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

Do you know what is Revenue Model is??
Revenue Model is a description of how the organization or e-commerce companies will earn revenue, generate profits, and produce a superior return on invested capital. The FIVE (5) major revenue models are sales, transaction fees, subscription fees, advertising fees, affiliate fees, and other revenue sources.

So do you know what the revenue model is for Google, amazon.com and eBay?

Google's which is more recognized for its world's largest search engine and the mission to organize the world's information and make it universally accessible and useful. In a fraction of seconds it provides easy-to-use free service that usually returns relevant results. However, although Google is providing free services, they generate profit through advertising. Their profit from advertisement is through two type of revenue model which are “pay-per-click advertisement” and “per-thousand-ads-displayed”.

Pay-per-click advertisement is a model that charges the advertiser in Google whenever their ads are being click. Moreover the fees is set by the amount that the advertiser willing to pay. Google will accumulate the amount of click on the advertisement and only will charge the advertiser when the amount reaches a certain sum. The “per-thousand-ads-displayed" for instance will help Google to charge the advertiser for every thousand advertisement that appear on the website.

To fully put the two revenue models into action, Google with the assistance of two programmes, the AdWords and AdSense. This two programmes helps Google generates revenue by providing advertisers with the opportunity to deliver measurable, cost-effective online advertising that is relevant to the information displayed on any given page. This makes the advertising useful to you as well as to the advertiser placing it. Thousands of advertisers use Google AdWords program to promote their products and services on the web with targeted advertising and almost 90% of the Google revenue is generated from AdWords programme. In addition, thousands of web site managers take advantage of our Google AdSense program to deliver ads relevant to the content on their sites, improving their ability to generate revenue and enhancing the experience for their users.

For more information, please refers to:
Google about me
Google's Revenue Model

Amazon.com, a Fortune 500 company based in Seattle, Washington, is the global leader in e-commerce with offers everything from books and electronics to tennis rackets and diamond jewelry at even lower prices. Moreover, Amazon.com are more conveniently and offering customers with more types of products, several community features like Listmania and Wish Lists that help customers to discover new products and make informed buying decisions. Amazon generates its revenue through:


Transaction fees - $ 0.99 (per-transaction)
Commission - the rate of commission is vary on different types of merchandise
Variable closing fee - the price is vary from different type of merchandise



Amazon will helps the collect money from the buyer and commission will be taken from the money collected and other feels will be charged on the seller account. Thus, amazon is actually a third party between seller and buyer that help them meet and close transaction and amazon collect commission from and some fees.

For more information, please refers to:
About Amazon
Fees and Pricing

Ebay is the world's largest online marketplace where practically anyone can sell practically anything at any time. It's an idea that BusinessWeek once called "nothing less than a virtual, self-regulating global economy." Ebay generate their revenue through fees charged on the seller which include insertion fees and final value fees.

Ebay will charge the seller insertion fees which is also called listing fees is fees when seller list their item for sales and this fee is charged at the time of listing. In addition, this fees is not refundable even the item until the expiry of listing date is still unable to be sold. On the other hand, final value fees are also transaction fees, when the item listed successfully bid, Ebay will charged on a certain rate against the final value of the bid to the seller’s account as a commission fees. The rate for the final value fees vary according to the type of product that are list for bid.

For more information, please refers to:
About eBay
Ebay.com listing fees
Insertion Fees
Final Value Fees

The successful e-commerce company such as Google, amazon.com and Ebay are prospering in this technology and online world. Each of this company is having their own revenue model that suits the environment and business nature in order to generate profit. However, each of this revenue models might not or could not work on another company. For example, Google which is earns their through advertising are unlikely to be usable for amazon.com and Ebay which their nature of business are skewed towards transaction. For Ebay, their revenue model is different from amazon.com in terms of fees charges that they incurred on the seller. As Ebay is an online auction company, they charge the seller for listing their merchandise. On the other hand, amazon.com which is dealing with business transactions, would need to charge their seller for successful business transaction.

