Revenue model for Google, eBay, Amazon.com

Revenue model are the technique, method or model can be use by all e-commerce company to generate profit. However, various e-commerce companies will use different method to generate profit.

Revenue model for Google
Google's revenue for the year ended 31 March 2009 is $ 5.5 billion. Advertising fees is the main sources for Google generate profit because it was made up 97% of revenue. Google has provided a few advertising model for advertiser to choose it, for example:

Google AdWord offers pay-per-click (PPC) advertising. The advertisers are paid Google for clicks to their site when their advertisements are shown in Google searches or on sites that display Google advertisements relevant to their content. The AdWords program includes local, national, and international distribution.

Google AdSense was another advertising model. This advertising model is similar to Google Adword. However, it is advertisement serving program run by Google and website owner display advertiser’s Google AdWord advertisements on their site and share in the revenue when AdWord advertisement was click by visitors and an Adwords customer pays Google. Furthermore, website owners can enroll in the program to enable text and video advertisements on their website.

Google Answer is an Internet search and research service offered for a fee by Google. Researchers are answer customer question and Google keeps 25% of the payment, sends the rest to the Researchers. However, Google Answer will offer a price for an answer before the answer is provide by researcher.

Froogle, also known as Google product search which is a service from Google that makes it easy to find information about products for sale online. Froogle is a price engine website launched by Google Inc. Furthermore, Google also sells advertising through AdWord to be displayed in Froogle.

The following table presents Google revenue for the year ended 31 March 2009:

Revenue model            $(in thousands) Percentage 
Advertising revenue:
Google web sites              3692,8      67
Google Network web sites      1638,1      30
Total advertising revenues    5330,9      97

Licensing and other revenues   178,1       3

Revenue                       5509,0      100 

Revenue model for eBay

eBay is an online aution and shopping website in which people and businesses buy and sell a broad variety goods and services worldwide. In year 2009’s first quarter, net revenue of eBay is $2.02 billion. In addition, eBay generates revenue from a number of fees such as transaction fees, subscription fees and so on. For example:

Transaction fees
Insertion fee- amount of money eBay charges to the seller for listing an item for sale. It is vary depending on the starting price of the item and the category the seller chooses to list. Furthermore, it is nonrefundable.


Final Value Fee (FVF) - amount of money eBay charges the seller when an item sells. FVF based on the final selling price of an item at the close of the listing whereas there is no charged when an item does not sell.


Subscription fees
As an eBay Store owner, they can to list their items at a set price, so buyers can purchase items immediately without bidding. However, it was include monthly subscription fees and the amount of fees payment is base on store level (basic, premium and anchor).

Beside that, eBay now owns the PalPay payment system which has fees of its own. PayPal is how individuals and businesses send and receive money online. To sell on eBay, Personal Paypal accounts cannot receive credit card payments except sellers have Premier or Business Account upon receipt of a credit-card-funded payment because eBay is accept many form of payment such as credit card or debit card. PayPal will charge seller’s Premier and Business accounts fees to receive buyer payments. Furthermore, Paypal charged on receive payment is depend on monthly sale volume and total payment volume via PayPal increased 61 percent in year 2008 in eBay auction site.

On the other hand, eBay generate the revenue from getting the commission for every complete sale made by subsidiary company, Half .com. eBay purchased Half.com in 2000 for roughly $350 million and sellers offer items at fixed prices in Half.com. The ratios of commission depend to different selling price.

The following table presents eBay revenue for the year ended 31 March 2009:

Revenue model
                      $(In thousands)Percentage
Marketplaces                 1,033,827      51
Payments                       604,833      30
Communication                  143,238       8
Total marketing services and   238,688      11
other revenue

Total Revenue                2,020,588     100

Revenue model for Amazon.com

Amazon is a first major company selling goods through internet, also known as e-commerce. It was generate US $177 million as net profit for year 2009' s first quarter. Amazon is using various ways to generate profit. For example:

Sales
Amazon.com getting a revenue from sales of goods such as selling music CDs, videotapes and DVDs, kitchen items, lawn and garden items, toys & games, baby products, sporting goods, jewelry and so on.

Transaction fees
In year 2001, Amazon.com was launched Amazon Marketplace where is fixed-price online marketplace that allows sellers or third party to offer their goods alongside Amazon's offerings. Therefore, Amazon can receive commission via Amazon Marketplace by charges commission rate based on different category of items, per-transaction fee and variable closing fee.

However, the charged only allow after the item sold. The items from Amazon Marketplace can be more satisfy customer need than item sell directly from Amazon. For example, book has author signature that sell via Amazon Marketplace but it do not has selling via Amazon. Therefore, Amazon Marketplace is one of the sales strategies and program has been very profitable for Amazon.com.

Affiliate fees
aStore is an Amazon.com affiliate product which website owners can use to create a professional online store, in minutes and without the need for programming skills, that can be embedded within or linked to from website owner website. Website owners pick products from Amazon's store and earn referral fees on the products purchased by their readers. However, the store does not allow website owners to sell their own products directly. The affiliate fees normally in ranges from 4% to 10% of the product price.

