Revenue Model for Google, Amazon, and eBay

Revenue model description of how the company or an e-commerce project will earn revenue. The major revenue models are sales, transaction fees, subscription fees, advertising fees, affiliate fees, and other revenue sources.

Google, is an American public corporation, earning revenue from advertising related to its Internet search, web-based e-mail, online mapping, office productivity, social networking, and video sharing as well as selling advertising-free versions of the same technologies.

Google.com usually generate most of the revenue from Google Adwards(pay per click advertising), Google Publication Ads, AdSense (ad serving program), and per-click or per-thousand-advertisement.

Google, a new revenue model, is currently testing a new advertising program that pays site owners based on a Cost-Per-Click model. The program, called Cost-Per-Action, was revealed via an invitation e-mail from the Google AdSense team to Web site owners.

For the 2006 fiscal year, the company reported US$10.492 billion in total advertising revenues and only US$112 million in licensing and other revenues. Google AdWords allows Web advertisers to display advertisements in Google's search results and the Google Content Network, through either a cost-per-click or cost-per-view scheme. Google AdSense website owners can also display adverts on their own site, and earn money every time ads are clicked.

Amazon.com was one of the major online shop to sell goods through internet. Amazon primary product lines is come from VHS, DVD, music CDs, MP3 format, computer software, video games, electronics, apparel, furniture, food, toys, etc. it would helping amazon.com to earn money everydays. Besides selling product, they also provide web services such as Amazon Simple Storage Services, Amazon Elastic Compute Cloud, and etc.

Ebay most common revenues come from online auction and shopping website in which people and businesses buy and sell goods and services worldwide.
Another interesting aspect of eBay's revenue model is that it is somewhat evenly spread out among a number of categories, with one glaring standout. Among the categories delivering more than $1 billion in gross market value are:

• Clothing and accessories -- $3.3 billion
• Consumer electronics -- $3.2 billion
• Computers -- $2.9 billion
• Home and garden -- $2.5 billion
• Books/Movies/Music -- $2.4 billion
• Sports -- $2.1 billion
• Collectibles -- $2.0 million
• Toys -- $1.6 billion
• Jewelry and watches -- $1.5 billion
• Business and industrial -- $1.5 billion
• Cameras and photos -- $1.3 billion

eBay offers several types of auctions like auction-style listings, fixed price format, and dutch auctions.
eBay generates revenue from a number of fees. The eBay fee system is quite complex, and different across the country. The eBay’s fees may include insertion fees, promotional fees and final value fees. Insertion fees are charged for any item that is listed on eBay, the fees is nonrefundable, promotional fees are charged for extra listed options that attract attention for an item, while for final value fees are a commission at the end of the auction that is charged to seller.

These three companies, Google, Amazon, and eBay, are few of the most successful e-commerce nowadays that adopting different kinds of revenue model. As we can see that google has charge advertising fee towards their advertiser, eBay has apply transaction fee for those products listed on their website as well as comission on the any complete auction transaction. As for amazon’s revenue has come from sales of product lines throughout their website and charged an affiliate fee for referring customers.

The success of eBay

Most of the people will have a mindset saying that “E-commerce, online shopping? Can it be successful in the real world?” Actually in the competitive world nowadays some potential and successful e-commerce websites still exist. One of it is eBay which is at http://www.ebay.com/.

Mr. Omidyar started eBay, which the first name eBay used was called Echo Bay Technology in 1995. When the company tried to register the domain name echobay.com, they found that it was already in use. They shortened the name to eBay.com and the website was born.

eBay began by Pierre Omidyar is 1995, (pure play) virtual organization, which they conduct their business activities solely online with no physical shop. This company began as something like an online garage sale in 1995 and has enjoyed steady growth over the years. Items on eBay are listed by categories and if you have an eBay account you can bid on the item on eBay. eBay include items like antiques, art, book, cars, coin or paper money, CDs, clothing, real estate, and many things else.








