E-Commerce: Revenue Models - Assignment Example

Running head: E-Commerce E-Commerce: Revenue Models Author Author Affiliation October 2009 Table of Contents Table of Contents 2 1- Abstract 3 2- Introduction 3 3- Ecommerce 4 4- Revenue Models 5 5- Examining Revenue Models 6 5.1 Twitter 6 5.2 Google 7 5.3- Yahoo 7 5.4- Facebook 7 5.5- YouTube 7 5.6- MySpace 8 5.7- MSN 8 6- SWOT analysis 8 6.1- Strengths 9 6.2- Weaknesses 9 6.3- Opportunities 9 6.4- Threats 10 7- Future prospects 10 8- Medium Term prospects (YouTube) 11 9- Customer Centric Design 11 9.1- Website 1- Ebay.com [GOOD] 11 9.2- Website 2 [BAD] 13 9.3- Websites 3- [MODERATE] 14 10- Conclusion 15 11- References 15 1- Abstract At the present, web based businesses are gaining more popularity. The web based business structures are more popular among people because they offer better operational structure, easy management, and huge revenue. This research based report presents the detailed analysis and review of the investment related decision in any web based business. This report is based on the detailed analysis of different website businesses and selection of appropriate one for the future investments. In this report I will discuss about the business in a detailed way and provide a comprehensive overview of the revenue models and operational details. 2- Introduction According to (Shelly, Cashman, & Vermaat, 2005), “the Internet is a huge collection of networks that connects the millions of organizations, government agencies, educational institutions, and individuals”. More than one-half billion people all over the world make use of the Internet on a daily basis for an assortment of reasons, few reasons are given below: (Shelly, Cashman, & Vermaat, 2005, pp. 11-12) and (Laudon & Laudon, 1999, p. 25): Talk with and meet other people around the globe Utilize a wealth of information, news, and research results Online shopping for goods and services of their choice Bank and investment Participating in online classes Making use of tools and ways such as, entertainment and free time, for instance online games, music, videos, books, and magazines. Internet has changed and facilitated in every field of life. But its usage in business has provided modern and innovative methods of business. “A revenue model refers to a course of action by which an organization essentially earn money by indicating how it will be charged for the services offered” (Kotelnikov, 2009). This research presents the online business revenue model assessment and analysis regarding the future business investments. This report will offer a deep insight into the one of the main and top business and revenue models. Through this we will assess the main business power and better investment areas. 3- Ecommerce The wide-ranging accessibility of the Internet for carrying out business activities and transactions between buyers and sellers is the essential and most important reason for the development of electronic commerce (e-Commerce). “Electronic commerce is the course of action of purchasing and selling goods and services electronically with computerized business transactions by means of the Internet, networks, and other digital technologies” (Laudon & Laudon, 1999, p. 25). It also encompasses actions and operations behind those market transactions, for instance advertising, customer support delivery, marketing, and payment. By substituting manual and paper-based techniques with electronic methods, and by making use of information flows in modern and energetic modes, e-Commerce can speed up ordering, delivery, and payment for goods and services on the other hand reducing organizations operating and inventory expenditures (Laudon & Laudon, 1999) and (Norton, 2001). 4- Revenue Models The revenue models particularly explain diverse methods for producing profits. The revenue model describes the main business earnings and its relation to the sales of products or services. This can be both for selling straightly from the main or, dealer of the service in the course of a mediator who will obtain a cut of the selling cost (Carter, 2009). There numerous techniques for online revenue generation. Some methods are given below: (Carter, 2009) 1. The business of online selling of the physical goods is now emerged as a solid e-business; a large number of online business corporation are generating revenue from this business. 2. Online advertisement is also a large business in this regard where we can utilize the website for the promotion of business products and services. In this regard we can generate revenue through online ads, promotions, and newsletters. 3. Earnings per click are fairly small income on the other hand; it provides a vital way regarding the online promotions and ads. We require a lot more online user traffic to formulate good capital. As well as not the entire data and informational subjects are gainful. For instance, searchers for amusement as well as games information do not be inclined to click on advertisements or else purchase anything. 4. We are able to sell our business services on the web. If we write on the web, what is our profession, whether we are a doctor, carpenter, lawyer, web designer, psychologist, whatever, we can obtain web visits from projection in our confined region as well as revolve those groups into clients. There are different revenue models that are involved in business, especially in online (e-commerce) business. Revenue model is an explanation of how the business will earn money, generate earnings as well as make a better return on provided assets (DuNg, 2008). Transaction fee revenue model is a model in which a business obtains a payment for allowing or performing a business. It is foundational on the capacity of dealings made. Subscription revenue model is model for business that charges a payment costs for the client that right to use to the data, information or other content as well as services obtainable. Sales revenue model provides business that obtains the income through selling products, information, goods or services. Advertising revenue model for a business offers an opportunity for ads as well as obtains costs from the corporations that promote their products. Affiliate revenue model for a corporation obtains payments for referring clients to others websites (Onlinebusiness, 2009). 