E-COMMERCE WONDERLAND

A revenue model is to generate revenue and the major methods that are using are sales, transaction fees, advertising fees, subscription fees and affiliate fees. Now, let’s compare the three internationally well known websites’ revenue model and let’s take a look on how they apply their revenue model. According to the most recent results, Google generated more than 99% of revenue from advertising, it is clearly shows that advertising fees is the Google’s revenue model, whereas Amazon.com generated revenue mostly by selling variety of products and services online to its customers which means Amazon.com is using sales revenue model. As for eBay, it generated most of its revenue from its online auction services hence it is applying sales revenue model.

For Google, it offers targeted advertising solutions and global Internet search solutions, such as Google AdWords, Google AdSense and so on. Among all the revenue sources for Google, Adwords generates more than 90% of its revenue, it generated about $21 billion in year 2008. AdWords offers pay-per-click (PPC) advertising,where an advertiser has to pay when his or her advertisement receives a click and advertisers is advertised in the right side of the researchers’ search results. AdWords plays a vital role in Google’s growth. If advertisers continue to choose AdWords and the number of people clicking on the ads increases, Google will continue to generate revenue and profits.

Whereas Amazon.com at the beginning is acted as an online bookstore, but later it started to sell different types of products such as VCDs, DVDs, CD for music and so on. Due to this diversification and international presence of products, it increased Amazon.com’s revenue from year 2002 to 2006,which is from $3.9 billion to $10.7 billion. Moreover, Amazon.com is not only applied sales revenue model, but also transaction revenue model because they will receive the commissions when the third parties manage to sell their product through Amazon.com.

Both Amazon.com and eBay are applying sales revenue model, however the main difference between them is Amazon.com major on online bookstore and eBay major on online auction. As for eBay, it is a worldwide online auction and online shopping website that allows users or businesses to bid, sell and buy different products and services through eBay. Besides that, eBay allows users to sell and bid their items for the best price. The items that sell and bid in the website are computers, furniture, vehicle, miscellaneous items or anything that you think you want to sell also can sell on the website. On the other hand, it also established localized websites in thirty over countries to its original U.S website.

By Simone