In the competitive world today, to build a successful e-commerce is not an easy thing. eBay provide us as a guide to become successful. The early emphasis on eBay was the customers. The very nature of online auctions required that strangers trust each other. First and foremost, eBay have done is to offer a quality product and be willing to stand behind it. Not only that eBay runs on feedback and it is far better to satisfy a customer than for negative feedback to be left. Positive feedback is one of the main things that attributed to the success on eBay. Next eBay focuses on providing excellent customer service. Give the customer MORE than expected. It is always more difficult to sell to a customer the first time. Therefore, once someone buys from eBay, their goal is KEEPING them as long term customer.

In order for the business to grow further, eBay started buying over some websites, which would help to boost up eBay’s. The Website Half.com was bought over by eBay in 2000 and fully integrated into eBay's web community in 2001. Half.com allows users to buy and sell items at lower rates much like eBay transactions but without the auction feature. The following year, eBay acquired Paypal Inc. which help eBay auctions to make payment. Paypal allows a person to send or receive money via an email address. Money in a Paypal account can be spent on the Internet, sent by check to the account owner, or deposited into a bank account. Paypal also offers credit cards, debit cards, and a bill paying function.


eBay is only for auction-style listings, which also auction for odd items that help eBay to earn a higher profit. The first item sold on eBay was a broken laser pointer, for $14.83. Omidyar was experimenting with how equal access to information and opportunities affects the efficiency of marketplaces. As a test he posted a listing for a broken laser pointer, which to his astonishment sold. Omidyar contacted the winning bidder to ensure he realized the item was broken. The buyer answered, "I'm a collector of broken laser pointers." At that moment, Omidyar knew he was on to something very big.

From day one, Omidyar built eBay around what remain the company's core values; a belief that people are basically good, everyone has something to contribute, an open environment brings out the best in people. The success of eBay underscores the truth of these values, and is at the heart of eBay's continuing success.

Advantages of using E-commerce

I am sure everyone know that what is e-commerce. Actually how it helps to reduce cycle time, improve employees' empowerment and facilitate customer support??

OCBC bank is the first which join bolero.net globally recognized Electronic World Trade System(EWTS). Actually EWTS is global and legal infrastruture helps business to business e-commerce function. The system enables faster turnaround time for trade processing. It saves a lot of time instead of using traditonal manual work. The system help to reduce paper work such as payments, letters of credit issuance and transaction confirmations. EWTS is available on http://www.bolero.net/ where OCBC bank used the system.It is an open system where customers easily exchange trade document via internet. Customers have a secure communication network like security code. EWTS secure delivery and receipt of an information to prevent unauthorised access. An e-solution such as product and services solve the customers need. Whenever customer encounter problems they would access via internet. E-solution provides web-based cash management to corporate clients. Whereby customers deal with cash transactions through e-solution.

The system provides such a conveniences to corporate customers. It is a connected open system where customers can develop their own interface. There are few security features that protect customers for their safety. For instance, off-line check. Security department make off-line check before customers can directly used the system. In fact, Private key is needed when customers access to the web-services and mailboxes. They are ensured each encrypt message digitallly signed by users after the messages being sent. Each original message must be validated and verified to prevent third party make any changes.

The manager of an organization gives the power to an employees in order to make decision. The important company decisions are based on well planned empowerment program. An individual felt happy as they are like a representative of a business. They became motivated by doing their task effectively and efficiently. An employees think of self-worth and dedication as the top management gives them control over company decisions. Top management would be provided suggestion box for all employees. The objective of the suggestion box is to ensure employee opinions are addressed and discussed. These may showed their potential of cooperation and work efficiently. The management is to get a competitive labour work force and increase company's standard.

Nowadays, everybody own a mobile handphone in globalization world. Who do not have handphone?? OCBC bank is developed a high technology system Microsoft®.NET. The IT development helps to improve employees empowerment.

The Microsoft IT development motivated people to get ready for a business. The image on the left hand side show how people look forward to do a business. Since it is a mobile internet banking system that enables employees work more effectively.

