E-Commerce Success and its Causes

Nowadays, there is a trend that most of the purchase transactions are conducted through online.Consumers are more likely to purchase in this way is simply because of the purchasing process is much more easier and faster when compared to offline purchase. For instance, without wasting time and energy to conduct survey, consumers are able to make a quick comparison among various products with only one user action (click). These competitive advantages have contributed to the success of enormous amount of companies and one of the great example is Amazon.com.

Amazon.com is an American electronic commerce company which famous in selling its books. The company was founded by Jeff Bezos in 1994 and based in Seattle, Washington. Amazon.com ventured beyond books and now it offers various line of product such as DVDs, MP3s, electronics, computers, video games, kitchenware, etc. On January 15, 2009, Amazon.com was the UK's favourite music and video retailer, and came third in overall retail rankings in a survey published by Verdict Research.

Why is Amazon.com so successful?

• Brand name - Amazon.com is trustworthy on its reputation for reliability. It is a site that is easy to navigate. It has developed loyal base customer, and attempt to cultivate them by continually lowering prices and adding features to their Web sites as written in CBS news.


• One click order system - A specific example would be Amazon's pioneering of the "1-click" ordering system which ease the customer to return to place new orders without having tediously re-enter basic and payment information.

• Personalize web-based model - Every single customer has a unique webpage and personalized in different methods. For instance, if the customer has made a recent purchase and again visited Amazon.com, the message might read, "Hi Alan, welcome back!" Amazon.com also sent out personalized coupons or emails to customers who had not visited the site for a period of time.

Besides that, an interview with Maryam Mohit, the V.P. of Site Development, Amazon.com which mention about the secret of Amazon.com, the challenges and also the future of Amazon.com There are numbers of minor reasons underlying behind the success of Amazon.com which are not mention above. If you guys are interested to know more, feel free to look up in ecommercetimes.

How does Google, Amazon.com and eBay make money online through E-commerce?

Google, Amazon.com and eBay are undoubtedly the pioneer companies in the field of E-commerce well known for their established operations, proven track record as well as excellent reputation. Although all 3 companies are highly profitable, however, it should be noted that their techniques of generating income online are distinctive as they adopt their different revenue model.

First, talking about Google, its main revenue stream comes from advertising fees. For instance, in year 2006 alone, it has generated an extraordinary amount of US$ 10.492 million through its primary advertising offerings such as Google Adwords and Adsense. Basically, Google Adwords involves displaying advertisements beside or on top of Google search results when the keywords typed in by users match with those registered by the corresponding advertiser. Subsequently, if the user clicks in, the advertising process is then completed and is charged based on a per-click basis. Meanwhile, Google Adsense is an advertising program which allows website owners to enroll to enable ads to be displayed on their sites and ultimately to earn money when the visitors click on them. Google search box could be embedded as well. For more information, please refer to Adwords and Adsense.














Next, instead of advertising, Amazon.com is America’s largest online retailer which generates income through the online selling of various lines of products. Starting from its original concept of an online bookstore, it then diversified to a wide range of businesses such as music CDs and MP3s, computer software, electronic goods, apparel, kids’ products and so forth. It breaks away from the traditional break-and-mortar way of transacting at physical location and it is now the leading online shopping center earning revenue of US$19.166 million in 2008. On the other hand, through the amazon associates scheme, Amazon award referral fees to their registered affiliates which advertise Amazon products on their websites and enable them to earn 15% of affiliate fees/ commission when consumers eventually buy.



In contrast, eBay does not own any products and services on its own. Nonetheless, it functions as an online auction site which provides an electronic platform for worldwide buyers and sellers to transact a broad variety of goods and services. In other words, it merely facilitates the business dealing between all potential buyers and sellers. As a transaction is successfully concluded through its site, eBay will earn a certain amount of transaction fees. eBay offers several types of auction models such as :

1) auction-style listings (allow the seller to offer items for sale for a specified number of days)
2) fixed-price format (allows the seller to offer items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid)
3) Dutch auctions (allow the seller to offer two or more identical items in the same auction).

The History & Evolution of E-commerce

What is E-commerce?

Definition ·History & Evolution ·Video·Issues

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The definition of E-commerce

First, Commerce is interpreted as all forms of trade and services that assist trading which deals with the exchange of goods and services from producer to the final consumer. Every era of business yields new strategies and new methods of doing business. With the advent of information technology, people able buying, selling, transferring, or exchanging products, services, and/or information via computer networks and Internet, this is known as electronic commerce (E-commerce).