5- Examining Revenue Models In this section I will outline the analysis of revenue models of different online ecommerce website. This section will outline different business operational on the web and having different business revenue models. 5.1 Twitter Twitter website has established on different online business and commerce practice. The main revenue models are based on the Adwords and search engine. The main fraction of the Twitter revenue is extracted trough these areas (Lunn, 2008). 5.2 Google Google is a major web based business that extracts huge percentage of annually revenue/income through the advertising revenue model. Google AdSense, Google AdWords, and Froogle are the main Google advertising revenue models through which Google takes revenue. This is a pay per click advertising program (OrganicSpam, 2009). 5.3- Yahoo Approximately 88 percent of Yahoo revenue is extracted from marketing services in year 2006. The biggest part of it comes from web based search advertising. In this regard advertisers bid for search terms to present their advertisements on the search outcomes. Besides this yahoo also has commission based sales and advertising revenue model (icmrindia, 2004). 5.4- Facebook Facebook has multiple web based revenue models. It is assessed that FaceBook is taking revenue for the brand ads, ad deal with Microsoft, virtual goods, and self-service ads. There we can say that FaceBook major source of revenue and main revenue model is Advertisement (Papworth, 2009). 5.5- YouTube The most widely used online entertainment portal is YouTube. This portal extracts major part of revenue for sales of contents and Advertising (Mappingtheweb, 2007). 5.6- MySpace MySpace functions exclusively on revenues generation through advertising. In the course of this Web site and affiliated advertisement networks, MySpace is next to Yahoo! in its capability to gather data regarding its users as well as in its capability to utilize behavioral targeting to choose the advertisements for every visitor (Kafka, 2008). 5.7- MSN Like Yahoo the structure of MSN is based on the multiple revenue models. This web based structure is operating and extracting revenue through the marketing services. It offers advertisements and search ads facilities to take revenue. Here this website also runs search engine and commission based sales (icmrindia, 2004). 6- SWOT analysis The SWOT Analysis is a planning tool which is used by organizations to make certain that there are obvious goals established for the project, as well as that all elements associated to the endeavor, no matter what is their nature, whether positive or negative, are recognized and addressed. With the purpose of completing this job, the method of SWOT encompasses four attributes of concern: strengths, weaknesses, opportunities, and threats (Tatum, 2009). This section presents the detailed SWOT analysis of the one of the main web based business. I have decided to discuss and evaluate the “YouTube” web based commerce structure. The online business of YouTube is a renowned success story. They are capable to make millions upon millions of video sights each day. However so as to really classify this start-up like a true success, considerable revenues require to be recognized like a considerable ROI is the end goal (Mappingtheweb, 2007). A lot of researches appear to keep surfacing just about how YouTube devices to monetize its huge traffic. Advertising is for all time a choice, although not for all time the most suitable or appropriate. 6.1- Strengths We can view that the popularity of the YouTube is increasing among people day by day. The power of the YouTube is enormous. The main strength of this business is its operational style. The main revenue extraction for this business is a positive idea. This business owns millions of viewers and billion of the clicks each day. The main advertisement business establishment business through this platform can offer huge benefit. 6.2- Weaknesses The main weakness we can assess from YouTube revenue generating methods that the most people going to YouTube are typically interested in viewing songs, clips, videos and would not click non-related advertisements on the website’ sides. Therefore the website advertisement options are not so appropriate some times (Bashar, 2009). This can be the main weakness in this business structure. 6.3- Opportunities There are lots of opportunities for the YouTube business structure. This business and entrainment platform offers a great opportunity regarding attracting huge people and viewers in the web based business. Millions of people daily access the website and we can obtain opportunity regarding the advertising and promoting the business on the web (Bashar, 2009). 6.4- Threats There are several threats regarding the web based business. The global economy is having a huge down period in last few years of this decade. In the scenario of web based commerce we are facing main danger from Internet security. There are large numbers of frauds and hackings are reported pervious few years. Now people hesitate regarding web based transaction. We can have threats regarding the down in the web based commerce and business (Shelly, Cashman, & Vermaat, 2005). 7- Future prospects In these aspects of future prospects regarding the web based business we are expecting that there will be potential enhancements in the web based business after few years. The main reason behind this argument is the emergence of the new and more secure web based business. This can be done through the Web 2.0. This new web structure will be operational after few years. This new web based system will offers more secure environment and business opportunities. This will also re-establish the confidence of the people in the web based business (Shelly, Cashman, & Vermaat, 2005). 