Google appeared to be one of the greatest search engines in World Wide Web. Google "gives away" a great search engine, among other features. That's great. But how do they pay for it? What is Google's business model? In a nutshell, through advertising revenue, this is both on Google’s site and other sites.
Google is a major player in the online advertising industry. Every time you search Google, you'll see ads displayed along with your results. The sponsored text-link ads above and to the right of the results generate a great deal of money for Google. These ads are known as Google Adwords. Besides, there’s another one called Google Adsense, it enables website publishers of all sizes to display relevant ads on their online content and earn money.
Besides making profit out of the ads, Google also has its own store selling its products via online. (http://www.google-store.com/index.php?currency=USD&osCsid=95d994cca193ccb76321c79eb28b1b5c ) Both the advertisement fees and sales amongst the revenue models are adopted by Google.
The ads highlighted in red shown in the above picture is how Google actually make profit out of it.
Amazon.com, Inc. is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is the America’s largest online retailer. Obviously, it Amazon.com generates revenue by using sales of revenue models. It started as an online bookstore but soon diversified to product lines of VHS, DVD, music CDs and MP3s, computer software, video games, electronics, apparel, furniture, food, toys, digital downloads etc.
eBay's Headquarter in San Jose, California.
eBay Inc. is an American Internet company that manages eBay.com, and it uses “Transaction fees” as its revenue model to generate profit for its company. eBay.com is an online auction hosting and shopping website in which people and businesses buy and sell a broad variety goods and services worldwide. A majority of the sales take place through a set-time auction format, but subsequent methods include a substantial segment of listings in the "Buy It Now" category.
How does eBay make money? When you sell an item on the site, eBay takes a cut of the profits you make. For example, let's say I started an auction selling one of my CD's, and I start the bidding at $10. A few days later my CD sells for $15. In this situation, here are the fees I would now owe to eBay:
- Insertion fee (Fee for starting an auction): $0.55
- Final value fee (A percentage of what the auction ended at): $0.79
A total of $1.34 eBay made its profit from me of selling this CD; with thousand of auctions taking place each day, eBay is making real great deals.
In addition to its original U.S. website, eBay has established localized websites in thirty other countries including Malaysia. Its slogan has well defined what eBay is all about - “From collectibles to cars, buy and sell all kinds of items on eBay”.
In a nutshell, I personally think that no revenue model is the best as each of them has its pros and cons respectively. One might be better than another in different aspects but what is more important here is that these models brought us new perspectives of doing business and making profits in today’s e-commerce as they were proven to be successful by these companies.
Relevant sites:
http://www.google.com/
http://www.amazon.com/
http://www.ebay.com/
The majority of people in the world today have used eBay to either buy or sell goods. The fact of the matter is that since eBay became known world wide it has drawn in millions of satisfied buyers and sellers. Ebay provides various means and opportunities to those who are searching for profit making ways on the internet. It is the largest marketplace in the world where millions of transactions are completed daily and best place to do all the work of selling. You can start your own business on eBay without having to go through the trouble and expense of setting up an e-commerce site of your own. (http://en.wikipedia.org/wiki/EBay)
There are variety of payment methods that you can use for selling products on eBay like debit or credit cards, electronic checks, money orders and personal checks. But the most popular payment method utilized by eBay is the PayPal service. You can open a free PayPal account and pay for goods with a credit card or debit your bank account through PayPal. Once you have received the payment Ebay will automatically deliver your e-Book to the buyer. In addition to its original U.S. website, eBay has established localized websites in thirty other countries such as Malaysia, Japan, Poland, Taiwan, South Africa, Thailand, France, New Zealand and so on. It operates in three segments which are eBay Marketplace, Payments, and Communications.
Success factor of eBay:
1)Best match defined- Best Match is the default sort order on the search results page that shows potential buyers the most relevant and popular items for their search criteria. Best Match uses different criteria to evaluate and sort Auction-style listings and Fixed Price listings. Best Match evaluates Sellers and items such as recent sales for fixed price, time ending soonest for auction style, sellers’ detailed seller ratings, sellers buyer satisfaction ratings, item title relevance, item plus shipping cost.
2)Corporate level strategy-EBay is a very diverse company. The service they provide is appealing to both individual customers as well as large corporate customers. Hobbyist and collectors, casual sellers, professional buyers, and corporate sellers all belong to the eBay customer base. The products that are offered on the eBay website range from shoes to automobiles. This makes their product line very diverse as well. The creation of eBay motors, eBay Real Estate, and the Live Auctions specialty site, as well as the acquisition of Half.com have all contributed to the growth and diversification of this company.
