Identify and Compare Revenue Model for Google, Amazon.com and eBay

A revenue model reveal how an organization or the Electronic Commerce project will generate revenue. They generated revenue by sales, transaction fees, subscription fees, advertising fees, affiliate fees, and from other revenue sources.

Google has made its fortune by using advertising revenue and global internet search solutions like companies charge others for allowing them to place a banner on their sites. Its principal products and services include Google Adwords and Google Adsense. Google AdWords is a pay per click advertising program which allowed the advertisers to present advertisements to people at the instant the people are looking for information related to what the advertiser has to offer.Google AdSense is an ad serving program run by Google. Revenue is generated on a per-click or per-thousand-ads-displayed basis and the ads are administered by Google. On each time a user clicks on one of their ads displayed on the web sites, the Google advertisers are required to pay the Google fees.

Amazon.com is the first major company sells goods by internet which the Amazon is completely e-commerce company. Buyers can buy new and used items sold directly by a third party through Amazon.com using amazon marketplace. Amazon.com charges a commission rate based on the sale price, a transaction fee, and a variable closing fee. Amazon.com is using online sales as their revenue from selling merchandise or service over their web sites.

eBay is the world’s largest online auction site. With eBay, all revenue roads lead to seller fees. eBay is an online auction and shopping web site that the people and businesses buy and sell goods and services worldwide. eBay's revenue increases with seller surplus. eBay is using transaction fees which is commissions paid on volume of transactions. The higher the volume, the higher the transaction fees will be.

We can say that Google, Amazon and eBay are the most successful e-commerce companies in the world. As for comparison, the revenue models for Google mainly is advertising, transaction fees which is commissions is for eBay and gaining revenue from sales of goods or services is for Amazon.com.

How Do eBay Success?

I think all of you is quite familiar with eBay. eBay is the world's largest trading community where you can either buying or selling product online. But, how do eBay actually success in e-commerce site?

There are few components push eBay to success.

Online Auction In Ebay
eBay have an online auction function which let buyers to bid on the product. People really enjoy the experience of the shopping bazaar. They enjoy the hunt. They enjoy looking around for merchandise and they really enjoy the competition of the bidding process. The buyers can stay at home and shop whatever they want. Besides that, they can sell their unwanted product on eBay by opening an eBay shop. It is easy and convenient for buyers and sellers to having an bargain in eBay.

Search Engine In Ebay
There are millions of product for sale in eBay. So, a good search engine is one of the component that result a success for eBay. The search engine gives convenience to buyer and seller to find the specific information in eBay as soon as possible. There is a column called "categories" beside the search engine and it will find the information according to the categories that user choose. It will ease the work to find the result. The "Advanced search" tool allows you to search by price, certain sellers, item location, items in certain conditions and much more, which can be very useful. As with most eBay pages, the page is well laid out, so it is extremely easy to perform an advanced search with over one million items being sold on eBay at one time, it is very important to be able to navigate through them easily. People like convenient, so Ebay success in attracting people to keep on with the eBay website.

Wide Range of Products

eBay deals with a wide range of products, even anything from collecting baseball cards to toy soldiers to Barbie dolls to doll houses, and so forth. It allows people to often time connect with some very fond and special early childhood memories. Besides that, it allows people to shop at one time and no need waste their time in searching the shop that providing for the specific goods. With one click, they should able to find the product that according to their needs. So, they like eBay since a wide range of products are provided.

After of all, eBay is quite success in e-commerce site since it is easy and clean to use. That's why people like eBay and spend a lot time in eBay website. So, what are you waiting for? Just go and find out eBay now!

An example of an E-Commerce failure and its causes

What is eToys.com?

eToys is the popular e-commerce site that sells toys. It launched in 1997. It emphasis on toys and it aims to sell parents several of things that their children might want or need. It was selling children's books, videos, music, and software, as well as toys via internet.

eToys had a highly successful Initial Public Offering (IPO) in 1999. Shares issued at $20 rose to $76 on the first day of trading. At its peak, the company was valued at more than $8 billion. E-marketer was once quoted as saying; "Put simply, eToys is the benchmark against which all other toy sites are measured."

