It is generally believed that there are two backgrounds for the emergence of the business model concept:

First, after many traditional industries entered the mature stage, they fell into the trap of homogenization and large-scale competition, and the whole industry became unprofitable (or less profitable). Therefore, new profit models are called for.

And a very small number of changemakers in these industries have achieved profitable breakthroughs using new strategic combinations. Corporate practice raises the issue of business models (originally called profit models or business models), and also shows clues and directions for solving problems (such as Southwest Airlines, Dell Computer, ZARA fashion, etc.), which will inevitably attract the attention and interest of the management community. Scholars summarize these new strategic combinations as new business models.

Secondly, during the growth and development of the Internet, a group of entrepreneurs who are "Spring River Plumbing Duck Prophets" were keenly aware of the business opportunities contained in it, and carried out various business attempts based on the Internet and important business methods and elements.

However, many Internet companies have only invested resources (commonly known as "burning money") for a long period of time and cannot find ways and means to generate cash flow and obtain profits. Entrepreneurs in the Internet field generally realize the importance of "traffic" on the Internet, but how to "monetize" "traffic" has always been a core problem that is difficult to solve. It can be said that the profitability problem of Internet companies is inherent. Some areas have been basically solved, and some areas are still being explored.

Take Tencent as an example. After inventing the QQ instant messaging system and attracting a huge number of users, it could not find a way to make money for a long time. It was not until the gaming business and mobile Internet business emerged and grew that the problems of corporate cash flow, profitability, and continued survival and growth were solved. Currently, Tencent’s “killer” product, WeChat, already has hundreds of millions of users, but WeChat’s profit model is still in its infancy.

The practice and practical problems of Internet companies prompt people to think about the logic of value creation of Internet companies:

What are the characteristics of the customers served by Internet companies, what products or services can create value for customers, how are they different from other companies' value creation methods, how to stick to customers and accumulate customer resources, how do Internet businesses obtain revenue, how to build a value chain, how to reduce operating costs, etc.

These issues all fall within the scope of the Internet business model.

What is the Internet business model?

When it comes to Internet business models, we often think of JD.com's e-commerce, Alibaba's Alipay, Tencent's WeChat, Sina's news portal, Ctrip's travel services... there are all kinds of them, and there are many styles.

The Internet is the main mechanism and way for the whole society to produce, use and distribute information. Without the Internet, it is almost impossible for any enterprise or individual to effectively transmit, obtain and process information. Since the Internet virtual space has the attribute of "information flow integration", its impact on business models occurs in two directions:

First, knowledge and information products that originally had a variety of tangible carriers (such as books, newspapers, records, films, etc.) are directly transformed into information forms on the Internet; and Internet technology will also give birth to new informationForms (such as virtual reality products and information products based on artificial intelligence) - they bring new experiences to customers. The production, circulation and consumption of these products (which can be collectively referred to as "content" products) all occur and are carried out on the Internet. This is why a large number of audio, video (including games) and other content websites have been generated in large numbers.

Second, transplant the information flow in the components of the enterprise value chain to the Internet to improve the efficiency of information flow such as market information acquisition, customer demand identification, product display, customer communication and interaction, market order response, and internal and external value chain connection. At present, a large number of "value chain" enterprises in traditional industries are absorbing, integrating and embracing the Internet in this way.

In addition to "information flow integration", virtual space also provides us with a second space for survival, bringing a unique experience different from the real world. Because virtual space is open and has low thresholds - almost all subjects can enter freely and equally, it is a platform for every enterprise and individual to express themselves, interact with others, develop and integrate resources, and find and create value.

On this platform, various companies and individuals both converge and separate, forming a virtual society that includes multiple "tribes." Because the Internet naturally has platform attributes, it creates conditions for some companies to adopt a platform business model, that is, I set up the stage and you sing; you sell, I serve; as long as you are willing to come, I will do it for free.

The more people come to sing, the greater the agglomeration effect and external effect of the platform will be. Just imagine, in a real physical space, which mall can accommodate millions of merchants like Taobao, which institution can provide opportunities for so many small and medium-sized entrepreneurs; and which software store can provide (and quickly update) massive applications like the "AppStore"?

The two functions and attributes of virtual space, "information flow integration" and "platform", are interrelated, interact, influence and enhance each other. The abundant information flow and the convenient, interactive, and unlimited link information flow mechanism have attracted the participation of many subjects (enterprises, individuals, and various institutions); and the focus and interaction of various subjects on the platform will bring huge amounts of information.

