Online Portals

Thomas R. Eisenmann; Sanjay  Pothen

Background Note | HBS Case Collection | December 2000

Online Portals

by Thomas R. Eisenmann and Sanjay Pothen

Abstract

Describes the online portal business model. Analyzes the model, focusing on the tactics used to acquire new users, turn new users into repeat visitors, and monetize user traffic. Explains portals' revenue and cost drivers and their implications for pursuing aggressive growth strategies. Finally, explores the challenges facing companies that aspire to develop portals for new online access technologies, such as wireless data and interactive television. To accompany teaching cases on online portals in courses on Internet strategies and e-commerce. Provides background on the online portal business model, and explains how it differs from other Internet business models. Examines the strategic choices that portals typically face. Also describes how portals can add value as consumers adopt emerging technologies, such as wireless data and interactive television.

Keywords: Business Model; Web Services Industry;

Format: Print

29 pages

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Citation:

Eisenmann, Thomas R., and Sanjay Pothen. "Online Portals." Harvard Business School Background Note 801-305, December 2000.

Explains how to identify and capitalize upon marketplace design opportunities. Defines markets and marketplaces and describes the basic functions of each. Discusses attributes (e.g., heterogeneity of participants' preferences and asymmetry in available information) that determine whether and how marketplaces create value. Explains common causes of market failure; presents a framework for designing marketplaces in response. Discusses tactics for building trust and liquidity when launching new marketplaces, as well as challenges encountered as marketplaces mature (e.g., congestion and disintermediation).

In 2017, management at Shift, an online marketplace that uses a “high touch,” concierge approach to buy and sell used cars, was formulating plans for the San Francisco-based startup’s next phase of expansion. One option was to preserve Shift’s current business model and grow through geographic expansion. Another option was to decentralize more tasks to sellers and/or buyers, for example, management of inspections and repairs. While decentralizing tasks would reduce Shift’s labor per transaction and thereby improve the venture’s unit economics and its scalability, Shift might risk undermining users’ trust by handing off responsibility for critical tasks.

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Online Portals

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