Most of the employees just touch on keypad then can deal with customers. This IT system can easily helps to get in connect between employees and customers. In fact, employees need not met face to face with their customers so it is easy and convenience. It save a lots of time of customers to queue up and wait for banking transactions. Those businessman who have a lots of work may not have time walk in to the bank. As a result, it is better way use of the mobile banking system. Any latest informations would be upgraded by employees into mobile phone. The high technology support employees to achieve goals of an organizations. It is very efficient and employees get to know vision of the company. They are well prepared and became innovative in a competitive world. On the other hands, Microsoft technology is a tool that enables an employees achieves their vision.

The history and evolution of E-commerce

As what i still remember when i was in primary school that personnel computer already existed at that time but not many people own a pc unlike now where every house have atleast one computer at home. Thus, only now i know what is e-commerce about after studying about it in college and university. Belows are the information about e-commerce that i found through the internet and search engine.

(History)

E-commerce began before personal computers were prevalent and has grown into a multi-billion dollar industry. History of ecommerce is unthinkable without Amazon and Ebay which were among the first Internet companies to allow electronic transactions and are two of the biggest names in e-commerce are launched: Amazon.com and eBay.com in 1995.

History of ecommerce dates back to the invention of the very old notion of “sell and buy”, electricity, cables, computers, modems, and the Internet. Ecommerce became possible in 1991 when the Internet was opened to commercial use. Since that date, thousands of businesses have taken up residence at web sites.

There have been several key steps in the history of e-commerce. At first, on the year 1984 the term ecommerce meant the process of execution of commercial transactions electronically 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. This guaranteed that companies would be able to complete transactions with one another reliably. The ability to use these technologies appeared in the late 1970s and allowed business companies and organizations to send commercial documentation electronically.

In 1992 cmpuserve offers online retail products to its customers. This gives people the first chance to buy things off their computer. Netscape arrived in 1994 and providing users a simple browser to surf the Internet and a safe online transaction technology called Secure Sockets Layer. Although the Internet began to advance in popularity among the general public in 1994, it took approximately four years to develop the security protocols (for example, HTTP) and DSL which allowed rapid access and a persistent connection to the Internet.

For the year 1998 with the captured attention of the use of Digital Subscriber Line (DSL) which exist in year 1989. It was designed primarily for video and provides the high downstream rates needed for streaming video on personal computer users who need high-speed access to the Internet and corporate networks from residences and remote offices.This prompts people to spend more time, and money, online.

(Evolution)
Now it is usual to seen people spend alot of time on online whether for fund, work, or study. This increase the capability of the internet. The access for online shopping and e-banking become very commons nowadays. Business also can comply throught internet and has been concern for the retailers. This is because it save more cost such as tax and attract more customer without any additional cost and activities such as promotion.

Todays there are 5 largest and most famous worldwide Internet retailers. There are Amazon, Dell, Staples, Office Depot and Hewlett Packard. According to statistics, the most popular categories of products sold in the World Wide Web are music, books, computers, office supplies and other consumer electronics.

In 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web. At this time the meaning of the word ecommerce was changed. People began to define the term ecommerce as the process of purchasing of available goods and services over the Internet using secure connections and electronic payment services.

Although the dot-com collapse in 2000 led to unfortunate results and many of ecommerce companies disappeared, the “brick and mortar” retailers recognized the advantages of electronic commerce and began to add such capabilities to their web sites. By this consumers can easily search through a large database of products and services and able to see actual prices, build an order over several day. Customers can compare prices with a click of the mouse and buy the selected product at best prices. Beside this, the web and its search engines provide a way to be found by customers without expensive advertising campaign. Even small online shops can reach global markets.

According to all available data, ecommerce sales continued to grow in the next few years and, by the end of 2007, ecommerce sales accounted for 3.4 percent of total sales. In 2008, the domain Amazon.com attracted about 615 million customers every year. The most popular feature of the web site is the review system, i.e. the ability for visitors to submit their reviews and rate any product on a rating scale from one to five stars.