The two functions of "information flow integration" and "platform" interact together, giving rise to many community-based, social-based and service-based business models.

Either "information flow integration" is a necessary condition and "platform" is a sufficient condition - such as Weibo, WeChat, stock bar, forum-type business models; or conversely, "platform" is a necessary condition and "information flow integration" elements are a sufficient condition - such as platform-based financial business models (Alipay, online crowdfunding, etc.).

Five types of Internet business models

The emergence and development of the Internet provide an important means for enterprise value creation and efficiency improvement, and provide aThe movement provides a new broad platform and new opportunities for corporate growth. Against this background, many Internet business models have emerged. As the breadth and depth of Internet applications expands, Internet technology advances, and new generations of Internet people grow, Internet business models will continue to innovate and evolve.

1. Commodity circulation

The commodity circulation Internet business model refers to using the Internet to replace one or several links in the traditional commodity sales and circulation process, using the Internet as a medium for product display, customer communication, and a channel for product sales. This type of business model can be roughly divided into B2B (business-to-business e-commerce), C2C (individual-to-individual e-commerce), B2C (business-to-individual e-commerce) and other categories according to the different transaction entities; according to different business methods, it can be divided into platform type and transaction type; according to different business scope, it can be divided into comprehensive type and vertical type.

In general, the Internet business model for commodity circulation has been expanding its penetration scope (taking daily commodities as an example, it has been extended to fresh food), and almost all commodity circulation must be Internet-based.

2. Information (content) service class

This type of business model mainly refers to the provision of various information (content) products and services on the Internet, including electronic books, databases, news, videos, music, traffic distribution, maps, navigation, search and online games, etc. Its income methods include advertising, content payment, value-added service charges, sharing operator traffic income, etc. Since this type of service has the attribute of traffic "entry", it is free in most cases. User resources and traffic are the focus of competition among service providers.

3. Social type

Social Internet business models mainly refer to business operations and revenue methods based on Internet social functions and social networks.

Looking at the characteristics of social networks, the first type is content-oriented social networks, which mainly include the early BBS (Bulletin Board System, electronic bulletin board system), as well as the major forums, blogs, Weibo, etc. that appeared later. Usually, users of such products gather in a virtual community due to common interests and topics.

The second category is personal information-oriented social networks (such as Facebook). The establishment of relationships between users of such websites relies more on personal information, relying on the users' existing social connections and organizational forms (such as schools, companies, etc.). The relationship is maintained mainly through the interactive services provided by these websites, such as messages, interactive games, etc. The third category, social networks, uses various current network communication and communication tools, such as Tencent QQ, WeChat, etc., to form social groups with varying degrees of openness and different scopes.

The revenue models of social networking websites and services include advertising models, value-added service models, platform service revenue models based on huge user resources, and closed and direct-selling commodity circulation revenue models within social networks (such as various sales-oriented WeChat groups), etc. Like the information (content) service business model, the key to the success or failure of the social business model is the scale, structure and stickiness of customer resources.

In addition, because there are a large number of horizontal and networked connections in social networks, which have self-organizing properties, some businesses will spontaneously generatecareer opportunities. Social network operators and service providers can develop some derivative business models. For example, operators of entrepreneur (entrepreneur) membership organizations usually get involved in investment business.

It should be pointed out that social business models may become an integral part of all Internet business models. In other words, any Internet business model is likely to include social content.

4. Online and offline interaction categories

Offline and online interaction mainly refers to O2O, that is, Online to Offline. It refers to the decomposition of business activities, business flow, logistics, and information flow into online and offline parts. The organic combination of online communication and interaction with offline services allows customers to obtain the best overall experience (such as convenience, speed, and reliability) in both virtual and real spaces, and reduces customer costs (various price discounts and reduced transaction costs).

At present, the O2O model has spread to many fields, such as commodity sales, tourism, medical care, transportation, life services, etc. For some enterprises in traditional industries, driving the improvement and upgrading of offline business through information flow and interactive flow on the Internet is the only way to introduce Internet factors and is also the basic direction of their business model innovation.

There are four main O2O revenue models:

The first type is represented by Suning Cloud Commerce

Online sales and offline sales coexist, and income comes from normal product sales.

The second type is represented by group buying websites

As an O2O business operation platform, partner merchants publish promotional information on the platform, and revenue mainly comes from rebates from partner merchants and advertising. This type of O2O model generally includes online payment functions, which is the premise and basis for collecting commissions from cooperative merchants.

