Revenue Model of Google, Amazon.com and eBay

Hi, everyone. Today, I’m going to talk about the various revenue growth models for the 3 most famous online sites which are Google, Amazon.com and eBay.

Revenue model is a description of how an organization will earn income, produce financial gain, and produce a better return on invested capital. The major revenue models are:
a) Sales revenue model – a company generates the revenue by selling goods, information or services.
b) Subscription fees revenue model – a company charges a subscription fee by monthly or yearly for the users who access to the content and services offered.
c) Transaction fees revenue model – a company receives commissions which paid on volume of transactions. The higher of the volumes, the higher of the transaction fees. E.g. eBay.
d) Advertising revenue model – a company provides forums for advertisements and receives the payments from advertisers. E.g. Yahoo and Google.
e) Affiliate fees revenue model – a company receives commissions by referring customers to other websites.

Revenue model of Google

First of all, I would like to discuss the revenue model of Google. A major percentage of Google’s yearly income is generated by the advertising revenue model which includes Google AdWords, Google AdSense and Froogle.
Google AdWords is a pay per click advertising program of Google designed to allow the advertisers to present advertisements to people who are looking for information related to what the advertisers have to offer. Google generates most of the revenue from Google AdWords since it enables advertisers easily to sign up and manage an account online.
Google AdSense is an ad serving program run by Google where website owners can enable text, image and video advertisements on their sites in this program. This program includes AdSense for search and AdSense for content. Revenue is generated on a per-click or per-thousand advertisement displayed basis and the advertisements are administered by Google.

Froogle is a price engine website launched by Google Incorporated which is different from other price engines since it neither charges any fees for listings, nor accepts payment for products to show up first.
Besides, Google is currently testing a new advertising program that pays site owners based on a cost-per-click model which is called Cost-Per-Action (CPA). It differs from AdSense whereas a site owner gets paid whenever a visitor clicks on an advertisement and performs a specific action.

Revenue model of Amazon.comAmazon.com was one of the major companies to sell goods by Internet which started business as online bookstore but nowadays they have become multi sellers. Amazon generates revenue primarily by selling books, videos, computer software, toys, industrial tools and etc.
Amazon Marketplace is a fixed price online market place that allows sellers to offer their goods alongside Amazon’s offerings. Buyers can purchase new and used items which sold directly by a third party via Amazon.com by using Amazon Marketplace. Amazon charges a commission rate based on the sale price, a transaction fee and a variable closing fee which is a very profitable sales strategy.
Furthermore, Amazon.com was one of the first online businesses to set up an affiliate marketing program. AStore is an Amazon.com affiliate product which website browsers can use to create an online store on their sites. Website owners are not allowed to sell their own products directly; they have to pick products from the store and earn referral fees on the products purchased by their readers. The fee structure is range from 4% to 10% of the product price.

Revenue model of eBay
EBay is an online auction and shopping website in which people buy and sell goods and services worldwide. Buyers are allowed to browsing and bidding on items which free of charge, but the sellers will be charged. The charges are based on promotional fees, insertion fees and final value fees which are the main revenue of eBay.
Insertion fee is a nonrefundable fee which will be charged when an item listed on eBay. Where promotional fee will be charged for additional listing options that help attract attention for an item, such as bold listings or highlighted. Final value fee is a commission that charged to the seller at the end of the auction.

For further information, please refer to:

http://www.organicspam.com/google_revenue_model.asp

http://www.amazon.com/

http://www.ebay.com/

An Example of E-Commerce Failure ans its Causes

An Example of E-Commerce Failure and its Causes

To many people, the term “Electronic Commerce” means shopping on the part of the Internet or computer network. For example, I have experienced online shopping and bought some shirts from www.yaca-collection.com. In this situation, E-commerce has occurred in my daily life. Although there are many E-commerce succeed stories around the world, but it cannot deny that there are still some failure E-commerce stories. The example I want to use here is Toy “R” us, Inc.

Toy “R” us, Inc is the world's leading dedicated toy and baby products retailer with more than 1,500 freestanding destination toy and baby specialty stores worldwide. Decades ago, Toys R US' huge stores redefined how toys were sold, it was the first of a new breed of retailers later called "category killers", but today retailing mass merchants and discount giants Walmart and Target have eventually pushed the company to the edge of a competitive cliff.

In order to provide the customers the products and services whenever and wherever they need, Toys “R” us announced its plans to create an e-commerce subsidiary- ToysRus.com. In 1999, ToysRus.com has established as a premier online toy, video game and baby store outlet. Tragedy happened at the end of 1999 when ToysRus.com did not prepare for the booming of the on-line Christmas shopping. In fact, ToysRus.com let their customer down very hard. It has failed to handle the orders flushed into its website, the company totally lost track of thousands of orders or failed to deliver them on time. The Federal Trade Commission fined Toys “R” us $350,000. Although the company had pumped millions of dollars into setting up its own online operation and distribution network for order fulfillment it had to announce 75% slump in profits in 2000.

The causes of its failure……

From my point of view, the main problem for Toy “R” us failed was due to lack of knowledge about the e-commerce system. They failed to attempt some common factors that will affect their company during the holidays. For example, using man power for shipping product really take time especially during the holiday season and it tends to slow the process down simply by the sheer volume of orders receives in that short period of time. This caused the dissatisfaction of customer towards the e-commerce services and the company and finally the sales dropped.

Other than this, customers unable to choose products more effectively that sold online than in the real world is also one of the causes that it failed. Customers have to “guess” at what the toys had looked like when they shopped online. The people still prefer to pick out their own product that looks for. This is due to they have a perception that product in hand is more reality than product in picture.

