ASSIGNMENT
BUSINESS MODEL – BRANDED STORE FRONT
(SuperStoreFront.com)
Sp-2011/Ph. D. EM/001 Mohammad Imran
Sp-2011/M. Sc. EM/046 Waqar Haider
Fa-2010/M. Sc. EM/CE/119 Syed Kamran Nazim Banuri
Sp-2011/M. Sc. EM/019 Muhammad Ahmed Alvi
Description of Branded Storefront Business Model
The branded storefront business model allows the owners of small web sites the ability to participate in E-
commerce without any of the investment or headaches associated with an online store. Web site owners can sign
up with a storefront service and choose products from over 1,000 online merchants that are uniquely relevant to
their audience.
The concept is basically an evolution of the "affiliate" programs employed by many online retailers. Such programs
get potentially thousands of Web sites to sell on their behalf, and pay them commissions in return. The branded
storefront model simplifies this by allowing a Web site that wishes to sell multiple products online to have a single
relationship with an intermediary instead of several online suppliers.
The storefront business model puts the power back in the hands of the consumer. It is up to the consumer to
decide who gets the benefits from their purchasing power.
Building an Online Store
The online retail site shall incorporate the following major components:
hardware
Core E-Commerce software
Functionality connections
technical and other support staff
knowledge base
product information
Content product trial capabilities
collaborative filtering and configurators support
consultative and promotional sales process beyond just
Guided Selling online ordering
promotional costs – online/offline advertising
Business Development portal deals
and Marketing sponsorships
managing queries prior to purchase
Customer service prior call centers
to sale
E-Commerce Revolution
Expanding at an explosive rate of growth, e-commerce is possibly the fastest growing business segment that has
ever existed and one that has already compelled business, large and small, to invest heavily in the hardware,
software and services that make successful e-commerce possible.
The advantages of e-commerce were initially exploited by retail “e-businesses” such as Amazon.com, eTrade, and
Auto-by-Tel that were created as Internet versions of traditional bookstores, brokerage firms, and auto
dealerships. Such firms could now deliver almost unlimited content on request and could react and make changes
in close to real-time since they had now been freed from the confines of geographical constraints and costs of
managing “actual stores”.
Not only do e-businesses provide alternative shopping sites to real world stores; they can also expand existing
markets - even create new ones. They can also provide increased information, choice and time savings over and
above the cost advantage. E-businesses therefore provide a new forum for buyers and sellers to come together in
significantly more efficient ways. The digital medium is not a ‘take it or leave it’ medium; instead businesses can
use this digital technology to augment their existing supply chain models.
Business-to-business e-commerce also has similar advantages as mentioned above under retail e-
businesses/business-to consumer e-commerce. It permits businesses to offer increasing number of services
through the use of digital technology. The Internet has created an immediate and convenient channel for
communicating, exchanging, and selecting information, e-commerce allows firms to reconsider which functions
they should perform “in-house” and which are better if “outsourced”. This has also led to the expansion of the
roles played by logistic and intermediary service providers.
E-commerce has given birth to entirely new classes of business intermediaries.
Aggregators create a business community: they pool supplier content to create a searchable one-top
shopping mall with pre-defined prices for buyers within a business community.
Auctions create markets and reduce sellers’ losses: they pit buyers against each other to purchase seller
surplus. Buyers and sellers can participate in multiple, real-time auctions simultaneously, without accruing
physical-world search and travel costs.
Exchanges create stable online trading markets: they provide players with a trading venue defined by clear
rules, industry-wide pricing, and open market information.
The estimated Internet Revenues and Internet jobs estimated by Cisco are:
Estimated Internet Revenues
Attributed Internet Jobs
Internet Infrastructure $114,982.8 M 372,462
Application Infrastructure $56,277.6 M 230,629
Intermediary/Market Maker $58,240 M 252,473
Electronic Commerce $101,893.2 M 481,990
The Internet Economy Indicators $301,393 M 1,203,799
Some Facts:
Consumer e-commerce is a multi-billion dollar industry and growing fast.
Lots of people are buying online and more are joining in every day.
People feel it convenient to do errands from the comfort of the internet.
Value Proposition for Storefront Owners
This is the first business model to provide individuals the opportunity to participate in e-commerce. Previously if
you wanted to add commerce functionality to your site it was necessary to negotiate with vendors, pay for
warehouse space, process and ship orders, and set up banking relationships to run their business. Branded
websites take care of those details and allow the site owner to focus only on managing and marketing their store.
Essentially, the individual or organization that sets up a storefront is an independent contractor who gets paid a
commission for any sale made from their stores. In order to add the storefront a website owner simply sets up a
storefront and links it to their site.
Branded Storefront owners receive the following benefits completely free:
Template for creating “somewhat customizable” storefront
High-speed hosting of the store
Management of all credit card transactions
Summary Reporting on a quarterly basis
Newsletters to storefront provided distribution list for marketing purposes
Vast selection of brand name products to sell from retailers
Product Delivery and service support to satisfy the needs of customers
Commission on every sale from every store opened
Guidance on how to market and route traffic to the store
Commissions paid on sales through branded storefronts range from 2% - 25%. The commission range for general
products categories are provided below.
