The study of business models is an important topic for entrepreneurship and organizational purpose because business models affect firms’ possibilities for value creation and value capture. The present study leaves a gap to be bridged, and the gap reveals a critically important research problem to be resolved, that is, how to visualize these transaction activities and calculate revenue respectively. This paper, therefore, adopts e3 model for investigations of E-commerce enterprise value generating in the process, and can be used to select or optimize value activities that advance both research and practice in the field of E-commerce enterprises. The result indicates that: c Profitability sheet is able to capture customers’ behaviors, which gives them insights to better understanding online customers’ experiences and expectations, and make reasonable decisions. d This model illustrates the main activities of business model and exploits the ways to optimize value activities.e This modeling approach provides pro-activities way to actually experiment with alternative business models, by making enterprise to simulate various possibilities before committing to specific investments in reality.
In the last decades science and technology have experienced an impressive and fundamental change, which provides many new business opportunities to establish E-commerce enterprises, e.g. Alibaba Group Holding Ltd,JD.com Inc and Suning Commerce Group Co Ltd in the mainland, and an ideal setting for studying business model development. Although the “what” question (i.e. business model’s definition, function, classification) has been investigated in many studies, the “how” question (i.e. business model’s representing method, evaluation) has yet to be explored.
Several scholars have recognized this problem and have attempted to represent value creation logic and process of business model through a mixture of textual, verbal, and ad graphic representations. Weill and Vitale (2001) have introduced three classes of objects ü participants (firm of interest, customers, suppliers, and allies), relationships, and flows (money, information, product, or service flows) ü intended to provide tools for the analysis and design of e-business initiatives. Chesbrough and Rosenbloom (2002) thought business model as input-output convert mechanism to be financed out of internal corporate resources. Osterwalder (2004) applies business model ontology (BMO) to conceptualization and formalization of the essential components into elements, relationships, vocabulary, and semantics. Based on a Penrosian view of firm, Demil and Lecocq (2010) build on the RCOV (R means resource, C means competences, O means organization, V means value) propositions framework to represent how value create and evolve. Casadesus-Masanell and Ricart (2010) represent business model by means of a causal loop diagram, where choices and consequences are linked by arrows based on causality theories. Li and Wang (2010) develop rules based on container model, systematically reveals fundamental components and building blocks, and explains function and value activities of business model. Teece (2010) defines a business model as the way in which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit. Despite conceptual differences among current literature, there is widespread acknowledgement that business model is a new unit of analysis in addition to the product, firm, industry, or network levels, and value creation is the focus of business model. Thus, these studies leave a gap to be bridged and the gap reveals a critically important research problem to be resolved, that is, how to visualize these transaction activities and calculate actors revenue respectively? This paper, therefore, adopts e3 value model (i.e. economical, exchange, enabler), proposing by Gordijn and Akkermans (2001,2004), to investigations of E-commerce enterprise value generating in the process.The quantitative analysis of our study can help the actors involved to understand value creation and capture, and advance both research and practice in the field of E-commerce enterprises. Therefore, managers need to know the key attributes when designing E-commerce business model to increase efficiency and effectiveness.
This paper is structured as follows: Section 2 presents our method and tools. Section 3 is E-commerce modeling construction. Section 4 is devoted to the evaluation of results. Section 5 summarizes our main conclusions and indicates the suggestions.
2. Methodology and tools
2.1. The methodology of e3 value
The model of e3 value defines how economic value is created and exchanged within a transaction network by utilizing conceptual graphical model and scenario-based thinking. What’s more, it can perform a financial sensitivity analysis. Through this model and subsequent profitability sheet, we can find enterprise sustainability depends on anticipating and reacting to dynamic environment while optimizing value activities. This modeling technique takes a value viewpoint unlike other traditional modeling tools that take either a business process viewpoint (typical of operation management) or a system architecture view (typical of information systems literature). Gordijn and Akkermans identified a number of generic concepts, relationships and rules in order to enhance and sharpen the understanding of business operations and requirements using scenario analysis and quantification. This modeling borrows concepts from business literature such as actor, value object, value port, value interface, market segment, composite actor, scenario path, start stimulus, end stimulus, and connection. The e3 value mode respect the rule of economical reciprocity and “give and take” methodology: for goods or services delivered to the transaction network, the transaction networks should provide goods or services of equal value in return.
