Identify and compare the revenue model for Google, Amazon.com and eBay

Revenue model of:

• Advertising revenue model

ØGoogle AdWords

A pay per click advertising program designed to allow the advertisers to place their advertisements to people who looking for information about the advertiser offer. When a user searches Google's search engine, ads for relevant words are shown as "sponsored link" on the right side of the screen, and sometimes above the main search results.

ØGoogle AdSense

Advertisers can enroll in this program to enable text, image and, video advertisements on Google websites. Revenue is generated on a per-click or per-thousand-ads-displayed basis. Advertisers are required to pay Google a fee each time a user clicks their ads displayed on Google’s web sites.

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

• Transaction fee Revenues model

Like others auction companies, eBay does not actually sell goods that it owns itself. It just provides a space for those people who want to sell or buy goods through online auction. When the buyers agree for the price of the goods seller offer, and buyer pay the money to the seller, the transaction is completed. EBay will get a small percentage commission as transaction fees.

related link: http://investor.ebay.com/tutorial.cfm

Amazon generates revenue primarily by selling books, videos, electronics, and kitchen equipment through internet.

• Sales revenue model and transaction fee revenue model.
  They allow sellers to offer their goods alongside Amazon’s offerings. Buyers can buy new or used items sold directly by a third party through Amazon.com. Amazon charges a commission rate based on the sale price, a transaction fee, and a variable closing fee.

• Affiliate revenue model.

AStore is an Amazon.com affiliate product which website owners can use to create an online store on their site. The store does not allow website owners to sell their own products directly. Website owners pick products from Amazon’s store and earn referral fees on the products purchased by their readers. The fee structure is currently the same as for the other affiliate links and ranges from 4% to 10% of the product price.

related link: http://www.ebstrategy.com/mobile/articles/port_rev_mod.htm

An example of an E-Commerce success and its causes

eBay is the world’s largest online trading community which is offering eBay users an opportunity to come together in one Internet site and be able to buy and trade a wide range of items. The headquarters of eBay is located in San Jose, Califonia with probably 500 employees now.

There are various causes that helped to make eBay as successful E-Commerce. This will be an advantage where it really allows people to often times connect with some very fond and special early childhood memories. For example, collecting baseball cards to toy soldiers to Barbie dolls to doll houses.

Besides, eBay is very very fortunate that it been able to build membership through the word-of-mouth of the users subsequently attracted a lot of new members due to the media attention that has come to the site in the past four years.

eBay provides a phenomenal impact where eBay has changed the culture of trading from traditional businesses to commerce via Internet.

eBay manages to build around a community where people are exchanging information and exchanging goods, services and merchandise. eBay has made everything a possibility.

Where is the traffic coming from? It comes from virtually everywhere. Furthermore, there are members from 19 different countries who are actively trading on eBay. eBay allows all people to do their own businesses here.

To understand what particular rules and regulations from market specialists and government specialists of the particular country in order to proceed further development and expand the business there.

eBay also allows for people to trade and buy in the appropriate language of the country and deal in the appropriate currency of the country.

With the causes above, eBay gains advantages to become an example E-Commerce success.

Read more about How to Run Your Business via eBay.

E-commerce can reduce cycle time, improve employees' empowerment and facilitate customer support

E-Commerce is the exchange of business information using electronics formats, including Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). It is a technology designed to enable individual and companies to sell or purchase the products or services through a faster, more efficient and reliable communications between computers.

Most e-commerce studies cite speed and convenience as the reason for the e-commerce upsurge. E-commerce obliterates the barriers that have long propped up traditional retailing. It has brought various benefits and we will discuss some of them below.

E-commerce can help to reduce the cycle time by creating a fast and direct system without wasting any valuable time. Cycle time is the total time from the beginning to the end of a business process. An example would be the total time spent by receiving a customer order, preparing invoices or receipts, preparing and delivering products or services. E-commerce potentially increases the speed of operation by many ways such as reducing the phone calling and snail mailing that used to be ways in traditional business. It is costly to keep a physical store open 24 hours a day. Hence, e-commerce is a cost saving way with web sites that are always open. Comparison-shopping is also a breeze because all shops are just a click away. Through e-commerce, customers are provided with convenience, low cost, high speed, desired customization, personalization and communities that will certainly reduce cycle time. Besides that, e-commerce also enhances the interaction and relationship between the suppliers and customers.

Employees are very important human resource in all organization because they are able to contribute many creative ideas. Empowerment is the process of enabling or authorizing an individual to think, behaves, take action, and control work and decision making in autonomous ways. It is the state of feeling self-empowered to take control of one’s own destiny. Through e-commerce, employees are given the authority to make decision for customers. They have more flexibility to access information for example internet, intranet, ED and other access to global regulations and latest information. Through e-commerce, employees are able to be alert of the complaints and to handle the complaints instantaneously and efficiently. In the other way, employees can work wherever and whenever they like because everything is done through online. This will increase their flexibility and productivity. Employee empowerment can increase employees’ motivation, job satisfaction and loyalty to the organization.

