The revenue model for Google, Amazon.com and eBay.

There are five sources of revenue model namely sales, transaction fees, subscription fees, advertising fees, and affiliate fees as well as other revenue sources. Sales revenue model is basically the revenue earned from sales of goods and services. It is main source of revenue for Amazon.com and eBay. Amazon.com earns revenue from its online bookstore that sells books, music CD, DVD, computer software, video games, electronics, and others that let its customers to sell used items. Infact, Amazon has started selling products under its own private label “Pinzon” mainly selling downloads exclusively in MP3 format. Whereas, eBay earns revenue through online auction and shopping whereby people and businesses buy and sell goods and services worldwide. It offers millions of collectibles, appliances, computers, equipment, vehicles, and other miscellaneous items that are listed, bought, and sold daily. EBay have opened its new eBay Express site, designed to work like a standard Internet shopping site to consumers with United States.

Commission that is received from the product's sale is known as transaction fees. Ebay adopt transaction revenue model as their primary income whereby the auctioneer is given a space to auction their items or products and will be charged an insertion fees. In other words, transaction fees will be received from those who are interested to post their product using the name of eBay. If the product is successfully sold, yet another commission will be received.

A subscription fee is a monthly or yearly fixed amount paid to get some services. It is designed to obtain up-front payments from customers that access to specific content or services. This subscription model attracts customers with services that enable them to maintain continuous contact with the company.

Advertising fees is derived from companies paying a fee to advertise their products on a portal

.Google a much known search engine earns almost 99% of its revenue mainly from advertising fees whereby the advertiser is charged once the user click on the advertisement which will link to the advertiser’s website. One of the Google’s offered advertising service is Google AdWords whereby the advertisers are allowed to present advertisements to people that are looking for information related to what the advertiser has to offer. This service is a pay per click advertising program of Google. Besides Google, Amazon.com also uses advertising fees to earn its revenue by allowing advertiser to publish their advertisement in their website.

An affiliate fee is a commission earned for referring new customers to the buyer. 1% of Google’s revenue comes from affiliate fees which provide a link on their website that highlights web address or images of an another website. Google earns a referral fee if a customer clicks on the link and purchases goods at the transaction site, registers for the site, or some other services for which a commission is paid. Besides Google, Amazon.com also uses this revenue model with other websites to generate side income. Basically, Amazon.com will receive a certain amount of fee when a visitor of advertiser site purchases an item through a link on their website. Similarly, Ebay also generate its income through affiliate revenue model mainly from three sources of business which are auctions, payments (PayPal) and communications (Skype).
In conclusion, the revenue model adopted by Google, Amazon.com and eBay varies according to the nature of the business.


Sources:
http://www.organicspam.com/google_revenue_model.asp
http://www.ebstrategy.com/mobile/articles/port_rev_mod.htm
http://en.wikipedia.org/wiki/Ebay
http://en.wikipedia.org/wiki/Amazon.com

E-commerce success and its causes

Have you ever heard of VerticalResponse..?VerticalResponses, is headquartered in San Francisco, California. It is a leading provider of self-service solutions for email marketing,direct mail services and surveys,empowering businesses of all sizes to create, manage,analyze and send their own direct marketing campaigns in minutes.All these require no technical expertise.VerticalResponse's flagship product, which allows customers to deliver sophisticated yet easily deployed email campaigns.With VerticalResponse companies of any size can quickly and affordably communicate with their valued customers and then track the results in real-time via verticalresponses gadget..They offer a Pay-As-You-Go pricing model so you are not locked into any contracts, monthly minimums or set-up costs. Furthermore they also provide free test driveThus, it is the most intuitive and affordable Web-based direct marketing solution available.They has won the gold prize winner for The Absolute Best in Small Business Award specialised in online marketing this year(2008). It has won by a large margin with more than 66 percent of the vote.

In conclusion,VerticalResponse is success due to following reasons:

• Feature Set
  Vertical response can ensures your emails are properly delivered whereby you can run a SPAM check and send a test email to yourself before you send it out to your customers. This program will also automatically add an unsubscribe link to the bottom of the email.
  
  
  Ease of Use
  Vertical Response has a user-friendly main control center where you can see all the options that are available to create your email campaign. There is a tab to manage your emails, reports, postcards and mailing lists. In addition, this program has a tour that will show you exactly how to use the program before you even start
  
  Email Campaign Creation
  Through Vertical Response you can create a plain text email message, use a pre-existing template or a freeform where you can upload your HTML page.
  
  When you start creating your email campaign, the service directs
  
  you to a page where the creation process is broken up into different steps. These steps make it easier to create your message and navigate the entire process.
  
  
  Campaign Reporting
  The reporting section is located on the homepage dashboard. The page includes all the campaigns you have sent. It will show you summary of how many emails were sent, opened, bounced, unsubscribed and display the number of times each link was clicked.
  There is also a report based on the email domain. This shows how many of the emails have been sent, opened, clicked, bounced and unsubscribed by a specific domain name like Yahoo.com, MSN.com and others.
  

Help and Support
Vertical Response includes a searchable knowledgebase that frequently answered people questions. They also include email, phone and live chat support. The community and blog were interesting and good for some minor tips and tricks.

To know more on Verticalresponse and the advantages of verticalresponse you can click on the following links-

• http://www.franchiseadvantage.com/info/verticalresponse.ihtml
• http://www.verticalresponse.com/landing/email/wybg2/?FranchiseAdvantage_VR

Credit

• http://email-marketing-service-review.toptenreviews.com/vertical-response-review.html
• http://findarticles.com/p/articles/mi_pwwi/is_200804/ai_n25347185
• http://www.ducttapemarketing.com/blog/2007/11/10/vertical-response-adds-multi-channel-tool/

Webvan.com-the Number 1 Dot-Com Flop

Webvan...Who??




