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

In the 20th Century, most of the activities we are doing daily involved Information Technology, or so called ‘IT’. We always heard of the word “E- Commerce”. But, how well we all know about E-commerce?

According to Wikipedia, Commerce is a division of transaction which involves the activities of trade of goods and services between two parties, such as from producer to final consumer. It functions as the central mechanism which drives capitalism and certain other economic system but compare command economy, for example). Commercialization consists of the process of transforming something into a product, service or activity which one may then use in commerce.

Electronic Commerce (E-Commerce) is a technology used by some modern business through Internet or other computer networks to do business transaction between parties such as buying and selling of products, services or exchanging information. E-commerce can be classified into several categories. This includes:

Business-to-Business (B2B) as commerce transaction between businesses such as wholesaler and retailer or manufacturer and wholesaler.

Business-to-Customer (B2C) involved electronic transaction between a business and consumer with product, or services. Consumer can order the product they want through the company’s website, such as Dell, www.dell.com to order or customize the product they want.

Customer-to-Customer (C2C) where consumers sell to each other through auction sites, such as www.lelong.com , one of the auction sites in Malaysia.

Customer-to-Business (C2B) can be defined as consumers or individuals offer products and services to companies and the companies pay them. It is totally contrast to the traditional business model, B2C where companies offer products and services to customers.

E-commerce application was developed in the early 1970s, which was using the technology of Electronic Funds Transfer (EFT) and Electronic Data Interchange (EDI) to allow businesses in doing financial transaction from one party to another party such as sending electronic purchase orders or invoices. However, the use of these applications was limited to financial institutes, large corporations, and some daring businesses during that time.

The purpose of development of Electronic data interchange (EDI) is to improve the limitation of Electronic Fund Transfer (EFT). EFT expanded electronic transfers from financial transactions to other types of transaction processing. After the development, there is an increase in the number of company participated in this computer based application such as manufacturers, retailers and others. Such systems were called Interorganizational System (IOS). IOS allows the flow of information to be automated between organizations to reach a desired supply-chain management system, which enables the development of competitive organizations.

In 1980s, the growth and acceptance of credit cards, Automated Teller Machines (ATM) and telephone banking were also forms of electronic commerce. Electronic commerce would additionally include Enterprise Resource Planning systems (ERP), data mining and data warehousing in the 1990s. During 1994 e-commerce started to become popular. It tooks four years for it to develop the security protocols and DSL which allowed rapid access and connection to the internet. In the 2000s, e-commerce changed the process of purchasing of available goods and services over the internet using secure connections and electronic payment services. In year 2003, Amazon.com, www.amazon.com , the successful and famous E-commerce company had its first year with a full year of profit.

E-commerce business has become more and more popular nowadays. The success of Amazon.com has shown and makes people more confident to use this technology to expand their business. Since the technology is getting advance as time passed, I believes that someday in the future, every business will be using E-commerce to do their business.

By Sze Ying

"Webvan" is one of the example of e-commerce failure that we choose.

What causes Webvan failure???

When Wedvan was popular, money was spent on infrastructure far exceeded sales growth. For example, Webvan placed a $1 billion (USD) to build a high tech grocery distribution system , purchased 30 Sun Microsystems Enterprise 4500 serves, several Cisco system Model 7513 and 7507 routers and others. Eventually, the company was run out of money.

Other reason that causes the company bankrupt is Webvan does not have basic knowledge of the sector. It is because Webvan made an arrogant assumption that they were a technology business and not a supermarket. Webvan run by the people who did not have working knowledge of the grocery business.

Besides that, Webvan’s failure was a result of poor customer relationship management. Webvan unable earn the trust of its customer. It is due to lack of an initiative by Webvan’s management to learn about customer’s expectation. Furthermore, Webvan was deterioration quality in a product in order to cost cutting. Hence, Webvan losing customer. They did not know about maintain the human touch is more important compare to the competitive in the low margin grocery business.

Webvan re-banded two years into its existence is one of the mistakes that cause Webvan’s failure. Re-banding was done in an effort to change their image from a grocery service to a general delivery service competing companies, for instance FedEx and UPS. The customers identified grocery bag was a logo of Webvan They changed their logo and website appearance in year 2000.Changing their logo and website ,at the same time struggling to raise capital for its daily operations was not a good strategic move.

At last, Webvan was shut down on July 13th 2001.This company has lost over $600 million providing that building a new, national chain of full service or home delivery supermarkets will probably not work.

By Hooi Shang