Saturday, June 20, 2009

An example of an E-commerce success and its causes

Amazon.com is one of the success e-commerce in the world. Amazon.com was started in the year 1994, in the beginning, Amazon.com was served as an online bookstore. Nowadays, Amazon.com selling a lot of products in its webpage. It allows costomer to buy products through online.
Why Amazon.com can success?

The main reason would be Amazon.com offers variety of products in the webpage. This allows customer to buy the product that they needed. Sometimes, customers may want to buy products that produced at other country, and this particular products may not sell at their own country. Therefore, they need a 3rd party such as Amazon.com that can offer a lot of products. In addition, the product sell at Amazon.com is cheaper if compare to market price. Therefore, buying through Amazon.com enable customers to save time and travelling costs.

Second reason is Amazon.com provides better customer service and the procedures for buying online is user friendly. This allows Amazon.com attract a lot of customers over the past 10 years and established good reputation from their customers.

The success of Amazon.com is due to the reasons that mention above.

For those who are interested, can visit to www.amazon.com

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~ History of E-Commerce ~


Electronic commerce or e-commerce (EC) can be defined as a process of buying, selling, transferring, or exchanging products, services or information through computer networks and Internet.

HISTory....
In
1970, Electronic fund transfer (EFT) and Electronic Data Interchange (EDI) have been introduced to facilitate commercial transaction ellectronically. EFT enables the financial institution and organization to transfer their fund to their suppliers, employees, customers and etc. Whereas, EDI allows companies exchange of document such as purchase order, invoice and etc.

In 1980, credit card, automated teller machine (ATM) and telephone banking have been introduced to the world. There are also considere as a form of e-commerce. In addition, airline reservation system is also a form of e-commerce. For example, AirAsia and MAS are the airline company in Malaysia that has been implemented airline reservation system. The advantages for this system are it can save time, save cost, and user friendly.

From the 1990 onwards, electronic commerce include enterprise resource planning systems (ERP), data mining and data warehousing.

There are 3 common types of e-commerce which is B2B, B2C, and C2C.

1. Business-to-Business (B2B) - all participants are businesses or organizations. For example, Dell and its suppliers.

2. Business-to-Consumer (B2C) - Participants are businesses and individual. For example, customer buy computer from Dell's website.

3. Consumer-to-Consumer (C2C) - All participants are individuals. For example, auction between individuals at lelong.com .

There is a lot of changes in e-commerce over 30 years. This may cause by the technology keep on changing and the needs and requirements for e-commerce has increased.

As a conclusion, e-commerce plays an important role in our life!!!

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Review on Real-World Case: Google is changing everything


“Hey, have you found the info for our assignment?”
“Don’t ‘kacau’ me, I am ‘googling’ now”

Google is well known for its search engine, and it has affected our life style very much. Just take the conversation above as an example, do you all feel familiar with the word of “googling”? Yes I think we all do knew it, it brings the meaning of searching. Although this is not a formal or proper English to be used, many people are still saying it, due to the effectiveness and efficiency of its search engine.

Other than its search engine, Google is also providing many free online services. Below are some of the examples of services:

Gmail
As compared to other email services, most of the working person would like to use Gmail as a working life’s email. In my personal opinion, I think that this incident happen is due to the popularity of its search engine. It has given people a working perspective, where it has become users’ 1st choice when deciding email services to be used for working. Besides, Gmail offers features to group related message together, and keyword searching through email messages.

Google Spreadsheet
It is a totally free Web-based application, where users are not required to install it, nor buy it. It breaks the key limitation of Microsoft Excel where it can be used and shared with up to 10 users simultaneously through online.

Google Earth
A collection of zoomable aerial and satellite 3D photo of the earth that enables users to find information linked to geographical location. Through this software, the users are able to search the place they are interested. It eases the drivers when they are searching for places that they did not go before.

Google Chrome
An internet browser, just like what we normally use, such as Internet Explorer or Mozilla Firefox. The different is its address bar has been modified to Google search engine. Besides, it also offers a secure browsing, which is incognito window. By using incognito window, the history of website you have browsed will never be saved into computer, which enhances private information security.

Google has also included many others services that can be seen in other website, such as group, calendar, blog, web-hosting, and more. Google has been categorized as a Web2.0 company, where it facilitates communication, secures information sharing, interoperability, and collaboration on the World Wide Web.

Google has changes everything, from our living life, to our working life.

Revenue model: Google, Amazon.com, eBay


A revenue model outlines how the organization or EC project will generate revenue. The revenue model comprises of five major components which are sales, transaction fees, subscription fees, advertising fees and affiliate fees. So for Google, Amazon.com and eBay, their revenue are as followed:

Google earned revenue from advertising related to its internet search, e-mail, online mapping, office productivity, social networking, and video sharing as well as selling advertising-free versions of the same technologies.