Ethical issue and Lawsuit against eToy.com
In late 1999, eToys attempted to buy eToy.com as it was confusingly similar to its own domain. etoy turned down the offer, so on November 29, 1998, eToys obtained a court injunction preventing etoy from operating a website at www.etoy.com. To obtain the injunction, eToys told the judge that etoy.com was confusing customers, and furthermore that it contained pornography and calls to violence.

In response to eToys' greedy and unethical conduct, a team of toy designers invented the etoy Fund online game which realistic intent was to make eToys' stock value go as far down in value as possible. The eToy Fund's fast and furious action and thrilling multi-user game play set thousands of users' hearts pounding as they helped to lower the value of eToys stock by using many methods.

The eToys' stock value falls dramatically from year 1998 to 1999. So on December 29, 1999, eToys made an announcement about that they had decided to give up this unpopular dispute and fight. However, it was not true that eToys stop the lawsuit. Furthermore, its stock value dropped to 9 cents per share in February 2001.

Terrible negligence on service
etoys.com decided to use a third party, Fingerhut, in order to fulfill lots of orders for the 1999 Christmas season. However, eToys.com failed to achieve one of its initial goals: speedy and reliable. Thousands of customers complained that their orders were either late in arriving at their destination or contained the wrong merchandise. This event had seriously destroyed the first image of eToys for new customers and impairs its goodwill.

Wrong strategy against Competitive Environment
Unfortunately, eToys went into another market battle while Toys 'R' Us and Amazon.com were forming a partnership in August 2000. Etoys.com faced a strong competitor during the 2000 holiday shopping season. Thus, eToys’ customers were reduced. Nevertheless, eToys.com adopted a strategy to offer more products that beyond their primary production line, Toys.

Failed in forecasting
In order to avoid the shipping missteps of 1999, the company spent heavily to build two large warehouses to handle inventory and delivery. However, the total $ 120 million income of sales for the 2000 season was just half of the company’s expectation. Short of money and other funding options exhausted, eToys.com filed for bankruptcy finally in March 2001.

List of top 10 failure on E-commerce: Click here.

References:
(1) http://en.wikipedia.org/wiki/Initial_Public_Offering
(2) http://www.rtmark.com/etoy.html
(3) http://www.wired.com/politics/law/news/1999/12/33330
(4) http://www.etoy.com/
(5) http://www.cnet.com/1990-11136_1-6278387-1.html

History&Evolution of E-commerce

In this week, I would like to blog about the history and the evolution of e-commerce. As we know, e-commerce describes the process of buying, selling, transferring, or exchanging products, services, and information via computer networks.

In 1960’s，a technology such as Electronic Data Interchange(EDI) and Electronic Fund Transfer(EFT) has been introduced to conduct a electronic transaction. However in 1979, the American National Standards Institute , they using ASC X12 to share the business document over electronic networks. Mosaic was the first point and click web browser which was developed in the year 1992.

In the early 1990’s, e-commerce was not even half popular as it is today and only few people understood how e-commerce went on. People started understand that opening a store meant renting a shop, buying product and business equipment, employ workers, paying the sale tax and buying a service that provide customer to pay using credit card. Since the e-commerce was being introduced, launching an online store today means pretty much save cost contrast to traditional commerce. Although the World Wide Web was introduced in 1990, it took about five years to introduce security protocols and DSL allowing continual connection to the internet



E-commerce has become fully evolved as the government has involved in the e-commerce, thus making the consumer not only comfortable, but also willing to share private information, financial, personal, and banking information over the internet. Most businesses have resulted in going online in transacting their businesses. The e-commerce strategy has really helped people to start their own business entity without any much expense.



Furthermore, Web2.0 as refer to second generation of web development and web design should be integrated into e-commerce website this is because Web2.0 sites often feature rich, user-friendly interface based on Ajax and is web-as participation-platform instead of web-as-information-source as Web1.0. It also helpful and bring convenient to the customer and businesses.



In conclusion, the territory of e-commerce did not actually spring up overnight. To success in the e-commerce, there must be some needs of the ever-changing marketplace, development of software and collaborations with others to deliver value that is evolved through trial and error but not the individual efforts nor experience.