8- Medium Term prospects (YouTube) In the aspects of medium term prospers the YouTube business is expected to emerge and enhance in coming few years. This business structure is expected to enhance and cultivate in coming few years. The investments in this business will offer us a confidence that our business is operational through the worlds’ most popular website. It is also expected that the viewership of the YouTube will also increase in coming few years. This business is offering the people a more enhanced control and power to mold the way of the entertainment according to their desires and will. So we are expecting that YouTube business will obtain more customers in coming few years. Therefore YouTube business will emerge in a better away. 9- Customer Centric Design In this section I will elaborate about the customer centric design of online websites. In this way we can assess the good web design and enhanced operational structure. 9.1- Website 1- Ebay.com [GOOD] This section will present the detailed analysis of the Web site design and interaction of the Ebay.com. Here I will elaborate the main feature and qualities of its website interaction and design regarding the better working and shopping. Here I will check and analyze the different human computer interaction features regarding the explanation main qualities and weakness in its online web design. Ebay Customer Centric Design This section is aimed to explain the main design criteria for website design. For this I will elaborate the few main terms regarding the online design and interaction. Given by: (Helander, Landauer, & Prabhu, 1997) and (Dix, Finlay, Abowd, & Beale, 1998): High quality content: Ebay.com website design contents are designed through the high quality website interaction design. The main arrangement and distribution among the website contents is really simple. Here we can select the category and type of the item for our shopping and search. Ease of use: Ebay.com website design has implemented a main web design quality regarding the ease of use of overall website. Here web designers have implemented the “1 click download” facility for any type of shopping and searching. Quick to download: Here we can view and retrieve our desired contents easily in less time and more rapidly. The designers have concentrated on the less complex and less heavy website contents so that any data retrieval is easier. Update frequently: The Ebay.com website contents are updated on daily basis. The website contents need to be updated because of heavy products launch and sales. Usability: If we analyze the main page of Ebay.com website then we will see that this page incorporates each feature of the good website design and interaction. Effectiveness: The overall search and shopping experience on the Ebay.com website is a real evidence of its effective web design and interaction. Here we have simple menus and methods regarding the online search and payment. Efficiency: The efficiency is the main feature of the online website design and interaction. The efficient website design makes the customer more loyal with the company. Ebay.com website has incorporated all the features of effective web design and interaction. Accessibility: Accessibility is main factor in any website working and design. Ebay.com website has a true implementation of the website accessibility feature. Here we have strong accessible features of the exploring, searching, and shopping for the products. 9.2- Website 2 [BAD] Tonyfretton.com This website is developed for business of Tony Fretton and his partner James McKinney. These people are in the business of architectural designing. The business of Tony Fretton continues to be globally recognized as exemplary for the architectural designing. This has established an enhanced market value on for the architectural experiences and social engagement with the surrounding city. This website design is really poor. The main website page is not offering valuable information about the business and company. There is no main link of name on this website. According to (Usabilitynet, 2006) given usability guidelines for the effective website design the main structure of the website is not offering better user interaction. The website design is not attractive and there is no appropriate navigation on the web pages. The information contents of the website are less effective. The website links are only images those are not offering the purpose of the website information. The website contents contain better information about the business main project, but there is huge difficulty for user to access this information. 9.3- Websites 3- [MODERATE] Crownhouse.com This website is sponsored by Crown House Technologies. This website and business is offering the consultation and services regarding the building and construction sector. The main audience of this website is the new building project managers and people who are interested in construction areas. This website is presenting a good web design that incorporates a better operational structure and working capabilities. This overall structure of website is good and offering the user a better overview of business and working structure. Here I have found these characteristics in this website: The navigation is simple and easy. Links are operational Color scheme is effective Overall informative structure Information presentation is easy to understand This website is offering a great advantage regarding the business links and contents. This website is entirely a useful structure. This website is offering construction business a great opportunity of linking to overall world clients. 10- Conclusion In this research I have presented a detailed analysis of the online business and ecommerce websites. This research based report has outlined diverse areas of web based businesses and their analysis. This report has covered the overview of the web based business structures, operational structure, easy management, and huge revenue generations areas. I have also analyzed the different websites and customer centric web design. This report will offer a detailed and comprehensive overview of the web based business and associated areas. 11- References Bashar. (2009, October 04). 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Retrieved 10 17, 2009, from http://www.sharpened.com/web/about/rules.html Shelly, Cashman, & Vermaat. (2005). Discovering Computers 2005. Boston: Thomson Course Technology. Tatum, M. (2009). What is SWOT Analysis? Retrieved October 18, 2009, from WiseGeek.com: http://www.wisegeek.com/what-is-swot-analysis.htm Usabilitynet. (2006). Design guidelines for the Web. Retrieved 10 17, 2009, from http://www.usabilitynet.org/tools/webdesign.htm Read More