3)PayPal-PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. PayPal serves as an electronic alternative to traditional paper methods such as checks and money orders. EBay purchases made by credit card through PayPal may incur a "foreign transaction fee" if the seller is located in another country, as credit card issuers are automatically informed of the seller's country of origin. (http://www.answers.com/topic/paypal)
4)Global reach-The global reach of eBay is not achieved by any other online auction site. For large corporations international selling and buying is done everyday. Even for an individual buyer or seller, having the option of searching throughout 150 countries with a span of 94.9 million users is very appealing.
5)Variety of product offered- When customers visit eBay they can search for virtually any product. eBay boasts a category variety not matched by any competitor with over 27,000.
(http://www.ebay.com/)
In conclusion, eBay has always been doing well in focusing its company's goals and has been fast in grabbing onto opportunities. From my point of view, i think eBay is one of very successful e-commerce companies in the e-marketplace and its potential for growth is greater today than it has ever been and i believe eBay will continue to grow ahead of e-commerce in the future.
Webvan was an online grocery business that was started in 1999 by Louis Borders, founding partner of Borders Books, and went bankrupt in 2001. Webvan is a business-to-consumer based e-commerce company. At the time, Webvan offered customers to order groceries and fresh food, such as meat, produce and milk, over the Internet and deliver to them within the same day.
Webvan was one of the biggest e-commerce business at that time. Whereares, why did this large e-commerce business go bankrupt. Now, let us look into the major causes that brought it to bankruptcy:
1) An inappropriate business model
Webvan has incorrectly believed that it was in the technology business, instead of the grocery business. Instead of increasing of its merchandises, it just continuously improve its online business technology. This action made it fail to recognize it was selling the grocery, not the technology.
2) The lack of retail food experience from the management team
Webvan was managed by consultants who were appointed as officers and directors, even though they had no retail food experience. Since grocery business run on very low margins, even the most effectively managed can lose money. Webvan founder Louis Borders was an expert in selling books, however, books do not expire.
3) The lack of understanding of the sociology and psychology of retailing food
Webvan did not put much efford in understanding and studying the sociology and psychology of its customers. Because at that time, most of the customers still could not accept to buy the food and commodities without seeing and touching them.
4) Erroneous target marketing
The most obvious customers for Webvan’s services were not soccer moms or the upscale suburban families the company targeted but people who have problems getting to a grocery store. Obvious potential customers were senior citizens, mothers with very young children or disabled people. However, most of their target customers did not even know to online at that time.
5) The high cost of running an online grocery business
The cost for building Webvan’s high-tech Atlanta warehouse alone was a staggering $40 million—much more than warehouses for traditional retail grocery chains. Webvan used the latest technology to automate its warehouses, bought hundreds of refrigerated delivery trucks, and hired and insured drivers allover the country. Unfortunately, the profit that it earned could not cover the cost that it contributed. one of the Webvan's packaging and distributing centers is shown below:
So, these are 5 main causes that bring Webvan to its failure. It is very useful for us to set up our own e-commerce business by understanding its failure. Because it can help us to avoid the mistakes that might be arised.
After Webvan went bankrupt, it was purchased by Amazon and overcome all the mistakes that were occured before. For your information, you can kindly visit its website: http://www.webvan.com/
- E-commerce -
E-commerce is a history of new and virtual world which has been evolving. The main purpose of e-commerce >>> customer advantage. It’s not only benefited mankind but also the future generations.
In my mind, the meaning of e-commerce is all about shopping online. This is because we can shop anytime and anywhere. Besides that, everyone also can set up their own e-commerce site.
The “evolution” of the very old notion of “sell and buy” brings today’s e-commerce. We only need electricity, cables, computers, modems and the Internet, then e-commerce is in our hands.
The “evolution” of the very old notion of “sell and buy” brings today’s e-commerce. We only need electricity, cables, computers, modems and the Internet, then e-commerce is in our hands.
The representatives of history of e-commerce are Amazon and EBay. They are the 1st companies that introduced electronic transactions. And now, there are 5 largest and most famous worldwide Internet e-commerce web: Staples, Amazon, Office Depot, Hewlett Packard and Dell.
Year 1970
With the help of the leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange business information and do electronic transactions and also allowed business companies and organizations to send commercial documentation electronically
Year 1991
E-commerce officially became possible when Internet was opened for commercial use.
