eBay: An E-Commerce Success

EBay is a global online marketplace where practically anyone can trade practically anything. It was managed by eBay Inc, an American internet company founded in 1995 by a computer programmer, Pierre Omidyar. Today, eBay is the world's largest online community of buyers and sellers.

Why is eBay so successful?

eBay acts as a place that gives people the opportunity to come together and trade any items. People are able to pursue interests in areas of their hobbies and collectibles that remind them of fond childhood memories.

People enjoy the experience of shopping bazaar and hunting for great merchandise or great deals. There are great selection of products which attract alot of consumers. The competition of the bidding process is also one reason that makes eBay successful. People like to get a bargain and haggle prices. eBay's auction format allows them to do just that.

Having no inventory is another key to the success. eBay only provides a virtual space and software tools while its customers supply the products for auctioning. So, eBay is not troubled by warehousing costs.

eBay also maintains close communication with its customers through posted bulletins and interactive message boards. A sense of community exists. Even Meg Whitman, eBay's CEO is known by everyone as Meg.

It also has a huge mass of customers through the so-called "network effect". It is expanding so much that they do not have to do much external promotion to build membership. Big and small merchants are drawn to eBay because that is where most buyers are.

Boo.com: An E-Commerce Failure

Boo.com is an example of an E-commerce failure. It is one of the famous Dotcom failures. Boo.com was a British Internet company established in 1998 and founded by Ernst Malmsten, Kajsa Leander and Patrick Hedelin. Boo.com was launched in 1999 and sold branded fashion lines through the internet.

There are several reasons that caused Boo.com to fail:

User Experience
The website of Boo.com was poorly designed for its target users. The site was too relying on JavaScript and Flash technology to display its products and a sales assistance of the site called Miss Boo. The home page alone already was a few hundred kilobytes and users have to wait when loading the website which was very slow. When Boo.com was created, about 20% of home users used dial-up internet connection which did not allow them to access the website at a fast rate. Therefore, the users were not willing to visit the website again because it was wasting their time waiting for the website to respond. The web page design usability is flawed and it confused the customers.

Overspending
Boo.com’s founders did not manage their capital effectively. They spent $188 million in just only six months to make the company globalized but Boo.com’s sales did not achieve the expectations of the management. Also, the management’s lack of clear direction and executive decision on a proper staff recruitment (how many and what type of staff should be recruited), had caused them a crippling payroll cost.

Overall the reason for failure of Boo.com was because of poor management of services and internal control.

Therefore, if you are interested in venturing into e-commerce business, you have to prepare all the relevant information and the website must be able to customize to meet all the needs of customers, this will lead you away from similar failure.

References:
http://www.witiger.com/ecommerce/dotcomfailures.htm

http://en.wikipedia.org/wiki/Boo.com

History & Evolution of E-Commerce

In early 1970s, EC applications like electronic funds transfers (EFT) were first developed even though the extent of it was limited to large corporations and a few daring businesses. Then electronic data interchange (EDI) was invented. This technology transfers documents electronically between firms which helped companies in their dealings.

Electronics commerce has become the word in early 1990s, when the Internet became more commercialized and people from all over the world started participating in the World Wide Web.

Later in year 1992, CompuServe offered online retail products to consumers. This is the first chance given to customer to buy things off their computer.

Netscape provided users a simple browser to surf the web in the year 1994.

In 1995, two of the biggest names in e-commerce were launched. They are Amazon.com and eBay.com.

In fact as early as 1998, Digital Subscriber Line (DSL) provides fast Internet service to subscribers across California. It encouraged people to spend more online.

Then in the year 1999, retail sales over the internet had reached as high as $20 billion dollars.Near 2000, emphasis of electronic commerce (EC) shifted from Business-to-Consumer to Business-to-Business and consolidation of organisations engaging in EC started taking place.

Web 2.0
The term Web 2.0 coined by Darcy DiNucci in 1999 refers to a second generation of web development and web design that led to better and new web-based communities and applications. There is an increasing presence of social-networking or video-sharing sites, wikis, blogs etc.

Traditional websites usually limit users to view content of websites and cannot modify it. However, Web 2.0 websites allow building of interactive facilities and user-friendly interface, not just retrieving information. Such websites include features like tags and keywords search that facilitate information searching, and Really Simple Syndication (RSS) that notify users of new updates.

Web 2.0 technologies benefit by creating customer loyalty, online brand immersion and repeat sales. Some common examples of the technology are Google AdSense, Flickr and Wikipedia.

References:
http://newmedia.medill.northwestern.edu/courses/nmpspring01/brown/Revstream/history.htm

http://www.muslim-programers.com/5/IntroductionToeCommerce.htm

Revenue Models: Google, Amazon.com & eBay

Google’s main revenue model in generating income is through advertising. The one program generating more than 90% of Google’s revenue is Google AdWords, which is a pay per click advertising program.

This is how it works: when users search for something in the search engine, ads will appear next to the search results (where the ads are related to the keywords entered by the users). Most users will be attracted to the ads because the ads match what they are already searching for in the search engine. The advertisers have to pay Google for every single click on their ads.

Google AdSense is another program that generates revenue based on per-click or per-thousand-ads-displayed. It allows website publishers to display relevant Google ads on their sites. Advertisers are required to pay Google advertising fee everytime their ads displayed on Google Network members’ sites are clicked. Google has a sophisticated system and technology that is able to match users and advertisers with its huge ads database and produce the ads that users are most likely to respond. More information on it here.

Amazon.com involves mainly buying and selling of products and services over the Internet or computer networks.

Amazon.com is a business that uses direct online sales model to gain revenue. A website is established and becomes the place for trading, directly selling to online visitors. Product delivery is often by mail, but digital files or products (eg. e-books and softwares) can be delivered instantly through downloading.
Amazon.com offers a wide range of both used and brand-new products like books, movies, electronic gadgets, jewelries, tools and many more. A list of their bestselling products in 2008.

Ebay is a shopping website and online auction giant which is a great place for people to sell their stuff.

Ebay earns from commissions or transaction fees. Normally, the eBay fees are insertion fees and final value fees charged for people doing business on the site. It means that the person who is selling has to pay eBay once for the privilege of listing an item on eBay website, and pay again when the item sells. Especially in auction-style listing, the higher the starting and selling price, the more eBay charges.

References:

http://organicspam.com/google_revenue_model.asp

http://www.school-for-champions.com/ecommerce/business_models.htm