The following table presents Amazon.com revenue for the year ended 31 March 2009:

North America        $ (in million)     Percentage

Net sale                  2,578            26
Media                     1,305            13
Electronic and other      1,172            12
general merchandise
Other                       101             1

International
Net sale                  2,311            24
Media                     1,418            15
Electronic and other        874             9
general merchandise
Other                        19          0.002

Total revenue              9778           100

The History and evolution of E-commerce

Electronic Commerce is also known as e-commerce, it consists of the buying and selling of products or services over electronic system such as the Internet and other computer networks. E-commerce was began soon after Samuel Morse sent his first telegraph message in 1844s,after that it expanded across the sea when they used for exchanged information from the New York market, linked Europe and North American in 1858s.

In 1970s, they using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) for businesses to sent commercial documents like purchase orders or invoices electronically. The growth of the environment, the e-commerce having credit cards, automated teller machines (ATM), telephone banking services and auto manufacturers. Besides that, Sabre was form the airline reservation system and Michael Aldrich form the online shopping in UK in the 1980s.

From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. In 1990s, Tim Berners-Lee writes the first web browser and WorldWideWeb (WWW). In 1994s, Netscape release the Navigator browser under the code name “Mozilla”. Therefore, the first online bank opens and Pizza Hut offers pizza ordering on its Web page. Adult materials also become commercially available such as do cars and bike. Netscape 1.0 is introduced the Secure Sockets Layer (SSL) encryption that made transaction secure. In 1995s, Jeff Bezos launches Amazon.com and the first commerce-free 24 hours, internet-only radio stations. Beside that, Dell and Cisco begin to aggressively use Internet for commercial transaction and Pierre Omidyar form the eBay as auction web. In 1998, the electronic postal stamps can be purchased ans downloaded for printing from the web.

In 1999s, Darcy DiNucci was coined “Web 2.0”, Web 2.0 refer to a second generation of the web development and design, it is characterized as facilitating communication, information sharing, interoperability, user-centered design and collaboration on the “WWW”.

In 2000, there was the bottom fell out the dot-com industry and hundreds of dot-com companies went bankrupt. In 2001, the e-commerce was growing back. In 2007, Bussiness.com acquired R.H.Donnelley , who is a telephonedirectory publisher. In last year, US e-commerce and Online Retial sales projected to reach $204 million and an increase of 17% over 2007.

Reference source:
http://www.answers.com/topic/electronic-commerce#Dictionary_ans
http://www.answers.com/topic/web-2-0#Blogs_ans
http://www.timetoast.com/timelines/5448

Failure of Boo.com and its causes

Nowadays there are a lot of people using e-commerce to do their business. This is due to its convenience for those people who are working or prefer to start their own business and does not have enough capital. E-commerce also knows as electronic commerce. There are a lot of successful in e-commerce companies such as eBay, Amazon, yahoo and Google. However, on the opposite side there are also have companies that are failure such as webvan.com, pets.com, etoys.com and etc.

Therefore, at here we will discuss about the failure of Boo.com and its causes.
Boo.com was a European company founded in 1998 and operating out of a London head office. The founded of Boo.com are three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. The main business of Boo.com was selling branded fashion over the internet and as an online fashion store. The customer range that they target was from 18 to 24 year olds.

Boo.com wills failure because they did not carefully plan their business by considers the 4 P’s (Price, Product, Place and Promotion) and the environmental factors. Boo.com was surrounding by many problem and they mismanage it. Many of the customer criticized that the website was too complicated and the design was very poor. This is due to the site was heavily relied on the JavaScript and Flash. Therefore, the home page will require several hundred kilobytes to load it but at that time many people used dial up internet and broadband technologies were still not widely been use. Therefore, the users will have to wait for long time to load the page. Otherwise, the website also not usability because the user difficult to get where they want to go. Other than that, the complicated design required the site to be displayed in a fixed size window. This will limit the space that available to display product information to the customer.

Boo.com had a policy of “limiting the amount of transaction they made to three per twenty minute” which will discourage customer to shop at Boo.com again. They had spent 125 million in just 6 month to market itself globally but had issues with different language, prices, and tax. If there are return items from customer, the company will help them to pay the postage. This had proved that, they did not manage their capital effectively. Finally, the end of boo.com came on May 18th 2000.

References:

http://www.witiger.com/ecommerce/dotcomfailures.htm

http://www.bookrags.com/wiki/Boo.com

http://www.cnet.com/1990-11136_1-6278387-1.html

http://en.wikipedia.org/wiki/Boo.com

Ebay success and its causes

On the Sept 5 1995, E-bay was founded by Pierre Omidyar. He is French –born Iranian computer programmer. E-bay as the world’s largest online trading offers a wide range of opportunity that user can come together in one internet site to trade and buy. The item such as collectibles décor, appliances computers furnishings equipment vehicles and even the service can be sold too. As long as the item is not illegal and does not breach the e-bay policy, sellers are permitted to list items for sale. For the buyers are allowed to bid which things they are interested.

In order to become e-Bay users,, they need to register first by filling their information, E-bay web site enables users browse through listed items in a fully convenient and automated way.

According to Kevin Pursglove who is spokesperson of e-Bay, the success of e-Bay is allowing people to often times connect with some very fond and special early childhood memories. Example such as collecting baseball cards to toy soldiers to Barbie dolls to doll houses and so forth.

Next, he thinks that people really enjoy the experience of the shopping bazaar by going through the process of looking around the merchandise. Besides that, he believes that people really enjoy the competition of the bidding process. With the auction format of e-Bay, user can get a bargain price and negotiate a little bit over the price. Another reason of e-Bay success is e-Bay have cooperate with America online that the company have a number of arrangements with smaller sites that go back several years as an exchange to persuade people surf e-Bay website.

References:

www.wikipedia.com