The history and evolution of Ecommerce

History of ecommerce dates back to the invention of the very old notion of “sell and buy”, electricity, cables, computers, modems, and the Internet. At first, the term ecommerce meant the process of execution of commercial transactions electronically with the help of the leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) for users to exchange business information and do electronic transactions. The ability to use these technologies appeared in the late 1970s and allowed business companies and organizations to send commercial documentation electronically. After that, the credit cards, automated teller machines (ATM), online airline reservation, and telephone banking in the 1980s were also known as types of electronic commerce. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. Online shopping was invented in the UK in 1979 by Michael Aldrich and during the 1980s it was used extensively particularly by auto manufacturers such as Ford, Peugeot-Talbot, General Motors and Nissan.

Although the Internet began to advance in popularity among the general public in 1994, it took approximately four years to develop the security protocols (for example, HTTP) and DSL which allowed rapid access and a persistent connection to the Internet. In 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web. People began to define the term ecommerce as the process of purchasing of available goods and services over the Internet using secure connections and electronic payment services. Amazon and Ebay were among the first Internet companies to allow electronic transactions. Currently there are 5 largest and most famous worldwide Internet retailers: Amazon, Dell, Staples, Office Depot and Hewlett Packard.

The growth of Internet has a special significance in the growth of e-commerce. It has the potential to involve general people into the process, thereby increasing its reach far beyond large companies.

An example of an E-Commerce success and its causes

Online shopping brings a lot of convenience to the consumers. In Malaysia, more and more people start to purchase something online such as clothes, electronic products or even pets. eBay offers boundless opportunity to allow people pursue their interests and their passions in the areas of their hobbies and their collectibles.

eBay has built an online person-to-person trading community on the Internet, using the World Wide Web. Buyers and sellers are brought together in a manner where sellers are permitted to list items for sale, buyers to bid on items of interest and all eBay users to browse through listed items in a fully automated way. The items are arranged by topics, where each type of auction has its own category. It's convenient and easy to be found by people. This facilitates easy exploration for buyers and enables the sellers to immediately list an item for sale within minutes of registering.

eBay has done a regular basis to promote eBay, they have had isolated campaigns through radio and print, and they've also done some tradeoffs and some banner ads on other sites. But the really unique thing about eBay is that when compare theirs to traditional businesses or other e-commerce sites, they have done very little external promotion to build membership.

Another cause has helped to make eBay as successful as it has been, is that people really enjoy the experience of the shopping bazaar. They enjoy looking around for merchandise. The other component is they really enjoy the competition of the bidding process. Everybody likes to get a bargain, and shape or form, likes to haggle a little bit over the price. eBay's auction format allows users to do that.


Obviously, people are becoming more and more comfortable with shopping online and they're getting more and more accustomed to doing that. That's another factor why eBay is grateful.


References:
http://www.cs.brandeis.edu/~magnus/ief248a/eBay/history.html

An example of an E-commerce failure and its causes

As we know, there are not all E-Commerce business successful like Amazon.com, AOL, eBay and Dell just to name a few. However there are also those that did not quite get it right and sunk badly. One of an example of an E-Commerce failure is webvan.com.

About Webvan


Webvan was an online “credit and delivery’ grocery business that was founded by Louis Borders, the same man that established Borders book store .It delivered product to customers’ homes within a 30-minute window of their choosing.Webvan began its operation on 2 June, 1999, went bankrupt and closed down by 2001. In June 2008, CNET hailed Webvan as one of the greatest dotcom disasters in history.

Factors that cause Webvan failure

Types of product

Most of the product sell in Webvan are F&B product like food.Shopper may also price sensitive on the product where Webvan had to include extra labor cost and shipping cost on the product. So discount of the grocery product, the expire dates and the price of the product are the factor that effect consumer decision whether buy online or buy through retail shop.

Logistic

It is not easy to convenience all customer at the same time. Scheduling the time to delivery is not easy job for a logistic department of Webvan. If the company want to schedule all the delivery process well where the company able to send to product in time and able to save company cost it take days to complete. So it is a challenge for logistic department to do well. If the company unable to send the product to their customer on time, this will effect the consumer loyalty to the company.

Delivery on the time that the customer needed it

The advantage of Webvan is that they will deliver to your home after you place the order. But the problem is that Webvan unable to completely send to you when you need it now and the delivery cost might be more expensive then the product. Product like fresh vegetable and fruit may no fulfill the consumer need where the customers unable get the goods on time where they need it.

This is on of our group example of a failure E-Commerce business. If you felt you have any opinion or suggestion. Don’t hesitate to post comment.

References:
http://en.wikipedia.org/wiki/Webvan
http://www.webvan.com/