Comparing with other methodologies, the e3 value model helps in building a conceptual model for E-commerce of both current and prospective business models, managers can quickly surmise many of the likely implications of making possible change. What’s more, it can automatically generate revenue/profit calculations for each actor involved, and analyze E-commerce enterprises for its economic sustainability. It is worth noting that the e3 value model is a simplification of the real world, and the focus of the model is on what kind of value objects must exchange to each other in order to cover customer needs.
Value transfer can be conceptualized by the following e3 value constructs (in italic). Actors, such as the buyer, seller are economically independent entities. Actors transfer value objects (goods, service, payment, or experience) by means of value transfers depicted by labeled arrows. By exchanging value objects they rather aim for profitability (in the case of supplier) or maximum their economic utility (in the case of customer). A value interface models the principle of economical reciprocity: Actors only willing to transfer a value in return for some other value of object, and consists of value ports, to depict outgoing-ingoing value activities. In the e3 value model, customers are considered as the starting points and the reason why a business model must be generated. How to satisfy customer need follows dependency path, which indicates the transfer of value objects. The dependency path shows how many value transfers are executed as a result of a consumer need. The dependency path is e.g. used to analyze the net cash flow for each actor involved. A market segment shows a set of actors that for one or more of their value interfaces, value objects from an economical perspective. The Table 1 shows e3 value mode how to present.
3. Building the business model for E-commerce enterprise using e3 value model
The business model is a structural template that describes the organization of a focal firm’s transactions with all of its external business partnerships. E-commerce enterprise, as a focus firm, is performing value activities to provide product or service which can be offered to customers, and demand resources from suppliers and other business partners. In order to understand these value transfers relationship in a more structured and rigorous way than would be possible through verbal theorizing, this paper applies e3 value model to the description of Ecommerce enterprise that behaves in compliance with procedure and regulations. Initially, assuming this Ecommerce business model that mainly involves eight actors below:
⦁ E-commerce enterprise T. It adopts feedback system and cogitation system strictly to prevent committing fraud or making intentional errors, e.g. buyers have paid but sellers don’t deliver the (right) goods or services, or buyers will not pay but sellers have delivered goods or services; or sellers will deliver counterfeits and bogus products. As a online platform, enterprise T must enhance e-service quality, including website design, reliability, securing and privacy for both buyers and sellers.
⦁ Consumers. Online shopping has become popular in our daily life and T provides rich products portfolio, such as Heath & Beauty, Gifts, Sports & Toys, Mobile Phone & Accessories, Desktops, Laptops.
⦁ B2C stores and C2C stores. They not only provide the wide variety of commodities, but also important revenue resource for company T. T gathers advertising expense (such as federal fees, bidding fee, key words ranking fee), membership fee (such as technical service fee, merchandise helving fee), value-added service charge (such as (the products in characteristics display, logistics charge).
⦁ Internet service provider(ISP). The core business of e-commerce enterprise T is to provide online shopping platform, and they are not so much interest in all technical activities, such as IP access provisioning. Therefore, they outsource these activities to the telecommunication enterprises.
⦁ Advertiser. Advertising message could effectively increase customers’ purchasing probability and enhance the image of product and service, then attract more stores to sell products.
⦁ Employee. The salary of treating employees well is largely influencing innovation in the E-commerce enterprises.
⦁ Equipment seller. E-commerce enterprise T outsources activities such as manufacture, update and maintain network equipment to the professional manufactures.