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Lesson 7

e-business Models Conclusion

When differentiating between perceived and actual benefits of e-business while exploring various advertising models, consider the following:
  1. Understanding Perceived vs. Actual Benefits
    • Perceived Benefits: These are advantages that businesses or customers believe they will receive but may not always materialize as expected. These could be influenced by marketing, hype, or industry trends.
    • Actual Benefits: These are tangible, measurable outcomes derived from e-business practices, based on real-world data and performance metrics.
  2. Evaluating E-Business Benefits
    • Perceived Benefits:
      • Increased sales due to a global reach
      • Cost reduction through automation
      • Faster transactions and improved customer service
    • Actual Benefits:
      • Sales may depend on competition, pricing, and customer trust
      • Automation may lead to hidden costs (e.g., technology investment, maintenance)
      • Customer service can be enhanced, but issues like delayed responses can arise
  3. Exploring Advertising Models with Perceived vs. Actual Impact

    Here’s how different advertising models can create perceived versus actual benefits:


    Advertising Model Perceived Benefits Actual Benefits
    Pay-Per-Click (PPC) Instant traffic boost, higher visibility High cost if not optimized, click fraud risks
    Search Engine Optimization (SEO) Long-term free traffic, brand authority Requires continuous updates, takes time for results
    Social Media Ads Viral potential, audience engagement Algorithm dependency, ad fatigue
    Affiliate Marketing Performance-based, no upfront cost Quality of affiliates varies, commission expenses
    Email Marketing Direct access to customers, high conversion Spam filters, requires strong segmentation
    Display Ads Brand recognition, high visibility Ad blindness, lower click-through rates
    Influencer Marketing Authentic engagement, high ROI potential Influencer trustworthiness issues, changing algorithms
  4. How to Validate Actual Benefits
    • Use Analytics: Track conversions, engagement, and ROI for different ad models.
    • A/B Testing: Compare performance metrics of different advertising strategies.
    • Customer Feedback: Gather insights on whether e-business features truly add value.
    • Competitive Benchmarking: Compare your results with industry standards.

By critically analyzing the difference between expectations and real-world outcomes, you can refine your e-business strategy and choose the most effective advertising models.

Business Architecture

Differentiate between Perceived and Actual benefits of e-business

E-business (electronic business) refers to conducting business transactions and processes over the internet or digital platforms. Its perceived and actual benefits can vary depending on expectations, implementation, and outcomes. Below, I’ll list and differentiate between perceived benefits (what businesses or individuals anticipate or believe e-business will provide) and actual benefits (the tangible, realized outcomes based on evidence or experience).
Perceived Benefits of E-Business These are the advantages that stakeholders (e.g., businesses, customers, or employees) expect or assume before fully engaging with or evaluating e-business systems.
  1. Cost Reduction
    • Perception: E-business will drastically lower operational costs by automating processes and eliminating physical infrastructure (e.g., brick-and-mortar stores).
    • Differentiation: While cost savings are expected, they depend heavily on initial investment, maintenance, and unforeseen expenses like cybersecurity.
  2. Global Reach
    • Perception: Businesses assume they’ll instantly access a worldwide audience by going online.
    • Differentiation: The potential exists, but actual reach depends on marketing, localization, and competition, not just having an online presence.
  3. 24/7 Availability
    • Perception: E-business is expected to enable round-the-clock operations with minimal effort.
    • Differentiation: While technically possible, this assumes flawless systems and customer support, which may not always be the case without significant resources.
  4. Improved Customer Convenience
    • Perception: Customers will automatically prefer online transactions due to ease and speed.
    • Differentiation: Convenience is anticipated, but poor user experience, technical issues, or lack of trust can undermine this perception.
  5. Increased Revenue
    • Perception: Moving to e-business will immediately boost sales and profits due to a larger market.
    • Differentiation: Revenue growth is possible but not guaranteed—it requires effective strategies, customer retention, and market adaptation.
  6. Efficiency and Productivity
    • Perception: Automation and digital tools will make all processes faster and more efficient.
    • Differentiation: Efficiency gains are expected, but they may be offset by learning curves, system downtimes, or employee resistance.

