E-Commerce

UBAI 3013 E-Commerce

History and Evolution of E-Commerce

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E-Commerce is also known as ecommerce, electronic commerce or E-Business. Unlike the traditional method of commerce, E-Commerce is the act and science of buying, selling or exchanging products, services and information over the internet. Internet shopping has become one of the popular activities around us. With E-commerce, everyone can shop at anytime they want.

The meaning of E-commerce has changed over the 30 years. In 1970s Electronic Date Interchange (EDI) and Electronic Funds Transfer (EFT) were first developed. EDI and EFT allowed business companies to exchange business information, do transaction, and send commercial documents electronically. Next, e-commerce also formed in 1980s in the growth and acceptance of credit cards, automated teller machine (ATM) and telephone banking.

In 1990, World Wide Web(WWW), which was proposed by Tim Berners had became more commercialized and anyone in the world started taking part in it. After that, Mosaic web-browser became the first ‘point and click’ browser and it was quickly adapted into a downloadable browser. In 1994s, a simple browser to surf the internet and a safe online transaction technology called Secure Socket Layer (SSL) was provided by Netscape.

Amazon (http://www.amazon.com/) and eBay (http://www.ebay.com/) were the first Internet companies to allow electronic transaction. The two websites are launched in 1995s. Besides that, DSL was also developed in 1998s and allowed quicker access and a persistent connection to internet. For addition, the development of Red Hat Linux was also another major step in e-commerce growth.

In 2000s, people began to define the term ecommerce as the process of purchasing of goods and services available over the Internet using secure connections and electronic payment services. There were a great number of business companies in United States and Western Europe represented their services in the world wide web (WWW).

Evolution 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. I strongly believe that e-commerce will keep on developing popular stages until anyone can just buy thing and shop from home.


eBay – An example of E-commerce Success and Its Causes.

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In my opinion, an example of e-commerce success is eBay which is a famous website visited by many people. The eBay was born over Labor Day weekend in 1995, when Pierre Omidyar, a computer programmer, wrote the code for an auction website that he ran from his home computer. Today, Omidyar's hobby is known as eBay, the world's largest online marketplace - where practically anyone can practically sell anything at any time. With a presence in 39 markets, including the U.S., and approximately 84 million active users worldwide, eBay has changed the face of Internet commerce.

eBay might be the first example where a commerce site has actually been built around a community where people are exchanging information and exchanging goods, services and merchandise. It is a software program that allows people, in one spot, to list down items of various interest and various degrees. It also allows people to be able to come to that very same site and look at what are available for sale and bid and buy those items. It uses the auction process as the method for establishing how merchandise is valued and eventually how it is exchanged between buyer and seller.

All eBay users can browse through listed items in a fully autamated way. The items are arranged according to topics, where each type of auction has its own category. They are having both steamlined and globalised traditional person-to-person trading. Their facilities are easy for buyers to explore and enable sellers list item for sale immediately within minutes of registering, the binding contracts of the auction is between the winning bidder and the seller only.

The causes the make eBay success is that it allows people to often times connect to some very fond and special early childhood memories. It allows people to make that connection and relive a lot of very vivid and very fond memories that they had from an earlier period of time. It could be anything from collecting baseball cards to toy soldiers to Barbie dolls to doll houses, and so on.

Another factor to consider is, people enjoy with the experience of the shopping bazaar. They enjoy the hunt, looking around for merchandise and they really enjoy the competition of the bidding process. Everybody likes to get a bargain, I think, in some way, shape, or form, likes to haggle a little bit over the price. The eBay auction format allows users to do that. The other thing is that as it has grown, it has become a very practical place to buy and sell collectibles or commoditie.


Related links:
http://www.ecommercetimes.com/story/2127.html
http://www.ebay.com/
http://news.ebay.com/about.cfm
http://www.scribd.com/doc/1020018/Seven-Secrets-to-eBay-Success

eToys - An example of an E-Commerce Failure and Its Causes

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eToys.com (1997-2001)
I was reading the Dot.com failures website. I notice that eToys.com is one of the top 10 dot-com flops. eToys.com is a retail website which sells toys via e-commerce. eToys was launched in October 1997, with funding from Sequoia Capital, Highland Capital Partners and Idealab. Like many other dot-com companies, the company that owned the eToys site filed for chapter 11 protection toward the end of the Internet bubble on March 7, 2001. At the same time, KayBee Toys (KB Toys) acquired the bulk of eToys’ remaining assets for $5million. The eToys.com website was eventually reopened by eToys Direct Inc., a descendant of Internet startup and KB Toys partner Brainplay.com, and a subsidiary of Parent Company. It continues to market toys by mail order under eToys name through both the website and printed catalogs. On 22 December 2008 eToys Direct filed for Chapter 11 bankruptcy and it was acquired by Toys “R” Us in February 2009.