Books: 5-20%
Music: 7-12%
Movies: 7-10%
Sporting Goods: 2-25%
Video Games: 2-15%
Electronics: 2-15%
Computers & Software: 2-15%
Value Proposition for Retailers and Manufacturers
Branded storefronts allow name brand retailers, manufacturers, and distributors (collectively suppliers) the ability
to monetize the highly targeted but lower traffic at small web sites.
Retailers will warmly embraced this branded web site business model since:
it gives them access to the approximately 85% of web page views happening outside of the top ten portals.
the retailer pays the storefront provider on a pay-for-performance basis - retailer doesn't pay unless a
customer places an order. The current customer acquisition model involves paying up front for advertising on
web sites, which may or may not result in a customer.
suppliers maintain complete control of pricing, product description, and products in the database because
they upload all their product offerings to the branded storefront owners database.
smaller specialty suppliers are not left out of the opportunity.
Suppliers of all types can be encouraged to sell their products through the branded storefront’s e-commerce
communities. Whether a manufacturer, distributor, wholesaler, e-commerce web site or retailer, distribution can
be enhanced through the vast network of storefronts. It is easy to become a supplier.
The basic requirements for becoming a supplier are:
Have unique products that you can drop ship via TCS, FedEx etc .
Provide full catalog line of products with text descriptions, images, and prices of products, preferably in
electronic format.
Provide a credit application that provides evidence of financial capability.
Provide key information for Company including contact information, sales volume, customer service
capabilities, etc.
Target Market for Branded Storefronts
One doesn’t have to be a "retailer" or even a "business" to host your own, personalized online store. Anyone can
become and e-tailer. Possible "e-tailers" under this model:
A high school student who has attracted a following for a Web page celebrating a favorite musical group.
A school volunteer organization seeking to raise funds by getting parents to shop online so the school can
benefit from the commissions.
A little league baseball coach who sets up an online store in order to make it easy for his kids to order
equipment, and uses the commissions on product sales to fund team activities.
A 12-year-old who creates a store that's a "wish list" of toys, and tells his grandparents to shop there for
birthdays and Christmas — pocketing the commission money!
Teenage boy can add a store to his personal Web page, which is a tribute to supermodels, and sell posters and
videos, for example. (Perhaps this will help pay his college tuition!)
A golf instructor can set up an online store to sell students golf equipment, books, & videos.
This model has changed the way we think about “retailing”. The traditional retailer is a bricks-and-mortar store, or
a retail catalog company or even a multi-level marketing sales operation. The e-commerce evolution has changed
these dynamics significantly. The definition of retailers has now been extended to include online merchants who
may have little or no physical facility. Amazon.com, for example, operates numerous brick-and-mortar warehouses
to ship products, while other online retailers contract with physical companies for order fulfillment to the
customer. These are pure cyber-retailers. The branded storefront model changes this too; anyone, even an
individual, can be a retailer since there are no barriers to entry.
Description of existing sites
We investigated three virtual storefront providers to determine the benefits and shortcomings currently
characterizing the industry.
Vstore is a privately held company dedicated to creating universal, personalized E-commerce opportunities. With
Vstore anyone can create his or her own fully stocked, personally branded, online store for free in a few minutes.
Web site owners can link to the store and start earning commissions of 2% - 15% on every sale.
The owner of a Vstore can choose from an inventory of over 1 million products to stock their store. Product
selection is simplified with the ability to choose all products for a certain theme in one click. For example, if you
choose the sports theme, all sporting goods products in Vstore’s database are listed in your store. Each theme
store has a different look that can be somewhat customized by the user. Vstore offers its storefront owners free
search engine registration, a Meta tag management tool, quarterly reports with sales volume and commission
check, and customer order tracking. Customer order tracking is a particular strength. After receiving an order,
Vstore sends an email to the customer with a number that they can use to track the status of their order. Their
account is accessed from the same store that they ordered the products, so the entire customer experience is
contained within the same site they visited and shopped at. The storeowner doesn’t have to send his customers
outside of his or her store for customer support.
Customizations of the storefront and product selection are two areas where Vstore could improve. The storefront
owner can add a heading and limited text to one of the preformatted themes but it still feels as if you are leaving
the original site to go to the store. With the theme store you get a set mix of products that match the theme’s
topic; you cannot add cookbooks to a sports site. To do this, you would have to build another store with a book or
cooking theme.
Affinia, currently in the beta testing stage, allows a site owner to create a customized shopping environment that
offers products uniquely relevant to the site's audience. Affinia also gives consumers a chance to benefit from the
product recommendations of other online content experts, and offers participating merchants the first broad-
scale, pay-for-performance Affinity Commerce solution.
The Affinia Commerce Network is a customer-acquisition engine helping merchants acquire customers on a pay-
for-performance basis. Affinia collects a performance-based fee from each merchant and keeps 50% of this fee,
while the other 50% represents a referral fee paid to storefront owners. Affinia pays its storefront owners a
referral fee, typically between 3 cents and 15 cents, each time a Storefront refers a shopper to an online merchant
- whether or not the shopper actually purchases the product. The company keeps track of all referral fees
generated by a storefront owner and makes the appropriate payouts to member web sites on a quarterly basis.
