Revenue Model for Google, Amazon and Ebay

Google’s yearly income is generated from advertisement fees. Google’s design, Google AdWards is a pay per click advertising program to allow advertiser to present advertisement to people online. Information related to the advertiser has being offered instantaneously to people who are looking for it through Google AdWards. An advertiser has to pay every time his ad receives a click. Google generate most of the revenue from Google AdWards. Besides, Google AdSense is an ad serving program that allow Website owner to enroll in this program to enable text, image and video advertisement in this site. Advertisers are required to pay Google a fee each time user click on one of their ads displayed on Google site. This is known as affiliate fees. Furthermore, Google also offer a research service called Google Answers. When customers ask questions, offer a price for the answer and researcher will answer them. The researcher is not Google’s employee but Google will keep 25% of the payment and the balance will subject to the researchers. Of all the revenue for Google, AdWords generates the most, which is more than 90% of the revenue. Currently, Google is testing a new revenue model that pay site owner based on a Cost-Per-Click model. It is a new way offered to advertiser to earn revenue from their Websites that are compensated based on Cost-Per-Action (CPA) basis.

E-bay earned transaction fees from each successful transaction made by the bidders or seller in an auction. It has built a streamlined and globalized person-to-person trading community on the Internet through World Wide Web. This facilitates easy exploration for buyers and allows the seller to immediately list those items for sale. Sellers and buyers are brought together in a manner where sellers are allowed to list items for sale and buyers can bid on the items interested. In the meanwhile, all eBay users can browse through the listed items in a fully automated way. Sellers are charged with two kinds of charges. First charge is charged on an item that are being listed on eBay which is called as nonrefundable Insertion fee which ranges between 30 cents and $3.30, depending on the seller’s opening bid on the item. . A fee is charged for additional listing options to promote the item, such as highlighted or bold listing. Secondly, a fee is charged at the end of the seller’s auction which ranges between 1.25% and 5% of the final sale price.

Amazon.com is an American electronic commerce company in Seattle, Washington. It is one of the first major companies involved in selling of goods by Internet. It was started as an online bookstore but later was diversified to product lines of DVDs, VCDs, computer software, video games, furniture, food and etc. In 2001, Amazon.com has launched the Honor System that allowed customers to make donations or buy digital content. With that, Amazon has collected 2.9% of the payment plus a flat free of $0.30 USD. For example, after 2004 earthquake and tsunami in the Indonesia Ocean, Amazon has set up an online donation channel to the American Red Cross, waiving its processing fee. Besides, Amazon has also launched an online storage service called Amazon Simple Storage Service. The service charges monthly fees for data stored and data transferred. Using Amazon technology, Webstore, allows businesses to create e-commerce websites. Merchants can customize their websites using their own photos and even branding. Sellers have to pay a commission of 7% to Amazon.com, which includes credit card processing fees and fraud protection fee; subscription fee of $59.95 per month for an unlimited numbers of Webstores and listings. Moreover, Amazon has launched Associates affiliate programme which run like this way: associate drive internet traffic to Amazon.com through links that allows user to track sales and other activity. Then, associates can earn up to 10% in referral fees on all qualifying revenue made via their links.

An Example of an E-Commerce Failure and its Causes

http://www.furnituresite.com/

Furnituresite.com was launched in 1998 by Steve Rothschild. A year after the site was launched; the company replaced Rothschild with Andrew Brooks as CEO and soon after changed its name to Furniture.com. The company had lost $46.5 million in the year it filled the IPO. Although Furniture.com had many customers, it still struggled to make a decent profit. It became apparent that the company was in trouble when it lay off 30 of its 230 employees in April 2000.

There were some reasons that caused furniture.com to failure in the market. Firstly, furniture needs high shipping cost because furniture is usually large and heavy. Since Furniture.com was an online store, shipping was very important because it was part of every sale. Most of the items Furniture.com sold were too heavy “to send by the U.S. postal service, Federal Express, or United Postal Service,” so it were forced to use more expensive specialty delivery services. There were some stories of shipping costing more than the purchase price, which is very bad for business. Furniture.com was not able to find a remedy to the high shipping costs and suffered greatly because of it.

Secondly, Furniture.com also struggled with its information systems. It struggled to “track, ship, and charge” properly on the goods it sold. Many shipments were shipped without charging the proper price for them, to the wrong place, or not sent at all. It was most common for shipments to be delivered late; this was a big problem for customers with deadlines, such as holidays and other special occasions. In the last few months of the company’s existence, the Better Business Bureau received over 70 complaints about Furniture.com, mostly over shipping errors.

Finally, the product, furniture, was not the ideal type of product for the Internet. Many consumers just weren’t ready to buy furniture over the Web. Furniture is a fairly expensive purchase, and most customers want to make sure they make the right decision. Consumers, put a big emphasis on the comfort of furniture. A major downside to shopping on Furniture.com was that the consumer lacked the ability to touch and feel cushions and fabrics first hand. People were not comfortable choosing furniture solely based on pictures, and those who did were forced to gamble on what the actual product would be like.

An Example of an E-Commerce Success and its Causes

http://www.dell.com/

Dell.com was founded in 1984 by Michael Dell, who is the longest-tenured executive to lead a company in the computer systems industry (Dell.com). One thing that separates Dell.com from other computer businesses is that it only offers its products online. The utilization of e-commerce is what has made Dell.com so successful. The company is based on a simple concept: selling computer systems directly to customers. This concept allows the people at Dell.com to understand the needs of its customers and build a computer that is most effective for its customers in the most efficient way possible. Its customers do not have to choose the one particular computer setup that is sold in a store; instead they are able to buy a computer that is best suited for them.

Dell.com sells more computer systems throughout the world than any other computer company. Over the last four quarters, Dell.com has totaled “$57.9 billion in revenues". Dell.com also introduces the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels, turning over inventory in just five days on average”. For over twenty years, Dell.com has experienced great success inB2C e-commerce.

Dell.com has been a dominate force in computers for over twenty years. It is one of the oldest surviving B2C e-commerce companies. The company’s success is due in large part to the way that it reinvented the computer making process. Its automated e-commerce network has streamlined the production of computers. Dell.com’s system revolutionized computer production in much the same way that Ford’s system revolutionized automobile production. The company’s radio powered ID chips have made the company successful by simplifying everyday processes.

Discuss how E-Commerce can reduce cycle time, improve employees’ empowerment and facilitate customer support.

Why E-Commerce?

Reduce Cycle TimeE-Commerce shortens the time taken for a business to complete. E-Commerce can reduce the cycle time by eliminating steps in the business process. Middlemen or the intermediaries are eliminated and producers are able to approach customers directly. Online stores operates 24 hours By reducing the cycle time, the company can decrease the cost incurred, increase revenue and gain competitive advantages over the others.

Improve Employees’ EmpowermentE-Commerce allows the decentralization of decision making and authority via collaborative commerce. E-Commerce offer desktop enhancement for data access and retrieval, superior reference tools and better decision support for the management. With central database, employees from different geographical location are able to access to the link required to carry out the business and perform business transaction instantly. It granted power to the employees in dealing with the process of capturing, researching and leveraging business information. Empowered employees will definitely make customer satisfied and eventually increase operation efficiency.

Facilitate Customer Support E-Commerce facilitates customer support by providing a wide range of technological solutions and communication opportunity. Maintaining electronic bulletin will enable customers to report fault immediately. E-Commerce creates an easier way for customer to purchases goods and services in a more interactive way. On line site are more attractive compared to the traditional store. Customers have direct access to product information, new product updates, and promotions by visiting online stores.