There are some reasons why eToys has failed:
1. Disrespecting competitors
One eToys senior manager reportedly boasted at the height of the Internet boom. What eToys forgot on the way to bankruptcy is that Toys “R” Us had even more powerful advantages, such as established customers, experienced in the toy business, and the heft to ensure supplies of hard-to-get hot toys. As eToys learned, disrespect is the first step to disaster.

2. B2C E-Business failures
eToys failed to appreciate the fact that theirs was a new service to the customers. The management must carefully handle both the front and the back-end of their businesses efficiently and effectively. During the 1999 holiday season, eToys was accused of falling short of one of its initial goals-speedy and reliable customer service. Thousands of customers complained that their orders were either late in arriving at their destination or contained the wrong merchandise.

3. Expensive advertising campaigns
Marketing tactics are what helped make eToys strong. It became a household name for unique, yet very pricey, print advertisements and commercials, which appealed to both parents and children. This resulted in eToys not being able to adequately meet the needs of its customers.

Revenue Model for Google, Amazon.com and eBay

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Revenue model is a description of how an organization will earn revenue. There are different techniques used in E-commerce in earning revenue. Some of the examples of revenue models are as follow:
1. Sales are revenue generated from selling of good and services over publishers’ websites
2. Transaction fees are commissions earned based on the volume of transactions made. It can be either of a fixed value or levied per transaction.
3. Subscription fees are monthly or yearly amount paid by customers to get some types of service.
4. Advertising fees are amount charged by publishers from advertisers who place a banner on their websites.
5. Affiliate fees commissions publishers received for referring customers to others’ websites. Examples of affiliate fees may included:
a) Cost per thousand impressions (CPM) is frequently used in advertising to represent cost per thousand. Each CPM will only be charged when an advertisement is pop-up on users’ screens for 100 times.
b) Cost per click (CPC) is amount of money paid by an advertiser to publishers. Cost will be charged for a single click on its advertisement that brings one visitor to its website.
c) Cost per action (CPA) is an online advertising pricing model where advertisers pay for each action done by visitors linked to the advertisement. Examples of action such as requesting or buying a product.
6. Other revenue sources. For example, some websites allow people to play games or watch sports in real time for a fee. E.g.: http://www.espn.com/.

Now, let’s look at the revenue model of various websites.




Google does not sell goods or services as it is only a content provider. Therefore, most of its revenue is from advertising. There are two sub-parts of Google which are Google Adwords and Google AdSense.
Google Adwords (www.google.com.my/AdWords) earns its revenue mainly from advertising of products. It is using cost per click model whereby advertisers will only need to pay if people click on their advertisement. When a person searches for information, advertisements with the relevant keywords will appear either at the right side of screen or above the search results.





On the other hand, Google AdSense (https://www.google.com/adsense/) is an advertisement application operated by Google. Website owners can sign up for this program to enable their texts, images or advertisements to be appeared on their websites. Google often earn revenue either by using cost per click or cost per thousand impressions.





Amazon is one of the biggest companies which sell goods over Internet. It started its business by selling books and now expanded to sale of CDs, software, video games, video games and so on. As Amazon is selling various types of products, it may earn revenue from sales of products. Furthermore, Amazon partners’ websites can display its books directly on their websites and send interested customers to its website when visitors are ready to buy it. After that, Amazon will pay a commission for the sale to the site owner.







eBay is a worldwide auction website since 3 September 1995. It is now managed by an American Internet, eBay Inc.. eBay is an online auction and shopping website where people and businesses can buy and sell various goods and services globally. Majority of its sales are taken place by auctioning. Customer who bid for a product at highest price will be able to get the product. Now, eBay is also using a substantial segment of listings in the “Buy It Now”. This gives visitors chances to purchase an item immediately before bidding begins. Through these, eBay can earn transaction fees by charging commission from sellers who sold their product successfully.

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