Besides, the slow in delivery of stock to customer by the company also caused the failure of the e-commerce. As we should know that, getting customer to the site is one thing, while delivering is another thing. Bricks and mortar retailers have no such problems. Failure to deliver the ordered stock on time to customers caused eToys (Toyrus Company) to give away hundreds of $US100 vouchers to displeased consumers.

Improvements taken by Toy “R” us, Inv

The company had to change its ailing e-commerce strategy and operation. In 2000, Toys R us announced its Internet joint venture with Amazon.com. Toys R us would take charge of buying and managing inventory while Amazon will oversee all web operations of order fulfillment, and customer service. Toys R us is now facing tense competition from giant Wal-Mart and KB Toys. Toys R us is trying hard to keep pioneer to drive further growth. They are planning in 2003 to follow in the footsteps of some other retailers by allowing customers to purchase merchandise online and pick it up in local stores and also allowing customers to return merchandise purchased online to stores in their area.


Related Links
www.internetlibrary.com/cases/lib_case424.cfm

http://business.timesonline.co.uk/tol/business/article451511.ece

http://abcnews.go.com/Technology/wireStory?id=7242585

http://arstechnica.com/old/content/2004/06/3944.ars

An Example of E-Commerce Success ans its Causes

eBay success and its cause...

Most of the people will have a mindset saying that “E-commerce, online shopping? Can it be successful in the real world?” Actually in the competitive world nowadays some potential and successful e-commerce websites still exist. One of it is eBay which is at http://www.ebay.com/.

Mr. Omidyar started eBay, which the first name eBay used was called Echo Bay Technology in 1995. When the company tried to register the domain name echobay.com, they found that it was already in use. They shortened the name to eBay.com and the website was born.eBay began by Pierre Omidyar is 1995, (pure play) virtual organization, which they conduct their business activities solely online with no physical shop.

This company began as something like an online garage sale in 1995 and has enjoyed steady growth over the years. Items on eBay are listed by categories and if you have an eBay account you can bid on the item on eBay. eBay include items like antiques, art, book, cars, coin or paper money, CDs, clothing, real estate, and many things else.

In the competitive world today, to build a successful e-commerce is not an easy thing. eBay provide us as a guide to become successful. The early emphasis on eBay was the customers. The very nature of online auctions required that strangers trust each other. First and foremost, eBay have done is to offer a quality product and be willing to stand behind it. Not only that eBay runs on feedback and it is far better to satisfy a customer than for negative feedback to be left. Positive feedback is one of the main things that attributed to the success on eBay. Next eBay focuses on providing excellent customer service. Give the customer MORE than expected. It is always more difficult to sell to a customer the first time. Therefore, once someone buys from eBay, their goal is KEEPING them as long term customer.

In order for the business to grow further, eBay started buying over some websites, which would help to boost up eBay’s. The Website Half.com was bought over by eBay in 2000 and fully integrated into eBay's web community in 2001. Half.com allows users to buy and sell items at lower rates much like eBay transactions but without the auction feature. The following year, eBay acquired Paypal Inc. which help eBay auctions to make payment. Paypal allows a person to send or receive money via an email address. Money in a Paypal account can be spent on the Internet, sent by check to the account owner, or deposited into a bank account. Paypal also offers credit cards, debit cards, and a bill paying function.

eBay is only for auction-style listings, which also auction for odd items that help eBay to earn a higher profit. The first item sold on eBay was a broken laser pointer, for $14.83. Omidyar was experimenting with how equal access to information and opportunities affects the efficiency of marketplaces. As a test he posted a listing for a broken laser pointer, which to his astonishment sold. Omidyar contacted the winning bidder to ensure he realized the item was broken. The buyer answered, "I'm a collector of broken laser pointers." At that moment, Omidyar knew he was on to something very big.

From day one, Omidyar built eBay around what remain the company's core values; a belief that people are basically good, everyone has something to contribute, an open environment brings out the best in people. The success of eBay underscores the truth of these values, and is at the heart of eBay's continuing success.

The History and Evolution of E-Commerce

Electronic commerce, commonly known as e-commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Nowadays, e-commerce is getting popular and it has become an important part of our life. The amount of trade conducted electronically has grown extraordinarily since the spread of the Internet.

The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). However, in the 1980s, the growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking were also forms of electronic commerce. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.

The development of EDI is believed to be a crucial phase so far as History of E-Commerce is concerned. EDI was invented in the 1960's and provided with a “set of standards” that enabled the big business firms to indulge in a sort of beneficial electronic transaction. It also facilitated the interchange of vital business oriented information.

The next important phase in the History of E-Commerce was the development of Mosaic web-browser in 1992. This web browser was soon given the form of a browser which could be downloaded and was named as Netscape. This further broadened the scope and possibility of electronic commercial transaction.

The development and adaptation of DSL and Red Hat Linux respectively, again benefited the process of online business transaction. The year, 2000, saw a major merger between AOL and Time Warner which marked another important step towards the development of E-Commerce. This merger proved to be very economically beneficial.

Electronic commerce is unthinkable without Amazon and Ebay which were among the first Internet companies to allow electronic transactions. Thanks to their founders we now have a handsome ecommerce sector and enjoy the buying and selling advantages of the Internet.

On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books, grocery to expensive items like real estate. On the other hand, on the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. The worldwide popularity of Internet has resulted in the stable development and overwhelming acceptance of E-Commerce.

E-Commerce provides with a rich online transaction experience. History of ecommerce is a history of a new, virtual world which is evolving according to the customer advantage. It is a world which we are all building together brick by brick, laying a secure foundation for the future generations.

Related Links:
http://resources.alibaba.com/topic/43711/Evolution_of_E_Commerce.htm
http://www.ecommerce-land.com/history_ecommerce.html