Actual Benefits of E-Business These are the real, measurable outcomes observed after implementing e-business practices, often validated by data or experience.
  1. Cost Reduction
    • Reality: Over time, e-business can reduce costs (e.g., lower overhead for physical stores, streamlined supply chains), but initial setup (e.g., website development, software) and ongoing expenses (e.g., hosting, updates) temper the savings.
    • Example: A small retailer might save on rent but spend more on digital advertising.
  2. Global Reach
    • Reality: E-business enables access to international markets, but success depends on logistics, cultural adaptation, and competition. Data shows e-commerce sales globally reached $5.8 trillion in 2023, proving the potential.
    • Example: Amazon’s global dominance vs. smaller firms struggling with shipping costs.
  3. 24/7 Availability
    • Reality: Websites and automated systems do operate 24/7, increasing sales opportunities (e.g., 30% of online purchases occur outside regular business hours, per some studies). However, human support or system failures can limit this benefit.
    • Example: An online store stays open, but a server crash at 3 a.m. halts sales.
  4. Improved Customer Convenience
    • Reality: Customers enjoy faster access to products/services (e.g., one-click purchases), but only if the platform is intuitive and secure. Poor design or slow load times (e.g., 1-second delays can reduce conversions by 7%, per Google) negate this.
    • Example: Netflix’s seamless streaming vs. a clunky e-commerce checkout.
  5. Increased Revenue
    • Reality: E-business can drive revenue growth—global e-commerce sales are projected to hit $7.4 trillion by 2025, but it’s tied to execution (SEO, customer loyalty). Many businesses see modest gains rather than instant windfalls.
    • Example: Shopify merchants often report 20-30% sales increases after optimizing their stores.
  6. Efficiency and Productivity
    • Reality: Automation (e.g., inventory management, CRM tools) boosts productivity—studies show 30-40% time savings in some sectors. However, technical glitches or inadequate training can reduce these gains.
    • Example: A company using AI chatbots cuts response times but loses customers if the bot fails complex queries.

Conclusion Perceived benefits of e-business are often idealistic, focusing on potential without accounting for practical challenges. Actual benefits, while significant, are more nuanced and depend on how well a business adapts to digital tools, customer needs, and market dynamics. For instance, while e-business undeniably expands market access, the reality of global competition and operational costs tempers the initial hype.

e-business Module Summary

Having completed this module, you should now be able to:
  1. List and differentiate between perceived and actual benefits of e-business
  2. Identify the various B2B models available
  3. Identify the various B2C models
  4. Differentiate between various Brokerage models
  5. Describe the various Advertising models

The following terms may be new to you:
  1. MRO inputs:Maintenance, Repair and Operating products and services; examples include human resources and capital equipment.
  2. B2B: A primary Business model where the buyer and seller are both businesses. This would be the case for a wholesale stationer selling stock to retail outlets.
  3. B2C: A primary two-business model where the seller is a business and the buyer is a consumer or individual such as with a bookstore that sells books to the public.
  4. Hub: A business that connects multiple buyers and sellers together electronically.
  5. Vertical hub: Source manufacturing inputs such as raw materials, components or sub-assemblies for manufacturers within a specific domain; tend to be industry sector specific in their content and relationships.
  6. Catalog hub: These place industry specific catalogs online from either a buyer or seller perspective.
  7. Exchange hub: Matches buyers in an industry with a supplier, by facilitating a temporary relationship between the buyer and seller based on supply and demand.
  8. Horizontal hub: Automate a business function or procedure across domains; are also known as Functional hubs.
  9. eProcurement hub: Are similar to catalog hubs but are not industry specific; also known as MRO hubs.
  10. Yield manager hub: Source operational inputs such as advertising, human resources, logistics and utilities, and work best where the demand and prices are more volatile and the goods or services are specialized.
  11. eTailers: A retailer that uses the Internet as a medium for selling products.
  12. Vortal: Specialized portal that is based on an area of interest or service which is industry specific.
  13. Specialized portal: Also known as a Vortal, is based on an area of interest or service that is industry specific.
  14. Component: A module, object or program that performs a specific function, and is designed to easily integrate with other components.
In the next module, we will discuss how to make your business an eBusiness.

Ebusiness Conclusion - Quiz

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ebusiness Conclusion - Quiz

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