An Example of E-commerce sucess and its causes

ebay is one of the famous sucess e-commerce company and powerful global online marketplace these days where anyone can trade anything in its auction website.Many of us would wonder how ebay has become a giant well known online auction websites in terms of its revenues.

How ebay sucess?
Who is the founder of ebay?
Why people like buying or selling things in ebay?

Actually the founder of Ebay is Pierre Omidayars, which has a French-Iranian descent , came to Amerika and finish a computer science degree. He puts his efforts to establiah an online venue for person to person online auction of collectable items called AuctionWeb.While the number of people visiting AuctionWeb site grew more and more each day then build it up his Ebay empayor where the world biggest and large coverage worldwide website with a global presence in 38 markets, including the US and over 241 million registerd users.

Factors that make ebay sucess:

1. Built and open an online person to person trading community on internet.

Ebay exits already break the traditional manner of buying and selling process in the world where the transaction can be done by using the World Wide Web. Ebay is a place that gather buyers and sellers around the world to sell , buy , find and request whatever things for sale by just a click on biding button. This is the transactionmethod that used in the auction processon eschanged between buyer and seller.

2. Simple registeration as a buyer or seller.

The registeration as buyer or seller are very easy just a few steps then they can immediately list an item for sale within minutes of registering. Besides that, Ebay provide a very clear user guide for every first time users either as buyer or seller to make sure everything going smoothly and also some supporting department to them too.

3.Convenient and easy .

All ebay users can browse all sales items in a fulliy automated way. All tge items are arranged nicely and cleary by topics, where each tyoes of auction has its own category. This will make all the buyers feel more efficient and save lot of time and energy on searching of their wanted products.

4. Secure shopping

All the items that sold in ebay by credit card or e-banking. So mostly buyers will worry about the security of their transaction being done. But, in ebay buyers not need to worry when using the credit card pay online. Ebay using industry standard data encryption and positive identification technology to ensure your online transactions are safe and secure.

5. Changing of People towards fast and easy space.

Obviously, nowadays people are becoming more comfortable with shopping online and getting more accustomed to do that compare with past generation. Mostly all ebay users are generation X and generation Y where they more expert on using internet, highly request on fast and easy on buying things and busy lifestyle where Ebay will be the most desireable solutions for them to buy things.

6. Enjoy shopping experience in bazaar market.

Lots of people enjoy looking around for merchandise and enjoy the competition of the bidding process on their desired items. All people around the world likes to get a bargain which the cheapest the desireable either in some way to haggle a little bit over the price. While ebay's auction know people's wants and needs then sets it business format which allows the users to do that.

Related links:

http://www.ebay.com/

www.freeauctionscripts.com/ebay-sucess-stories/

www.ecommercetimes.com/story/2127.html

An Example of an E-Commerce failure and its causes

Nowadays, E-commerce has become efficiency in the global business. It serves as one of the business tools for companies. However, E-commerce will become failure if the company does not use it wisely.

WebVan.com is an example of a company for a failure in E-Commerce. WebVan was an online "credit and delivery" grocery business in 1999 and founded by Louis Bounders who also co-founded the Border bookstore in 1971. WebVan tried to deliver products to customers' home within 30-minute window of their choosing. The headquarter of the company located in Foster City, California and expanding its services to 10 US markets such as San Francisco Bay Area, Dallas, San Diego, Los Angeles, Chicago, Seattle, Portland, Atlanta, Sacramento, and Orange Country. The company had originally hoped to expand to 26 cities. However, Webvan went bankrupt in 2001 due to the financial difficulties.

What causes WebVan failure?


(1) Fast and Aggressive
WebVan wanted to grow quickly and immediately after they lauched their website. It tried to enter 26 US markets within 3 years and it opened 4 warehouses by August 2000. However, during the first half of 2001, WebVan was forced to exit several markets such as Atlanta, Sacramento, Dallas and it postponed expansion plans in a few East Coast cities. In the end, WebVan spread itself too quickly and thereby dooming its ambitious business model.

(2) Free Delivery
WebVan lauched its services, it offered free delivery for orders US 50 which ended up costing it millions in uncovered expenses. In May 2001, its delivery fee charging between US 4.95 and US 9.95, and it offered free delivery for order over US 100.

(3) Lack of experience in the grocery industry
The CEO, George Shaheen had no former background and knowledge in gorcery business. He never understood the value chain of the grocery business. Because of lack of experience, WebVan was unable to master the inventory management, warehousing and efficient distribution of goods. They were too optimistic in their operation planning and promised to deliver groceries within 30-minute window. It was unrealistic considering they had to pull items from shelves then drive the distance for the delivery. Besides that,they also lack of inventory controls and the unrealistic cost structure, so, there was no way for them to compete with the economies of scale of the major grocery stores which including Wal-Mart.

