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.

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