E-commerce can be classified by the nature of the transactions or the interactions among participan ts such as business-to-business (B2B), business-to-consumer (B2C), consumer-to-business (C2B), and so on. In B2B, all the participants are either businesses or other organizations. For instance, Niki and Dell involve B2B with their suppliers. On the other hand, the typical example of B2C is where the individual shoppers purchase their desired books at Amazon.com.

History & Evolution of E-commerce

In the late 1970s, e-commerce meant the facilitation of commercial transactions electronically by using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These allow businesses to send commercial documents and information such as orders' lists or invoices electronically.

In 1980s, the invention and high level acceptance of credit cards, automated teller machines (ATM) and telephone banking were formed further meaning of e-commerce.

In addition, e-commerce is also includes enterprise resource planning system (ERP), data mining and data warehousing started since 1990s. Even though the Internet was famous in world wide in 1994, it took about five years to develop the security protocols e.g. HTTp and DSL. These allowed rapid access and a persistent connection to the Internet.

In 2000, a huge number of business companies United States and Western Europe provided their services through World Wide Web. Due to the revolution, people started to relate e-commerce with the ability of purchasing various products and services through the Internet using secure protocols and electronic payment services.

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Issues about E-commerce

E-commerce offers pros and cons to organizations, individual customers and society. Particularly, consumers can shop any time at any place. Also, consumers have large selection to choose from suppliers, products and styles. By surfing the Internet, they able to make comparison among the products and shop for the lowest price. In the same vein, business world becomes larger and more competitive.

The increased of competition has caused the product differentiation. Many similar products were invented creatively with the same general function, but are still unique. Thus, individual shoppers will face difficulties in making products comparison. In conclusion, as there are limited information provided, the competition may be not as high and price may not be lower because it is depend on their targeted market on which design or features they provide to their targeted customers.

Prepeared by Carrie Hon.

An example of E-commerce failure and its causes

Hi everyone...Today, I would like to share some information with all of you about an e-tailer, Boo.com. Boo.com was a British Internet company which founded by Swedes Kajsa Leander, Ernst Malmsten and Patrik Hendelin. Boo.com was launched on 3rd November 1999 and selling premium sports, urban street wear,brandend fashion apparel and cosmetics. It targets on those young individuals who are fashion concious. In 1990s, Boo.com had become the most heavily funded Internet start-up in Europe and the most high profile. This is due to the fact that the company had invested $135million venture capitalists' money in just 18months. However, no longer after, Boo.com went into a place of receivership and liquidated on 18May2000.

After surfing around, it can be concluded that the downfall of Boo.com is mainly attributed to the reasons below:

a) Bad Planning
The founders of Boo.com were too ambitious in their business plan. Unlike the traditional shopkeepers who preferably start their business in small scale and then expand it slowly, its Swedish founders wanted to dominate the market immediately. Hence, they had come out an extremely aggresive growth plan, which is simultaneouly launch the new chain of stores in eighteen European countries. The sizeable vision of Boo.com's founders caused the company suffered with huge costs as a result.

b) Poor Web Design and Usability
Boo.com had relied heavily on JavaScript and Flash techonology with the purpose of enabling the shoppers view the products in 3-D. But, the problem is that, in 1990s, the average user's Internet connection does not have the available bandwidth that is needed for 3-D viewing. This causes the difficulties for the shoppers when viewing the products.

Besides that, most of the shoppers were complaining that they were greeted by poor browsing whereby they had to take 5 users actions and answers 4-5 basic questions before they manage to search for the product informations. This could encourage shoppers visit to others site instead of Boo.com as the users do not need to click more than 3 times to find the information they seek. The others site are much more simple, quick and pleasureable to use.

Moreover, Boo.com is not a consumer-friendly website where it is designed for the shoppers who have 56K modems and above only. This limitations had severely impacted on the revenue earned.

c) Bad Marketing
Even though Boo.com provide the technology which enabled the shoppers to view items in 3-D, but it had ignored the key internet buying diven-lower prices. The products which sold by Boo.com were highly priced and it subsequently tends the result that the shoppers would not enticed to shop at this site anymore.

In short, the cause of failure of Boo.com is that it DID NOT FULFILL the 3 main criterias for web purchases: Ease/convenience, better price and speed of process.

If you guys are interested to know more Boo.com, kindly visit to the links below:
i)www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Boo.com-case-studies

ii)en.wikipedia.org/wiki/Boo.com