Customer is the main profit sources for all organizations. Therefore, every organization should design some strategies to retain their customers by satisfying their needs. E-commerce has been used by many organizations to facilitate customer support because it can provide unlimited shopping hours for customers to place their order as it is run on a 24 hours basis. Besides, it also provides a range of technological solutions and communication opportunities to fulfill different customers’ requirements. In most e-commerce web sites, customers can always get “Frequent Asked Questions” which contains the frequently asked questions together with the answers. Apart from this, customers are able to locate the company’s information in the web site. For example, they can write any complaint or feedback to the company through e-mails. By enabling customers to find detailed information online, customer service can be greatly improved.

In conclusion, e-commerce plays more and more important role in nowadays world as it brought us a variety of benefits. Therefore, we must make use of it wisely around the globe.

The history and evolution of E-commerce

Internet plays an important role in the evolution of e-commerce, in 1960s, e-commerce appeared through internet; in 1990s, e-commerce took off with the arrival of the World Wide Web and browsers. So, the evolution of e-commerce attributed to a combination regulatory reform and technological innovation.

E-Commerce was developed with innovations like:

• Electronic funds transfer (EFT) - funds can be routed electronically from one organization to another.
• Electronic data interchange (EDI) - used to electronically transfer routine documents that expanded electronic transfers from financial transactions to other types of transaction processing.
• Interorganizational system (IOS) - a system which allows the flow of information to be automated between organizations in order to reach a desired supply-chain management system, which enables the development of competitive organizations.

There have been several key steps in the history of e-commerce.

• EDI --a set of standards developed to exchange business information and do electronic transactions. At the beginning, there are few formats of EDI, companies cannot interact with each others. In 1984 the ASC X 12 standards apply became stable and reliable in transferring large amounts of transactions.

• The development of Digital subscriber line (DSL) -- DSL allowed quicker access and a persistent connection to the Internet.

• The development of Red Hat Linux— it gave users another choice in a platform other then Windows that was reliable and open-source. Microsoft faced with this competition needed to invest more in many things including electronic commerce.

• In early of 2000, merger between AOL and Time Warner. This merging brings together a major online company with a traditional company.

• In February 2000 hackers attacked some major players of e-commerce, including Yahoo, eBay and Amazon. After this incident, the security of electronic commerce has improved.
  

We will see a larger presence by experienced traditional companies, such as Wal-Mart. It shows that companies who take this mixed strategy of having stores online and offline will be successful. It can be seen that there will be a large growth in Business-to-Consumer (B2C). However, even though B2C electronic commerce may be the most recognizable there are different varieties.

Today the largest electronic commerce is Business-to-Business (B2B). Other varieties growing today include Consumer-to-Consumer (C2C) and Peer-to-Peer (P2P)

related link: http://newmedia.medill.northwestern.edu/courses/nmpspring01/brown/Revstream/history.htm

An example of an E-commerce failure and its causes.

Nowadays, there are many successful e-commerce businesses in the world such as Google, Amazon.com and E-bay. But, there are also have a lot e-commerce failure such as Webvan, Pets.com, eToys.com and Flooz.com. Flooz.com is one of the top ten dot com flops, which is based in New York City. Flooz.com went online in February 1999, started by Robert Levitan and hired Whoopi Goldberg as a spokesperson.



Flooz.com was an online currency that would serve as an alternative to credit cards. After buying a certain amount of “flooz” money, user could then use it at a number of retail partners. By the period of incorporation of Flooz.com, it managed to raise a staggering amount of $35 million from investors. Flooz.com went bankrupt in 26th August 2001 and the unused “flooz” money becomes worthless and un-refundable.

Flooz.com became failure because of credit card fraud. Flooz.com had unknowingly sold $300,000 of its “flooz” currency over the last three months to a group of credit card thieves in Russia and the Philippines and used to purchase goods at online stores that accept the “flooz” money as payment.

Consumers are losing their money when the “flooz” money becomes worthless during dot.com recession is one of the reasons of the failure of Flooz.com. When Flooz.com informed them that their Web site operations had been suspended in early of August, the merchants stopped accepting the currency.

Although Flooz account number is similar to a credit card number and can be used to pay for purchases of goods. But “flooz” money only can be used at selected stores and this will limit the use of “flooz” money.

The merchants that subscribe to Flooz.com are mostly high-end stores with very little offer to the thrifty shopper. Besides that their merchants listed cost much more than many of the online sites offering the same products.

Some causes of Flooz.com failure is lacking in their customer service department. There is a severe lack of communication on the part of the staff as well as between the Flooz Company and their online partners.

Another factor that contributed to the failure of Flooz.com is that the company was facing financial problem. The company began struggling in the earliest of 2001 after its biggest clients, which had formerly bought “flooz” money to use as awards in employee incentive are cuts in spending.

You can know more about the failure of Flooz by click on the links below:

1. http://keithelder.net/blog/archive/2001/10/18/flooz-com-files-bankruptcy.aspx

2. http://www.mail-archive.com/e-gold-list@talk.e-gold.com/msg07242.html