Affinia members get centralized reporting and aggregated payouts, rather than dealing with a large number of
merchants.
Affinia claims to have the most extensive product database on the web. It includes more than 1000 online
specialty merchants who provide access to millions of products to suit all types of interests. Most of these
products are difficult to find elsewhere on the web. Products are displayed in a vertical scroll on the Storefront
with the merchant’s logos next to the products, so visitors can shop with confidence that their purchases will be
handled by someone they know and trust.
Affinia offers storeowners assistance in reviewing and selecting products for their storefronts. They offer free
monthly email newsletters including tips on how to get the most out of your Storefront, links to successful
Storefronts, products and merchant news. Recently, Affinia also began featuring the ability to give coupons for
particular merchants.
Affinia would benefit from allowing more customization options to storefront owners. Storefront design is
uniform, and the transition from the owner’s home site to the Affinia store could be more transparent to the
shopper.
Ubrandit offers a suite of brandable destination web sites offering products in two categories: books, music, and
videos; and financial information services. Web site owners register with the company to provide its catalog of
goods or services and collect a commission on sales generated from their sites on a quarterly basis. Ubrandit, in
turn, collects revenue on the sale of products and advertising space on the catalog pages.
Product offerings include over one million titles of books, CDs, videos, and DVDs on its JungleJeff.com catalog site,
currently the only site that is fully functional for branding. Nearing completion are three sites dedicated to
financial information. StockStudy.com is a comprehensive financial information site providing timely stock quotes,
charts, personal portfolio management, news releases, exclusive editorial content, and a search engine dedicated
to web sites of publicly traded companies. Newsletterz.com is a financial newsletter-marketing site that provides
publications from an array of investment categories; viewers can purchase trial copies and subscriptions of these
financial papers. Irpackages.com provides a fully automated request system for investor relations packages from
over 5200 US and Canadian companies. The three financial information sites can be integrated into a single site, or
they may be branded separately to add a particular functionality (stock quotes, IR packet requests, etc.) to the
owner’s web site.
Ubrandit’s primary shortcoming is its lack of product line breadth. In addition, the only product collection
currently available for branding is a highly competitive, low margin market. The catalog is uniform from storefront
to storefront; for example, a radio station that plays classical music can offer a storefront with music, books, and
videos, but it must carry the entire product line, including rock and country music. Also, since Ubrandit.com
retains the rights to sell the advertising space on the storefront pages, the storefront owner may unwittingly
advertise for companies or products with which it would not transact business in a traditional format. Finally, of
the four brandable sites offered by Ubrandit, only two have the potential to generate revenue; the remaining two
offer services that can be obtained for free elsewhere on the Internet.
The following is a comparative chart of features for the three highlighted storefront providers.
Vstore Affinia Ubrandit
Features
# of product lines Many Many Two
Level of storefront customization Average Average Average
Level of product offering Average Average Low
customization
Ability to feature products on No No No
home page
Summary reporting Quarterly revenue Quarterly product-level Quarterly revenue
statement information statement
Inventory management By manufacturers By manufacturer Internal
Marketing guidance/support Average Extensive support - search None
engine registration,
product selection
Incentive programs No No No
Recommended Improvements to the Business Model: SuperStorefront.com
Components Problem Solution
Customer Offering – distinctive, cheaper Diverse product offering; Customization of
than competition? storefront so that shoppers do not feel that
Customer Value they have left the sponsoring web site.
Provide one-to-one marketing. Profiling
capabilities.
Scope Who is the customer? Associations and communities. Individual
Users, web site owners
Pricing How is the value priced? Remain free for storefront owner.
Revenue source How is valued paid for? By whom? When? Commission from merchants and suppliers;
What are value and margin drivers? Advertising
Connected What are the required activities? Add Suppliers – merchants, provide diverse
Activities product offering with interest group focus,
enhance service capabilities to storefront
owners setting up sites
Implementation What structure, systems, people, Integrate various stakeholder systems –
environment are needed to carry out suppliers, storefront owners, storefront
activities? providers
Capabilities What are the shortcomings that need to See text below table
be addressed?
Sustainability Why can other firms not copy away the Can be copied since low barriers to entry;
advantage? How can the advantage be however service capabilities and ability to
sustained? provide ease of use to individual/association
users is vital.
An overview of our suggested enhancements compared to existing site capabilities:
Vstore Affinia Ubrandit SuperStorefront.com
Features
# of product lines Many Many Two Many
Level of storefront Average Average Average High
customization
Level of product offering Average Low High
customization Average
Ability to feature products No No No Yes
on home page
Summary reporting Quarterly Quarterly product- Quarterly Quarterly product and
revenue level information revenue customer information
statement statement
Inventory management By By manufacturers Internal By manufacturer
manufacturers
Marketing Average Extensive support- None Search engine
guidance/support search engine registration, product
registration, selection, custom direct
product selection e-mail promotion
Incentive programs No No No Yes- couponing, gift
certificates