Transaction fees:

Google Answers was an online knowledge market offered by Google that allowed users to post bounties for well researched answers to their queries. Asker-accepted answers cost $2 to $200. Google retained 25% of the researcher's reward and a 50 cent fee per question. In addition to the Researcher’s fees, a client who was satisfied with the answer could also leave a tip of up to $100. In late November 2006, Google reported that it planned to permanently shut down the service, and it was fully closed to new activity by late December 2006, although its archives remain available.

Affiliate fees:

Google Adwords is a pay per click advertising program of Google designed to allow the advertisers to present advertisements to people at the instant the people are looking for information related to what the advertiser has to offer. When a user searches Google's search engine, ads for relevant words are shown as "sponsored link" on the right side of the screen, and sometimes above the main search results. Google generate most of the revenue from Google AdWords. In year 2005, Google launched the Google Publication Ads Program through which they distribute their advertisers’ ads for publication in magazines. Google recognize as revenue the fees charged advertisers when their ads are published in magazines.

Therefore, people can promote their websites online regardless of budget,they can advertise their business on Google and its advertising networks (Google Adwords). They only pay if someone click on their ads. Take a look at the below diagram, it show Organic listings and Paid listings (Pay per click).


Other than that, Google also earned revenue by pay per action advertising. However, it was then replaced by Conversion Optimizer and Performics Affiliate which enable the business to manage their advertising on a CPA (Cost-per-acquisition) basis.Amazon.com is America's largest online retailer. It started as an online bookstore but soon diversified to product lines of VHS, DVD, music CDs and MP3s, computer software, video games, electronics, apparel, furniture, food, toys, etc.

Sales:

Amazon has steadily branched into retail sales of music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, groceries, and more.

Transaction fees:

There are no start-up charges, monthly charges, hidden fees, or long-term contracts
Fees are assessed on a per-transaction basis and vary depending on the transaction amount. They are based on a percentage of the transaction amount plus a per transaction fee.

For Transactions >= $10:
2.9% + $0.30 for all transactions

Volume Discounts:
2.5% + $.30 for all transactions for monthly payment volume from $3k-$10k
2.2% + $.30 for all transactions for monthly payment volume from $10k - $100k
1.9% + $.30 for all transactions for monthly payment volume over $100k

For Transactions < $10:
5.0% + $0.05 for all transactions

Affiliate fees:

There are no monthly fees and no minimum spend - you are charged only when an Amazon customer clicks on your ad and is taken to your Web site. You control not only the maximum price you are willing to pay for that click, but also your daily budget. This allows you to measure the return on your advertising investment and optimize your budget accordingly. Product Ads by Amazon provides a new, highly targeted advertising channel. Amazon's world class shopping experience and product pages ensures you only pay for qualified customers. You don't pay for customers to read about and view your products on Amazon. You only pay when they click on your ad to go to your Web site.
Ebay is an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide.

Subscription fees:

As an eBay Store owner, you’ll pay the monthly subscription fee corresponding to your Store level.

Insertion fees:

If you want to sell on item on eBay, you create a listing using the Sell Your Item form. When you list an item on other eBay sites, you are charged an Insertion Fee for the listing. The Insertion Fee is based on what you decide is the Starting Price of your item.

Final value fees:

If the item sells, you are charged a Final Value Fee if you list on other eBay sites. The Final Value Fee is based on the final amount the item sells for. The Final Value Fee does not include postage costs.

Listing upgrade (Optional):

If you want to add a subtitle or an extra picture to your listing, a charge would be added for each listing upgrade. The charges also depend on the category and format you list in.

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Friday, June 19, 2009

Example of E-commerce failure and its causes


The development of E-commerce undergrounds a rapid changes in today's world. Internet-based firm have to be aware of the management plans and strategy and be updated in order to keep themselves up with the current changes. Otherwise, they might be eliminated.

One of the e-commerce failure can be shown by Pets.com. It was a short-lived online business that sold pet accessories and supplies direct to customers via world wide web. It began operations in February 1999 and ceased in November 2000. It is not bankrupt but self-liquidated. The company succeeded in making its mascot which is the Pets.com sock puppet. Besides that, its website design is well received and had been garnering several advertising awards. Pets.com was successfully in building brand recognition. Since then, why it went into liquidation?

There are many causes that make Pets.com failed in e-commerce. The main reason would be the company was weak on fundamentals and actually lost money on most of its sales. Pets.com's revenue is less than the advertising cost. It earned $619,000 and yet spent $11.8 million on advertising during its first fiscal year. It lack a workable business plan. It was selling merchandise for approximately one-third the price it paid to obtain the products even before the advertising cost.

Other than that, this company had a improper selling strategy. It tried to build a customer-based by offering discounts and free shipping with the purpose of shifting customers into higher margin purchases. However, customer buying patterns failed to change and it is impossible to turn a profit while absorbing the cost of shipping. Thus, it only hastened the firm's demise.

The uncertainty of the existence of substantial market was another reason that caused Pets.com went into liquidation. There was no independent market research preceded the launch of Pets.com. In light of the venture capital situation, Pets.com management realised that they were unable to raise further capital. As a consequence, they undertook the action to sell the company. US$300 million of investment capital vanished with the company's failure.

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