at stocks behaviour and day to day rates.However loyal users are ready to pay subscriptions for extra services like volility studies, to have an expert view on stock rates (oeil de pro – Eyes of a pro), advice, or pay the service of a broker online to do the job for them2) Freewarehttp://www.ca.com/CA, a software company used to put trial version of its products on line ( these are limited either by the time or the number of users). If such a software is of an interest to someone or a company he can choose to transform the transaction into a professional paid one.3) Lettings service (Arguslogement.com, Meilleurtaux.com)/http://www.meilleurtaux-patrimoine.com/index.phpOne can look at advertissements for renting for free on the internet.However in a view to sell one can pay to have one’s property estimated before putting it on sale.4) Les echos,http://www.lesechos.fr/abonnement/index.htm#Newspaper offering free articles summary to internet users.They also offer for some subscription fee more advanced and specialized articles on particular subjects or the full paper.