E-Commerce Invents New Business Models

Internet-based e-commerce will skyrocket, but only companies that develop and implement entirely new business models will succeed, according to a report by Datacomm Research and Techvest International.

The report, “Portals to Profit: E-Commerce Business Models and Enabling Technologies,” predicts much experimentation with new e-commerce business models. Many businesses will sell products at cost, making money off advertising, shipping and handling charges, membership fees, and cash flow, the report finds. Auction sites will continue to evolve, and shopping bots will make the entire Internet into one, big real-time auction, the report predicts.

“Traditional business models will be replaced by new models based on electronic information chains,” said Michael Hentschel, principal author of the report. “The Internet is the most efficient market ever devised, but the inexorable drive toward cost and below-cost pricing will compel vendors to discover new paths to profit.”

Big portals will likely merge with ISPs and telecomm access providers, and the portals will begin to emulate AOL’s subscription model, according to the report. The best-capitalized portals and hubs will pull ahead of the pack using their valuations to acquire whatever technologies they need. Small e-tailers will find opportunities by helping customers find what they want, the report says.

Wireless technologies will extend e-commerce to everywhere business transactions are conducted, and high-speed access will allow merchants and advertisers to deliver richer content and a more compelling shopping experience, according to the report.

In addition to sections on Business Models, Implementation Strategies, Technology, and Opportunities, the report profiles dozens of e-commerce companies, including Amazon, AOL, Alta Vista, Buy.com, Priceline, Real Networks, and Yahoo