Year 1994
Although the Internet began to advance in popularity among the general public, but it also took about 4 years to develop the security protocols and DSL which allowed rapid access and a persistent connection to the Internet
Amazon.com, Inc, Seattle, Washington (USA). It was founded by Jeff Bezos and the one of the 1st American e-commerce companies that sells products online. (Amazon was the 1st adaptor of e-commerce)
Dell Inc, one of the companies that contributed much to the process of e-commerce development and launched as a static page
Year 1997
Dell.com became the 1st company to record a million dollars in online sales using unique strategy of selling goods over the World Wide Web with no retail outlets and no intermediaries. This business model is admired by a lot of customers and imitated by a great number of e-commerce businesses.
Year 2000
Many business companies in US and Western Europe used World Wide Web to represent their services and this also leads to the changes to the word of e-commerce.
The dot-com bubble happened (http://en.wikipedia.org/wiki/Dot-com_bubble)
Although the dot-com collapse led to unfortunate results and many e-commerce companies disappeared, the “brick and mortar” retailers recognized the advantages of e-commerce and began to apply e-commerce as well.
The success case like Albertsons, the supermarket chains, used e-commerce to enable their customer to buy groceries online. (http://locator.albertsons.com/StoreLocatorAction.do?action=showZipEntry)
Amazon lost its position as a successful business model after the dot-com collapse.
Year 2001
Business-to-business (B2B) model was conducted, had around $700 billion in transaction
Year 2003
Amazon.com, Inc. made its 1st annual profit which was the first step to the further development.
Year 1991
E-commerce officially became possible when Internet was opened for commercial use.
Year 1994
Although the Internet began to advance in popularity among the general public, but it also took about 4 years to develop the security protocols and DSL which allowed rapid access and a persistent connection to the Internet
Amazon.com, Inc, Seattle, Washington (USA). It was founded by Jeff Bezos and the one of the 1st American e-commerce companies that sells products online. (Amazon was the 1st adaptor of e-commerce)
Dell Inc, one of the companies that contributed much to the process of e-commerce development and launched as a static page
Year 1997
Dell.com became the 1st company to record a million dollars in online sales using unique strategy of selling goods over the World Wide Web with no retail outlets and no intermediaries. This business model is admired by a lot of customers and imitated by a great number of e-commerce businesses.
Year 2000
Many business companies in US and Western Europe used World Wide Web to represent their services and this also leads to the changes to the word of e-commerce.
The dot-com bubble happened (http://en.wikipedia.org/wiki/Dot-com_bubble)
Although the dot-com collapse led to unfortunate results and many e-commerce companies disappeared, the “brick and mortar” retailers recognized the advantages of e-commerce and began to apply e-commerce as well.
The success case like Albertsons, the supermarket chains, used e-commerce to enable their customer to buy groceries online. (http://locator.albertsons.com/StoreLocatorAction.do?action=showZipEntry)
Amazon lost its position as a successful business model after the dot-com collapse.
Year 2001
Business-to-business (B2B) model was conducted, had around $700 billion in transaction
Year 2003
Amazon.com, Inc. made its 1st annual profit which was the first step to the further development.
Year 2007
E-commerce sales accounted for 3.4% of total sales.
Dell ranked by Fortune magazine as the 34th-largest company in the Fortune 500 list and 8th on its annual Top 20 list of the most successful and admired companies in the USA in recognition of the company’s business model, which is using an e-commerce business model.
Year 2008
Amazon.com is an example of a successful e-commerce business model that can attract about 615 million customers every year. Thus, this example leads to the booming of e-commerce websites.
E-commerce sales accounted for 3.4% of total sales.
Dell ranked by Fortune magazine as the 34th-largest company in the Fortune 500 list and 8th on its annual Top 20 list of the most successful and admired companies in the USA in recognition of the company’s business model, which is using an e-commerce business model.
Year 2008
Amazon.com is an example of a successful e-commerce business model that can attract about 615 million customers every year. Thus, this example leads to the booming of e-commerce websites.
The chart shows that the Estimated U.S Retail E-commerce Sales as a percent of total retail sales from year 1999 to year 2007
Here is a video clip about the Evolution of E-commerce from YouTube. ENJOY...
E-commerce became a very important part in the business world. As we can see from the chart, the total profit that generated from the whole world through e-commerce is increasing from year to year. Besides that, the new or young entrepreneurs can use e-commerce as one of the ways to start up a business as they wanted a pure play e-commerce website which does not need high capital requirement to set up compare to a brick and mortar business. Moreover, existing entrepreneurs can also expand their business by using e-commerce as well. Evolution of e-commerce has proven that e-commerce can be successful way to doing business. Furthermore, people who adopt e-commerce as their business strategy able manage their business in just anytime and anywhere.
Let's take Amazon as an example. Try it and you will know.
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