Business Models in Online Photo Gift Products business

Online photo gift product business is slowly gaining momentum in Indian market place. The key market players are this space include picsquare, iTasveer, snapfish, snapgalaxy, photohugs, zoomin, merasnap, printcamp and gkvale. A closer look at the background of these online shops brings out the nature of business models which are in play in this space. Broadly, you can see the following models:
A) e-commerce: Most of the players in this space largely generate revenue by selling photo based products online. Mainly, these involve taking online orders for printing of digital images uploaded on the portals and selling personalized photo based products. However, many of these portals do not have their own photo labs and have partnered with various local or regional photo studios that print and deliver these photos on behalf of these portals. The key cost centers for these portals include:
- Procurement of products like mugs, key chains, mouse key pad, T-Shirts etc. which are used for building personalized photo products.
- Printing of photos on these products
- Printing of photos by a third party studio
- Distribution cost
- Web site management cost
B) e-Stores: Some of the web sites also provide its users to set up online stores for uploading and selling its designs which the customers can use for personalizing their products. Companies like Pringoo.com are providing users with the capability to set up their online stores and earn commissions on sale of every product which goes out to customers with their designs.
C) Brick and Mortal model: The existing photo studio labs are the next emerging players in the online personalized photo product business. Regional companies like G K Vale, Bangalore have emerged as one of the strongest players that have cost advantages due to its age old photo printing business.

DVD Online Rental market - Business Models

India is a virgin market for online DVD rental companies. The concept of movies on rent has been in India from late 80's but was largely dominated by local video parlors most of whom had pirated movie versions. With Internet spreading reaching out to tier II and tier III cities, this space is slowly turning into a big market opportunity. To be an early entrant and establish itself, the companies are trying different business models to make this a profitable venture. Some of the business models that are currently in play include:

1. Subscription Model: The core business model across all the players in this space is the subscription model. Companies are offering monthly, quarterly, half-yearly and annual membership plans to woo consumers based on their preferences. The subscription plan include following components :
a)subscription fees (monthly, quarterly, half-yearly or annually)
b)refundable deposit
c)number of movies that you can rent at a time within a plan(Limited, unlimited)
d)Time-Limit for rental period (new titles need to be returned earlier while old titles may not have any time limit)

2. Brick and Mortar Model: A number of companies started off with an online store and have slowly expanded its presence into retail outlets. The web sites are now acting as store fronts rather than the core revenue generation machine. This has allowed the companies to widen their customer reach

3. Advertising: Many companies are also offering their real estate on their web sites for advertisers to advertise their products and services. The major source of revenue is from the entertainment industry.

4. Franchisee Model: In order to scale up, companies are also looking at opening new outlets through the franchisee route. The investment for a franchisee is to the tune of 13 -14 lakhs. In addition to this their is going to be franchisee fee and revenue sharing.

5. Online Movie Sales: Some of the companies also offer DVDs/CDs on its web site for sale. Bigflix in fact allows the users to download movies from its web site over a broadband connection(Not available in India though).

I have focused only on the revenue generation aspects of the business model here. It would be interesting to see the cost centers in this model given the fact that the companies may need to pay royalties to production houses.

Business models - Online Bus Reservation Sites

The bus reservation sites in India differ from each other in two ways - one the features and facilities that they provide over internet, second the business model. Here is a list of business models which I could see in practice across different online bus reservation sites:

1. Broker/Commission based revenue model: The online bus reservation sites make money by charging commissions on bus bookings from various registered partner bus operators.

2. Revenue from value added services: These sites charge small amount of money from consumers for value added services like home delivery of tickets.

3. Revenue from advertisements: Some of the web sites offer on site advertisements which are used to generate revenue.

4. Revenue from Franchisee: Some sites also offer franchisees for providing online reservation services. The franchisees are offered at a fee with additional income on shares on commissions.

5. Revenue from other travel ancillaries: Some sites have tied up with Taxi operators, Rail (IRCTC) as well as hotels and provide online booking facilities to availing these services. These partners are being charged a commission for every closed deal through their web sites.