The third type is represented by some traditional companies

Customer communication and interaction are conducted online, and revenue still comes from offline sales of products.

The fourth type is the currently popular “sharing” model

Uber, Airbnb (AirBed and Brearfast, an in-flight accommodation website), Didi Chuxing, etc., integrate and utilize idle social resources to provide services and share service income according to a certain proportion. Of course, under this model, once customer resources reach a certain order of magnitude, the revenue method will change.

5. Finance

Financial Internet business models refer to utilizing the functions and advantages of the Internet to conduct financial business, or to create and trade credit instruments and financial products. Some of them originate from the basic attributes and functions of the Internet, and some are derivatives of other Internet business models (such as Alipay, which is a derivative of e-commerce). Since the form of financial products is information-based, the Internet is the best carrier of financial services and products, and is also the ideal form of its business model. It can be said that finance is naturally not the Internet, but the Internet is naturally finance.

There are many financial business models. Generally speaking, it includes the sales of financial products and financial services on the Internet (some people believe that this does not belong to the financial business model); Internet-based loans (for members)Closed-end loans, and direct lending between individuals through the Internet); Internet-based crowdfunding, including equity crowdfunding and consumer rights crowdfunding (the latter has been sold similar to goods and services); payment tool innovation and payment services (Alipay, WeChat Pay, etc.); and credit tools and product creation (such as Bitcoin, etc.).

Due to the disruptive impact of Internet finance on the traditional financial industry, coupled with its own shortcomings in security, risk control and other aspects, as well as the difficulty of supervision, the current development has been restrained to a certain extent.

How much room for Internet finance to survive in the future depends on the game and negotiation between various entities (users, Internet financial companies, traditional financial institutions, government regulatory agencies, etc.), as well as the reform of the entire financial system—including the direction, scope, and intensity of reform.

Possible business models in the future

With the development of Internet technology and the expansion of the Internet population, Internet business models will continue to evolve and innovate. At present, some new Internet business models such as seeds are being nurtured. In the near future, they will break out of the ground and grow rapidly.

1. Business models related to the Internet of Things and the Industrial Internet

The Internet of Things is usually defined as the "Internet of Things", that is, the Internet extends to objects and physical objects, allowing them to communicate with each other and exchange information (interconnection).

The Internet of Things is an important development direction of the new generation of Internet technology and computer technology, and is also the main field of future application of the Internet. It will be widely used in smart industry, smart agriculture, smart logistics, smart transportation, smart grids, smart environmental protection, smart security, smart medical care, smart homes and other fields (see the "Twelfth Five-Year Plan for the Development of the Internet of Things" issued by the Ministry of Industry and Information Technology on November 28, 2011).

As for the business models related to the Internet of Things, in addition to the development, manufacturing, and sales of Internet of Things hardware and software, there is one form worthy of attention: service operations based on the Internet of Things information platform (such as home information service platforms in the field of smart homes, information service platforms in smart grids, intelligent transportation, etc.) - currently only clues are not yet mature.

The so-called industrial Internet is the integration of industry (including industry, agriculture, transportation, logistics and other industrial fields) and the Internet. This concept overlaps with the Internet of Things. It usually refers to the interconnection within enterprises in the industry (the unification of physical systems and information systems, and automated, informatized, and intelligent operations). It also refers to the interconnection between enterprises in the industry, and even includes cross-industry interconnection. The future picture can already be imagined, but the business models contained in it still need to be gradually explored and created with the advancement and implementation of the Industrial Internet.

At present, the business models related to the industrial Internet that people can understand are mainly: C2B (Consumer to Business, consumer to enterprise) customization model, decentralized manufacturing model based on a unified management platform (such as Wen Group's "company + farmer" breeding model), ecological chain model based on technical standards and core software and hardware, etc. In addition, in the process of product development, production and sales, various carriers are used to make the information flow visible and traceable.In order to ensure product quality and win customer trust, it is also an attempt at the industrial Internet business model.

2. Business models related to cloud computing

Cloud Computing, according to relevant experts, is an Internet-based computing method. Its goal is to simplify computing and storage into resources as easy to use as public water and electricity. Users can use them conveniently as long as they are connected to the Internet and pay as they go. Cloud computing has greatly improved the efficiency of information storage, information utilization and processing in society. Enterprises and individuals can run various business systems on cloud platforms without building an information center.

Cloud computing itself is a new service-oriented business model in the Internet field. If it is subdivided, it can be divided into two categories: cloud services and cloud computing applications in other industries.

