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Lesson 5The Brokerage model
ObjectiveIdentify the various brokerage Models.

b2b Brokerage Model

Brokerage models can be applied to both B2B and B2C businesses, although some are more suited to one or the other.

Variations of the B2C model

A broker will usually take a commission for transacting business on behalf of others or for introducing buyers and sellers. There are many variations of the brokerage model that can be used by eBusinesses and some are adapted from more traditional business models and some are unique to eBusiness. Here are seven of the more common types of brokerage models. Examples of each are described in the diagrams below.

1) The Buy/Sell Match Model

The Buy/Sell Match model concentrates on fulfillment of buy/sell transactions. In many cases, this is based on a traditional "brick-and-mortar" business with a web extension. This model can be applied to financial and insurance brokers and to travel agents. e-businesses based on this model work on high-volume, low-markup transactions for which they charge a broker's fee.
A site that aligns itself to the Buy/Sell Match model might:
  1. Provide consumers a place to research, price, design, order, and arrange for delivery of a new vehicle at their home or the office
  2. Offer online investing services and investment ideas and insights

Brokerage Model

Buy/Sell Fulfillment: customer specifies buy or sell orders for a product or service, including price, delivery, etc. The broker charges the buyer and/or seller a transaction fee.

  1. In the transformative year of 1995, a significant shift occurred in the business landscape, marking the dawn of the e-business era. It was during this time that the collective consciousness of the mainstream business world began to acknowledge and embrace the vast potential of e-business. Traditional enterprise resource planning (ERP) systems, once confined to the internal operations of an enterprise, began to extend their reach. They evolved to encompass trading partners, heralding a new age in supply chain management (SCM) and customer relationship management (CRM). This expansion was more than just a technological leap; it was a paradigm shift in how businesses interacted with each other and their customers. The Internet, a burgeoning force at the time, became the backbone of this new business model. It enabled an unprecedented form of procurement, one that was not just faster and more efficient but also more interconnected. Enterprises began deploying electronic commerce (e-commerce) applications at an unprecedented rate, transforming the landscape of buying and selling transactions.
    In this new world of e-business, the lines between B2B (business-to-business) and B2C (business-to-consumer) started to blur. Companies were now engaging in intricate B2B supply chain scenarios, purchasing direct and indirect materials through digital networks. Simultaneously, the B2C channels flourished, offering finished products and customer services directly to the end-users. Amidst this digital revolution, a critical aspect emerged: the need for meticulous information quality management. Enterprises recognized the importance of periodically assessing the quality of their information, especially focusing on the timeliness of data propagation and the consistency of data across multiple databases. To ensure the integrity of their data, businesses began to extract sample records from the record-of-origin database. They scrutinized these samples for completeness, accuracy, and nonduplication, understanding that the quality of their data was paramount in the rapidly evolving world of e-business. This practice became a cornerstone in maintaining the efficacy and reliability of the e-business systems that were swiftly becoming the lifeblood of the global economy.
  2. C-commerce) Collaborative commerce: Collaborative commerce describes electronically enabled business interactions among the internal personnel of an enterprise, business partners and customers throughout a trading community. Rather than simply exchanging procurement transactions, enterprises are sharing intellectual capital with their trading partners working as a value chain that provides a competitive advantage for the development and distribution of their products. These collaborative business practices are fundamental to the ebusiness transformation. The convergence of business process reengineering and web technology that spawned ebusiness during the mid-1990s has set the stage for reengineering the resulting management decision making processes to promote c-commerce as the dominant business model of the 21st century.
    Note that the collaborative business practices that are fundamental to C-commerce were mature as standard practices in aerospace well before 1996. In fact, the C-commerce practicesvleveraging web-based collaboration in the aerospace industry, had their beginnings in 1985. This should be no surprise when it is realized that it was natural for the aerospace enterprises to collaborate over a communications network to share data with their customers in the (DoD)Department of Defense since they created the Internet. By 1994, leading aerospace prime contractors were providing business and technical applications hosted on integration hub platforms for collaborative product development and logistic support for their DoD customers, as well as for their value-added trading partners and suppliers.