(4) Not knowing their target market
First of all, they did not take into consideration that capturing a market for online grocery shopping would not be that easy because it takes a long time to get consumers to adopt new ways of doing things or buying things. shopping for their groceries online. Customers prefer go through the process of going to a store and picking out their groceries, especially their produce, meat and items they choosing. However, WebVan overlooked that their customers were not willing to trade he convenience factor for additional cost of delivery. Even though WebVan did not charge delivery fee, but gorceries were sold in high price compared to its competitors because it did not have low cost structure. Customers were not willing to pay because WebVan was not giving them a service that needed to pay.

In the conclusion, the advancement of technology may helps companies doing businesses easily, more creative and innovative. However, appropriate strategies and planning are the most important in doing a dotcom business. Know the causes of failure, prevent it!

Reference:
Retrieved from http://www.cnet.com/1990-11136_1-6278387-1.html on 17 June 2009
Retrieved from http://en.wikipedia.org/w/index.php?title=Webvan&action=history on 17 June 2009
Retrieved from http://www.knowbd.com/piedmont/mba605/ReportWebVan.pdf on 17 June 2009

The history and evolution of E-commerce

Definition of E-commerce.

E-commerce is the buying and selling of goods and services on the Internet, especially the World Wide Web.

History of E-commerce.
E-commerce application were first developed in the early 1970s with innovations such as electronic funds transfer (EFT),whereby funds could be routed electronically from one organization to another. Then came electronic data interchange (EDI). EDI provided with a "set of standards" that enabled the big business firm to indulge in a sort of beneficial electronic transaction. It also facilitated the interchange of vital business oriented information. E-commerce is also conducted through the more limited electronic forms of communication such as e-mail or fax. Most of this is business-to-business, to consumers and other business prospects.

Evolution of E-commerce.
Year 1984-Electronic data interchange (EDI) named as ASC X12 has gained a lot of popularity and was readily accepted by new businesses for transfer of huge amount of transactions. This guaranteed that companies would be able to complete transactions with one another reliably.

Year 1992-The first point and click web browser was developed called Mosaic. The first downloadable browser, Netscape, was developed based on Mosaic, and this gave people with Internet access the ability to participate in electronic commerce.

Year 1995-Two of the biggest names in E-commerce are lauched which are Amazon.com and eBay.com.

Year 1998-There was a maximum sales of E-commerce than ever before as the benefit of E-commerce was taken by those people who had Digital Subscriber Line (DSL) or high speed internet access.

Year 2000-The need for high security where E-commerce was concerned developed as the hackers attacked those popular sites such as Yahoo, eBay and Amazon.com.

Year 2001-E-commerce was adapted by almost every major retail company such as Wal-Mart. The transactions that took place between the businesses where recorded at around $700billion.

Year 2005-The U.S. government extended the moratorium on Internet taxes until this year.

Year 2008-The U.S. E-commerce and Online Retail sales projected to reach $204 billion, an increase of 17% over year 2007.

What is Web 2.0?

Web 2.0 refers to what is perceived as a second generation of web development and web design. It is characterized as facilitating communication, information sharing, interoperability, user-centered design and collaboration on the World Wide Web. It has led to the development and evolution of web-based communities, hosted services and web application. Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform. Web 2.0 websites allow users to do more then just retrieve information.

Identify and compare the revenue model for Google, Amazon.com and eBay

Direct online sales model (Amazon.com)
You can establish your website as your place of business and directly sell to those entering your "store" to make a purchase. Since delivery is often by mail, this is similar to customers buying from a mail order catalog. Software products, e-books, music and video files can be delivered to the customer through the downloading process. Customers can browse through a variety of merchandise, mainly book titles and make comparison with other retailers to get the best online deal.

Online advertising space model (Google Adsense)
Just as television and radio stations gain revenue from advertisements, related to the reach or number of viewers they have, so too can popular websites charge for the number of viewers seeing an ad. A better method is to count the number of viewers that click on an ad, taking them to the company's website. This is increasingly popular due to its simple and easy implementation that can be added directly to one website or blog to increase its revenue.

Online commission model (eBay and PayPal )
Individuals and companies can also be established as affiliates, where they gain a commission for sales made through a company using the direct online sales model. For example, customers of eBay might need to create an eBay account to shop if they do not have a credit card. In addition, for customers that have a credit card but do not wish to use it for online transaction due to security issues will consider creating an eBay account to act as a medium for online transaction
purposes.

*Reference: Retrieved from www.school-for-champions.com/ecommerce/business_models.htm on 15 June 2009.