As far as cloud services are concerned, it usually includes three models: first, the infrastructure "cloud"; second, the platform "cloud"; third, the application "cloud". Currently, Internet giants such as Amazon, Google, and IBM provide different levels of cloud services around the world; my country's Alibaba has also launched Alibaba Cloud. Due to the constraints of technical capabilities, most cloud services of Chinese enterprises are at the application (software) cloud level and focus on specific industries and professional fields.

There are many cases of using the cloud computing system, or drawing on the structure of cloud computing, to innovate business models in other industries and fields, the more eye-catching ones are cloud education and cloud medical care. Cloud education aims at real-life problems such as uneven distribution of educational resources across society, overweight students' schoolbags, and insufficient interaction between schools (teachers) and parents. It collects educational resources (such as famous teacher lecture videos, textbooks, handouts, exercises, and tutoring materials) on the Internet. Students can learn online through computers, mobile phones, tablets and other terminals; at the same time, with the help of the Internet, real-time interaction between schools (teachers), students, and parents is realized.

The mechanism of cloud medical care is somewhat similar to that of cloud education. It also integrates the medical resources of the whole society (mainly doctors) to solve the problem of imbalance of medical resources; patients can upload their own health and physical examination data through terminals such as mobile phones and computers, and doctors can conduct remote diagnosis and treatment online. When encountering difficult and complicated diseases, you can also seek help or conduct global consultation through the Internet. Currently, cloud education (online education) and cloud healthcare (online healthcare) are favored and sought after by venture capital, but it may take a long time to truly generate revenue and profitability.

3. Business models related to big data

Whether it is a natural system or a social system, huge amounts of information and data are constantly being generated and deposited. The advancement of computer technology has created conditions for the analysis, utilization and management of huge, dynamic, and unstructured data.

As far as the business field is concerned, through the analysis and processing of big data, business opportunities and customer needs can be identified, sorted out, and considered. Customer value positioning can also be more accurately positioned, and new methods of creating value can be explored. In particular, some Internet companies that only operate online are in a vast virtual world. The traces and characteristics of customers cannot be observed and recognized through direct contact. They can only be captured with the help of data and information such as "goose passing by leaves a sound" and "traveling in the snow leaves traces".

Related to big dataThe simplest business model is for institutions that own big data (such as airports, cinemas, chain shopping malls, Internet websites, etc.) to sell big data. For most companies, the use of big data analysis can better adapt to segmented and personalized needs: on the one hand, the "long tail" of products and services can become longer (the characteristics of economies of scope are more obvious), on the other hand, customers can be understood more accurately, and interactions with specific customers can be more in-depth and lasting (such as precise communication, product recommendations). This is the main way for traditional enterprises to use big data technology to innovate business models.

In addition, using big data technology and related analysis, we will have a more accurate and in-depth understanding of complex systems in the natural, economic and social fields (such as meteorology, geology, security, transportation, disease, finance, etc.), so that analysis, prediction, prevention (for disasters) and regulation can be carried out. This will be the soil for nurturing new business models.

With the widespread application of big data technology, related software and supporting hardware companies will usher in huge development opportunities. Since big data is still new, specific business models are still to be created and researched.

4. Business models related to mobile terminals

At present, the growth of smart mobile terminals is extremely rapid, and their replacement of other terminals (such as PCs, TVs, etc.) is becoming increasingly significant. In this context, new business model innovations based on mobile Internet will continue to emerge.

First of all, the number of applications that use mobile APPs as their entrance will continue to increase (a few years ago, people would never have thought of revolutionary products like Uber; similar things will appear in the future, and people don’t know where they are now).

Secondly, the business models on the WeChat platform will be richer (e-commerce, payment, social networking, video, etc.), especially social e-commerce based on trust will make great progress.

Thirdly, various platforms on mobile terminals (such as search, browsers, portals, application software stores, etc.) will integrate, transform and evolve in the competition, thus integrating new business forms and revenue models. In addition, in the era of the Internet of Things, mobile terminals will become the control center and management platform for smart homes, smart cars, and other systems related to production and life functions. There is a lot of room for imagination in new business models related to this.

As for the specific business model form, it can only be gradually explored and tested in the process of practice - most business models are not thought up in advance, but are generated naturally and naturally based on certain customer needs (some "pain points" of customers) and certain problems in social life. The lucky ones did the right thing at the right place (with large-scale demand space and supply resources that can be integrated and utilized) and at the right time (at the turning point of a new business model from immaturity to maturity).