  1. The Buy/Sell Match Model: Discussed in detail above.
  2. The Buyer-Aggregator Model: The Buyer Aggregator model brokers transactions on behalf of a group of buyers with one or more sellers. The grouping of buyers allows for greater purchasing power and thus reduces costs for each of the grouped buyers. Sellers may pay the broker a fee based on a percentage of the transaction value. This model can be applied in either B2B or B2C applications.
  3. The Classified-Advertiser model: Not unlike classified advertisements in a newspaper or magazine, this broker charges a fee to the advertiser based on the time period and/or size of the advertisement, regardless of whether or not a sale results. The broker may also offer search and rating services.
  4. The Virtual Mall model: In this model, a broker sets-up a site and rents out virtual space to many online retailers. The broker may offer a variety of additional services to the stores, such as advertising and marketing, search facilities, advice, and even store-development platforms with transactional services.
  5. The Virtual Mall-Intermediary model: The Virtual Mall Intermediary model is very similar to the Virtual Mall model, but takes it a step further. The Virtual Mall Intermediary broker locates multiple suppliers of a product, and then sells the product online from an e-store or virtual mall. The broker handles the online transactions and may initiate the billing, shipping, and tracking of the order. In some cases, the actual supplier of the goods is not identified to the buyer.
  6. The Auction and Reverse Auction broker: Auction and Reverse Auction brokers are another type of B2C Brokerage model. Adapted and expanded from a traditional business model, an Auction broker offers goods and services from one or many resellers, for which they receive a fee per transaction. In the case of a Reverse Auction, buyers name their price and the broker seeks out a supplier who can fulfill that price.
  7. Directory and Evaluator Model: These brokers offer a directory listing for general or specific goods or services. In many cases, they also evaluate the business concerned, and offer value awards to companies based on customer feedback. They may also offer rewards to customers. These brokers may charge membership and/or pay-per-click fees. In some cases, membership fees are also charged to the customers. The following list describes examples of each of the variations on the B2C model.

Five examples of the variations on the B2C model.

  1. Generalized portals rely heavily on mass appeal and huge volumes of traffic. The most obvious examples are search engines like Google, Bing, and DuckDuckGo. ISPs like AOL generate traffic through content and services.
  2. Vortals or specialized portals are based on an area of interest or industry-service. These portals keep to specific content to ensure continued interest from a group of visitors. Although volume is of importance, it is less so than for Generalized portals.
  3. Profile or personalized portals enable visitors to customize the site based on their interest and requirements.
  4. Customer loyalty models are structured along the lines of frequent flyer miles and supermarket customer loyalty points, offering buyer incentives in various forms. They can reward viewers for undertaking surveys, completing forms, viewing advertisements, or making purchases with points that can be accumulated and redeemed in various ways.
  5. The Free model, often adopted by Generalized portals, offers something for free. These models can develop into or from portals and may also merge into the infomediary model. They may offer free services, email, web space, internet access, software or other products. This model strives for loyalty while offering general appeal.

Variations of the B2C model

  1. What characteristics or benchmarks can be used to assess the business value of a company such as Twitter?
  2. Have you used Twitter to communicate with friends or family?
  3. What are your thoughts on this service?
  4. What are Twitter's most important assets?
  5. Which of the various methods described for monetizing the assets of Twitter do you feel might be most successful?
  1. eCommerce Business Models
  2. Major Business-to-Consumer (B2C) Business Models
  3. Major Business-to-Business (B2B) Business Models
  4. Business Models in Emerging eCommerce Areas
  5. How eCommerce changes business: Strategy, Structure, and Process

Generalized portals rely heavily on mass appeal and huge volumes of traffic. The most obvious examples are search engines like Google, Bing, and DuckDuckGo. ISPs like AOL generate traffic through content and services.
1) Generalized portals rely heavily on mass appeal and huge volumes of traffic. The most obvious examples are search engines like Google, Bing, and DuckDuckGo. ISPs like AOL generate traffic through content and services. This traffic makes the generalized poral sites valuable billboards for advertisers.

Vortals or specialized portals are based on an area of interest or industry-service. These portals keep to specific content to ensure continued interest from a group of visitors. Although volume is of importance, it is less so than for Generalized portals.
2) Vortals or specialized portals are based on an area of interest or industry-service. These portals keep to specific content to ensure continued interest from a group of visitors. Although volume is of importance, it is less so than for Generalized portals.

Profile or personalized portals enable visitors to customize the site based on their interest and requirements
3) Profile or personalized portals enable visitors to customize the site based on their interest and requirements.

Customer loyalty models are structured along the lines of frequent flyer miles and supermarket customer loyalty points, offering buyer incentives in various forms
4) Customer loyalty models are structured along the lines of frequent flyer miles and supermarket customer loyalty points, offering buyer incentives in various forms. They can reward viewers for undertaking surveys, completing forms, viewing advertisements, or making purchases with points that can be accumulated and redeemed in various ways.

The Free model, often adopted by Generalized portals, offers something for free. These models can develop into or from portals and may also merge into the infomediary model.
5) The Free model, often adopted by Generalized portals, offers something for free. These models can develop into or from portals and may also merge into the infomediary model. They may offer free services, email, web space, internet access, software or other products. This model strives for loyalty while offering general appeal.

In the next lesson, we look more closely at the various Advertising models.
Ad B2B Digital Marketing Strategy