Early development
The meaning of electronic commerce has changed over the last 30 years.
Original
Electronic commerce meant the facilitation of commercial transactions electronically, use technology. For example: Electronic Data Interchange (EDI) and Electronic Funs Transfers (EFT)
Electronic Data Interchange (EDI) refers to the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another from one trading partner to another trading partner. It is more than mere E-mail.
Electronic Funs Transfers (EFT) is any transfer of funds, other than a transaction originated by a paper instrument, that is initiated through an electronic terminal, telephone, or computer or magnetic tape and that orders or authorizes a financial institution to debit or credit an account.
Late 1970s
Allowing businesses to send commercial documents like purchase orders or invoices electronically. For example: acceptance of credit cards, automated teller machines (ATM).
A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services.
Automatic Teller Machines (ATM) an unattended electronic machine in a public place, connected to a data system and related equipment and activated by a bank customer to obtain cash withdrawals and other banking services.
1980s
Telephone banking also forms of electronic commerce
Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone.
1990s onwards
Additionally include enterprise resource planning systems (ERP), data mining and data warehousing.
Enterprise Resource Planning (ERP) is an industry term for the broad set of activities that helps a business manage the important parts of its business.
Data mining is the process of extracting hidden patterns from data. As more data is gathered, with the amount of data doubling every three years, data mining is becoming an increasingly important tool to transform this data into information.
Data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis
Event
1984
EDI, or electronic data interchange, was standardized through ASC X12. This guaranteed that companies would be able to complete transactions with one another reliably.
1992
Compuserve offers online retail products to its customers. This gives people the first chance to buy things off their computer.
1994
Netscape arrived. Providing users a simple browser to surf the Internet and a safe online transaction technology called Secure Sockets Layer.
1995
Two of the biggest names in e-commerce are launched: Amazon.com and eBay.com.
1998
DSL, or Digital Subscriber Line, provides fast, always-on Internet service to subscribers across California. This prompts people to spend more time, and money, online.
1999
Retail spending over the Internet reaches $20 billion, according to Business.com.
2000
The U.S government extended the moratorium on Internet taxes until at least 2005.
Time line
1990
Tim Berners-Lee wrote the first web browser, WorldWideWeb, using a NeXT computer
1994
Netscape released the Navigator browser in October under the code name Mozilla. Pizza Hut offered pizza ordering on its Web page. The first online bank opened. Attempts to offer flower delivery and magazine subscriptions online. Adult materials were also commercially available,
as were cars and bikes. Netscape 1.0 in late 1994 introduced SSL encryption that made transactions secure.
1995
Jeff Bezos launched Amazon.com and the first commercial 24 hour, internet-only radio stations, Radio HK and NetRadio started broadcasting. Dell and Cisco began to aggressively use Internet for commercial transactions. eBay was founded by computer programmer Pierre Omidyar as AuctionWeb.
1998
Electronic postal stamps can be purchased and downloaded for printing from the Web.
1999
Business.com was sold for US $7.5 million, which was purchased in 1997 for US $150,000. The peer-to-peer filesharing software Napster was launched.
2000
The dot-com bust.
2003
Amazon.com had its first year with a full year of profit.
2007
Business.com acquired by R.H.Donnelley for $345 million
2008
US eCommerce and Online Retail sales projected to reach $204 billion, an increase of 17 percent over 2007
Webvan (1999-2001)Webvan was an online grocery business that was started in 1999 by Louis Borders, founding partner of Borders Books, and went bankrupt in 2001. Webvan is a business-to-consumer based e-commerce company. At the time, Webvan offered customers to order groceries and fresh food, such as meat, produce and milk, over the Internet and deliver to them within the same day.
What Went Wrong?
The following are some reasons which contribute to the failure of Webvan:
• An inappropriate business model
Webvan has incorrectly believed that it was in the technology business, instead of the grocery business.
• Lack of retail food experience from the management team
Webvan was managed by officers and director who had no retail food experience. Webvan founder Louis Borders was an expert in selling books, however, books do not expire.
• Lack of understanding of the sociology & psychology of retailing food
Webvan’s management did not grasp how consumers shop for food. People go to supermarkets to look at and even feel the merchandise. Customers like to speak to the grocer, the butcher or the wine department manager, for example. There must be a special reason for people to forego supermarket shopping.
• Lack of demographic understanding
Webvan located major warehouses in Atlanta and Los Angeles, where people are used to driving and would rather drive to a store than wait for delivery. . Webvan’s problems were exacerbated in California’s Orange and San Diego counties, both of which have large Latin American and Asian populations. These customers were already being served by local grocers who catered to these ethnic communities much more effectively than Webvan could.
• The high cost of running an online grocery business
In order to make its business to be successful, Webvan spent a lof of money to build "high-tech" warehouse as well as to purchase the "lastest technology" to run its business, however, these did not contribute to the factors of success but worsened the financial situation of Webvan.