Internet Business Models Part 2

I started this blog with Internet business models and then got drifted to advertisements, perhaps because it is so vast and difficult to understand :) I will come back to it probably sometime down the line. Let's review some more business models to widen our understanding of net commerce. As per my research following represent some other interesting models:
1. Affiliate Model: An affiliate model allow you to acquire customers with the help of your partners/affiliates. The partner or affiliate would typically put a link on his web site pointing to yours. You share the revenue with the partner if you are able to make a sale to the referred customer. This is a very common model and a vast number of web sites in this ecosystem use it. There are broker companies like commissionjunction or element5 which act as a broker between publishers and advertisers. The commissions vary from 5% to 60% or more depending upon the publisher.
2. E-Commerce: This model allows you to sell a product or service through web site. You can create a e-commerce environment and then charge sellers for hosting their products. The sellers can be charged catalog listing fee as well as a share from each sale that is being made. There are different types of e-commerce models - business-to-business(b2b), business-to-customer(b2c), customer-to-customer(c2c).
3. Catalog Listing: This is another interesting model where the site owner provides the platform for uploading different catalogs. For example a real estate owner can list a number of properties that he wants to sell or rent. Similarly, a rental car agency can list all the cars available on rent for users to search and select. The publisher is charged for the duration of time for which the content will remain hosted on the web site.

I will come back to some other interesting models later this week. For now you can check out a good collection of these models at Fred Wilson's blog

Internet Advertisements - Part 2

Internet advertising is becoming more and more creative with marketers looking at different ways to promote their products in an effort to catch maximum eye-balls. All this has led to a great revolution in the way people advertise on web sites. I looked at yahoo advertising and could easily see around 30-40 ways of placing image or text based advertisements. If you want to get a flavor of what I am sharing visit Yahoo ads
The ads are either static or dynamic in nature. So you can have a flash ad with roll over effect or a text ad with link. A flash ad may start off covering the entire web page and then reduce to a static image sitting in a small corner of the web page. In effect it is basically a strategic placement of images and texts to grab maximum eye balls within a session. I am putting some other links which can give you a good idea regarding different ways the web companies use their asset for advertising. My suggestion: Go through different ad models before choosing the right one for your web site.
MSN India
NDTV (Most user friendly mechanism to explain the advertisement methodology)
CNN-IBN (You can also get an idea on the statistics and rate card on this site)

It is interesting to see that news channels have a very simple solution for advertisers as compared to portals which have made it sound very complicated. If as an advertiser, I would like to look at advertising options on portals, it will need some assistance from sales people ! Nevertheless I guess the more you visit web sites you will uncover many more models. Piece of advise learn only the fundamentals and then spin around based on your site requirements.

Types of Advertisements on internet

Before I jump onto the next business model it would be a good idea to explore the different types of advertisements that you can place on a web page:

• Banners: You can have different types of banners with different sizes based on the space available on your web site. These include Slugs, Horizontal banner, Tower banner, Skyscraper, Island banner, Monster banner
  
• Pop-ups
• Pop-unders (http://icant.co.uk/articles/how-to-create-popunders/#get)
  
• Shoshkeles or floating ads (http://en.wikipedia.org/wiki/Shoshkele)
  
• Advertorials
• Contests
• Site/ Channel Sponsorships
• Email Shots
• Text links

Reference: http://advertise.indiatimes.com/

Business Models on Internet

While the whole world is getting connected through the power of web, I am scratching my head trying to figure out how these millions of web sites make money to spin the financial community out of gear. The quest to understand the inherent behavior of how this ecosystem works together lead me to make startling revelations about the power economics of web. This blog is going to be all about my learnings on wild wild world of web.

I am going to start with one of the oldest business model built around world wide web:

Advertising: One of the biggest source of revenue for various web sites is advertising. A number of companies largely thrive on the number of advertisers that they can pull on to their web sites. This in turn depends on the traffic which a web site can generate. There are different ways by which the companies charge advertisers for putting up ads on their web sites. Some of them that I am aware of include:
1) CPM (Cost per thousand impressions or views): Here the advertiser is charged on the basis of 1000 views of the ad on a specific web site. The ad can be in text or image format. Every time a visitor lands on a page where the ad is placed, it is being counted as one impression. The publisher is paid only for a unique visitor viewing the ad. The banners, popups, skyscrapers are examples of CPM. Generally CPM is around $1 for advertising on a popular web site.
2) CPC (Cost per click) : This model works on the premise that everytime a visitor clicks on a ad link, the advertiser is charged for the ad. Google model is largely based on CPC. Everytime you run a search you can see a list of adwords appearing on the right side of your search page. You can learn more about this on www.google.com/adwords.
3) CPA (Cost per action): This model requires the visitor to complete an action like filling a survery form, completing registration, voting for a product etc. The advertiser is being charged for each completed action by the visitor on the web site.

Next we will look at what is beyond advertising models.