History
Webvan.com was founded by Louis Borders which originally set out to create a full service online retailer that offered the customers a convenient and affordable way to shop for groceries and other items through the net. Webvan launched it’s operations in the San Francisco Bay Area in 1999. Webvan wanted to create a sophisticated and highly automated information systems centered around warehouses, and therefore started to built vast infrastructure to effectively store and deliver merchandise to customers. Customers could order online and Webvan would deliver the groceries within a 30 minute window. In just 18 months, Webvan succeeded in raising $375 million in Initial Public Offering, expanded its business rapidly to eight cities in the United States, and build a gigantic infrastructure(high-tech warehouses). At a point, Webvan worthed a staggering amount of $1.2 billion. However, Webvan was unable to sustain its business, and declared bankruptcy in 2001, causing thousands to lose their jobs.

So what went wrong with Webvan?

• Financial problems- Webvan's high-tech order-picking centers were so expensive that the company was heavily financial burdened from the day the first center was built. The centers might have performed efficiently at scale, but the company did not survive long enough to prove it.
  

• Poor understanding of consumer needs and behaviour- Although selling groceries online was an innovative move and considered as something novel at that time, Webvan failed to consider that their customers were mainly traditional consumers, and were mostly not technologically oriented and well knowledgeable with the internet. As a result, they faced financial losses due to high administrative costs, lacked strong customer base, and failed to implement proper costs controls.

• Aggressive expansion strategy- Webvan emphasized on “GBF” of “Grow Big Fast” and built large infrastructure consisting of large warehouses, and incurred high costs in purchasing costly technology equipment.
  

• Groceries are perishables-Customers must be at home to receive a grocery delivery so that they may store the perishables. Webvan scheduled deliveries in 30-minute timeslots, and was usually quite good and making them. However, deliveries would sometimes be late, and customers would soon grow annoyed at waiting, and many might simply purchase their groceries from their local supermarket. Few such dissatisfied customers would be likely to try Webvan again.

The combination of these factors was devastating for Webvan. Their highly ambitious infrastructure rollout depended on massive customer growth, while the nature of their market meant that any failures would be very damaging to customer growth. Unfortunately, some failures were inevitable.

What we caan learn from the case of Webvan is that even though we have a great idea, we should plan our expansion carefully and not grow too fast too soon. But online grocer Webvan was the poster child for doing just that, making the celebrated company our number one dot-com flop.

Credit:

• www.cnet.com/4520-11136_1-6278387-1.html
• http://www.wired.com/techbiz/media/news/2001/07/45c%29
• http://en.wikipedia.org/wiki/Webvan

The history & revolution of E-commerce

I know it's kinda boring..but we must at least know who are our ancestors (in regards of E-commerce) right?HEHE.

The history of e-commerce comes in few phases, it was all started with the development of the Electronic Data Interchange (EDI). The standards of EDI is widely applied in the 1960’s to exchange business information and to do electronic transactions This includes in handling all aspects of business transactions such as ordering, acknowledgements, pricing, status, scheduling, shipping, receiving, invoices, payments, and financial reporting. Although there are few EDI format being practices in the early years, due to some limitations companies are still unable to interact with other companies.

However, in 1984 the Accredited Standards Committee (ASC) X12 develops standards for cross-industry electronic exchange of business information. These standards became stable and reliable in transferring large amounts of transactions .Today, ASC X12's members include companies shaping the new global economy and pioneering the next generation of cross-industry, interoperable e-commerce standards.

The next major phase occurred in 1992 when the Mosaic web-browser was made available. It was the first ‘point and click’ browser and quickly being adapted into a downloadable browser, Netscape, which allowed easier access to electronic commerce.This has allowed Pizza Hut in attempting to have its pizza ordering made online(incredible huh..) follows by the first online bank,flowers delivery and magazine subscriptions to be done by only one click(convenience makes it all).


Whilst in 1995, it was a hype when two biggest competitors in e-commerce are launched, Amazon.com and Ebay.com .Both companies provide global online shopping and online auctions.

In the of 1998, Digital Subscriber Line has provided a fast, always-on Internet service to subscribers across California. This prompts people to spend more time, and money through Internet.E-commerce becomes common to everyone and "boom" retail spending over the Internet reaches US 20 mil by the year of 1999.

Today the largest electronic commerce is Business-to-Business (B2B). Businesses involved in B2B sell their goods to other businesses. In 2001, this form of e-commerce had around US700 bil in transactions. Other varieties growing today include Consumer-to-Consumer (C2C) where consumers sell to each other, for example through auction sites. Peer-to-Peer (P2P) is another form of e-commerce that allows users to share resources and files directly,for examples Napster(music files sharing) in the early years til Bitcomet(multi format files sharing).

While in Malaysia(Malaysia BOLEH..LOL) ,E- commerce has gain much attention from governments, businesses and regional bodies.

Malaysia are seen to have a bright future in years to come. However, it can only remain so if there is consumer trust and confidence in it. Therefore, there is a need for online traders to be accountable and responsible to the consumer. Governments and businesses need to work together on an international platform to ensure specific standards are set, which will assist the electronic traders to meet their responsibilities more systematically. Both the business and government have a role to play in international consumer protection in the online marketplace, which can be global and borderless.

The government needs to provide a baseline for international consumer protection to ensure effectiveness of industry self-regulation and thus strengthen consumer confidence. Industry’s expertise and knowledge of commerce, and its ability to take that information and translate it into procedures for operating in the digital world at the same pace as the underlying technology evolves will allow it to implement the necessary codes of conduct (Kiranjit, 2004).

credit :

• http://www.wikipedia.com/
  http://www.ecommerce-land.com/history_ecommerce.html
• http://www.4th-media.net/overview/history.php