The failure of Webvan does not mean the online retail industry is not workable. However, it mean that reasonable study should be taken before entering any industry. Thus, it is a good lesson to remind us not to repeat the mistakes that Webvan has done.
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The online revenue Model means different techniques for generation income from an internet business. I will discuss about what is the revenue model of Google, Amazon.com and eBay and do some comparison on them.
In the most recently resu
lts, the Google generates 99% of the income from ads. There are two sources of advertising, which are Google Adsense and Google Adwords. Adsense is an advertisement application run by Google. Website owners can enroll in this program to enable text, image, and video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. Thousands of website owners will take advantage of the Google Adsense program to deliver ads, and they are required to pay Google an affiliate fee each time a user clicks on one of their ads displayed on Google Network members’ web sites.
Besides that, the other source that Google generate income is the Google AdWords. 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. AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text and banner ads. Advertisers will need to pay Google the fees through either a cost-per-click or cost-per-view scheme.
Amazon.com is an online bookstore in the early stage but soon it diversified into different product line like VHS, DVD, music CDs and mp3, computer, software, toys and so on. Therefore, the Amazon.com generates its revenue by sales of goods, merchandise information and service provided in the website.
However, according to the information in Amazon.com discussion forum, Amazon derives about 40% of its sales from affiliates whom they call Associates and third party sellers who list and sell products on the Amazon websites. In worldwide, Amazon has "over 900,000 members" in its affiliate programs. There are a new affiliate product, aStore, allows Associates to embed a subset of Amazon products within, or linked to from, another website. Consistent with the data, there are 1.3 million sellers sold products through Amazon's World Wide Web sites in 2007. Therefore it shown that Selling on Amazon has become more popular as Amazon expanded into a variety of categories beyond media and built a variety of features to support volume selling.
Other than that, Amazon.com also incorporated a number of products and services into its shopping model, like Kindle which launched in November 2007. These products can attract people to continue buying in Amazon.
eBay is an online auction and shopping website in which people and businesses buy and sell a broad variety goods and services worldwide and it also owns Paypal and skype. EBay generates revenue from a number of fees. there are fees to list a product (Insertion Fee) and fees when the product sells (Final Value Fee), plus several optional adornment fees, all based on various factors and scales. The final value fee is the commission that charged to the seller at the end of the auction.
Moreover, there is a portion of eBay’s revenue gain from direct advertising on the site and also the acquisition of PayPal, which bring additional transaction based fee for revenue. EBay also runs an affiliate program under the name eBay Partner Network and the eBay affiliate marketers Fees are paid a percentage of the eBay seller's transaction fees. The payout is 50% to 75% of the fees paid for an item purchased.
About their revenue in year 2008, the Google gain the most which is US $21.796Bil, Amazon.com is the second which is US $19.166bil and finally is the eBay which is US $8.46bil. Three of them also obtain the affiliate fees, but Google is the best to earn the income from it. Amazon.com will more focus on sales and the transaction fees and together with Ebay also more on the transaction fees.
More information, you can visit their website.
Google---Amazon.com---eBay
Dell, one of the most successful e-commerce company, offers personal computers and computer-related products online. The company was founded by Michael Dell in 1985. Currently, Dell develops, manufactures, sells, and supports personal computers and other computer-related products. It also become one of the top five computers makers in the world, behind Hewlett-Packard in 2008. Dell achieved $60 billion sales online a year and employs over 63,000 people.
Dell using direct online marketing as its major e-commerce activity. They sells to individuals, small businesses, medium and large businesses, government, education and health-care organizations. The company's strategy selling online with no retails shops and middleman enable them to sell their product cheaper. By applying the direct sales model, Dell able to maintain a negative cash conversion cycle. In other words, Dell receives payment for the products before pays for materials.
Customers can easily buy personal computers through Dell's website. By entering Dell's website, customers can choose category such as home or business. Customers can narrow their selection by product category, screen size, laptop weight and graphics capability. It makes customers to find their needs easily. Hot deals also offer information about some discounted products to customers. After made decision, customers can make payment by credit card. Products will be delivered to customers in 5-8 working days.
Causes that bring Dell success:
1) Customers can buy personal computers online without go to the store. Computers will be delivered to their house. It save their time and energy.
2) Customers can choose computer's components like hard drive size, processor speed and screen size based on their budgets and needs.
3) Direct contact with customers give them feedback such as what customers ordering and how their site working.
4) Technical supports such as business-hours telephone support and next business-day on-site support increase customer's confidence towards Dell.
In conclusion, since Dell has chosen to sell their products online, they have to put more effort in their customer service. Beside, product quality also should be improved to serve customers' demands. In my opinion, purchasing personal computers online is a trend now. Dell will become stronger in the future with its successful online marketing strategy.
For more information, Please refers to Dell's website.
References:
Dell (wikipedia)
Case study: Dell