History of ecommerce is a history of a new, virtual world which is evolving according to the customer advantage. It is a world which we are all building together brick by brick, laying a secure foundation for the future generations.

Local E-commerce success

I had heard in my lecture and tutorial class about the successes and failures of companies in e-commerce but all the examples that was mention there wasn't even one that was a local company. I have been thinking why didn't my lecturer and tutor gave a local example since we are in Malaysia and we ought to know about it. They should have included a local company example even though it might be in a smaller scale, the impact is not so great in the world, not many people knew about it or it's achievement is nothing compare to the examples of the international companies given by them.

It might seems so that way but we as Malaysian should be proud that there are local companies who tried to venture into e-commerce knowing that it is like an uncharted sea where danger lurks everywhere during the late 90s. Their success might be not be much in the eyes of the world but in Malaysia, its' success mean a lot to all Malaysian who are trying to venture into e-commerce. It shows Malaysian to can be successful in e-commerce. So i try looking for article or news that might talk about our local e-commerce success and at last i found it in our own local online newspaper Thestar.com.my. Here is a part of the article:

"YOU'VE probably heard a lot about dotcoms over the years – from the ones that were hugely successful, to the ones that were absolute failures.

But most of these companies you hear about are probably not Malaysian.

Though on a much smaller scale than the United States, Malaysia has its own share of e-commerce companies, online retailers and various e-businesses.

These companies have been around since the Internet hit our shores in the early- to mid-nineties.

And just like their global counterparts, many were also wiped out when the dotcom bubble burst in 2000.

A few survivors, like Martin Cheah, remain, to tell their stories."

To read the entire article, it is at http://star-techcentral.com/tech/story.asp?file=/2007/9/20/itfeature/18927703&sec=itfeature.

In the article, it mention a few local companies that was successful in e-commerce. 1 of them is a company that i knew. XL-Shop Dot Com Sdn Bhd is a toy shop that have been around for almost 11 years. It venture into e-commerce in 1999. Till now it had been successful, me as a customer can be sure of it. Even though i knew about it's website when i was studying in KTAR in 2005, i had always wanted to collect figurines since i was young but i just don't have the cash then. But i only started collecting these figurines in 2007 when i had saved some money to spend on things that i like. The link to the website is http://www.xl-shop.com/. Here is a few screenshots of the website of xl-shop.

I had bought a few figurines from xl-shop. Even though i don't purchase it online but i relied on its website for the latest update of products that xl-shop will be getting. With those information, i know when to go to their shop to purchase the figurines that i want. They have 3 shops located in Midvalley Megamall, Ampang and Berjaya Times Square. It's customer doesn't consist of Malaysian only but also foreign customers from other countries. Being able to draw in foreign customers is because of e-commerce. This shows how xl-shop have been successful in attracting foreign buyers to buy from them, our own Malaysian online shop. It had received many positive feedback from local and foreign buyers for its services.

The facts that why it is able to continue successfully and not failed like the rest had already been mentioned in the article. Just to elaborate some points, first impression really matters. The first time i enter its website, i like the design, it looks very neat and have a lot of attractive information display in it. It made me want to check it's products. The best part of it is that it is constantly being updated by the staffs if there are new products arriving. Their forum is also a very good place to get information about toys and also to talk to the members of the forum about random stuffs because it's members are very active especially the staffs. It's products price are also cheaper compare to other online toy shop. Given that a figurine already cost me Rm200+, imagine how much it would cost me if i bought online from toy shop from other countries.

If possible i would like to upload my figurines pictures to the blog but let's just see how it goes.

So to end my post, no matter how insignificant it might be local e-commerce success should not be ignore, new entrepreneurs who want to venture into e-commerce should try to emulate their success. International companies success are hard to follow but local companies success are more feasible to achieve. Their success can paved way for future local companies in e-commerce. MALAYSIAN BOLEH!