History and Evolution of E-commerce

Electronic Commerce is defined as the process of buying, selling, transferring, or exchanging products, services, and information via computer networks.

History and Evolution of E Commerce

In 1960s Electronic Data Interchange (EDI) was invented and it is used to transfer data between different companies which use networks in its earlier stage, such as VANs or the Internet. Later on, the technology evolved to Electronic Funds Transfer (EFT).

EFT is used to provide for electronic payments and collections. Funds could be transferred electronically online from one to another without using any existence of paper money. Because of this, EFT can help the users to save on administrative costs, increase efficiency, simplify bookkeeping, and enhance stronger security.

EDI and EFT gave an opportunity for users to exchange their business information and operate various types of electronic transactions. The ability to use such technologies appeared in the late 1970s and such technologies allow all the business companies to send their commercial documentation to each other electronically.

In the 1980s, e-commerce has grown rapidly when the credit cards, automated teller machines (ATM) and telephone banking using online services have developed and accepted by the public. Besides this, the airline reservation system like Sabre in the USA and Travicom in the UK also facilitate the development of e-commerce. The other important steps for the rapid growth of e-commerce are the first online shopping site that was invented in the UK in 1979 by Michael Aldrich and the online shopping website was used extensively particularly by many of the auto manufacturers.

From 1990 onwards, e-commerce was used widely including enterprise resource planning systems (ERP), data mining and data warehousing. In 1991, the first online information marketplace, including online consulting and another pre-Internet online system were being introduced. But, the commercial enterprise on the Internet was strictly prohibited. E- commerce started to be used widely in 1991 when the Internet was available for commercial use to the public.


In 1992, the development of Mosaic web-browser contributes an important step for the development of e-commerce. This web browser was given in the form of a browser which can be downloaded and it was named as Netscape. This web browser was further broadened on the scope and possibility of electronic commercial transaction.

In 2000, a major merger between AOL and Time Warner contributed another important step for the development of E-Commerce. By the end of 2000, there is an increasing number of European and American business companies that start to offer their services through the World Wide Web. Then people began to associate a word "e-commerce" with the ability of purchasing various goods and services through the Internet by using the secure protocols and electronic payment services.

In 2004, the term Web 2.0 was introduced by O’Reilly Media which refers to the second-generation of Internet-based services that enables people to collect and share information online with new methods such as networking sites, wikis, communication tools and folksonomies. Many researchers predicted that the booming of e-commerce will become more and more popular in future which will also generate large revenues to the companies.

Review on Real-World Case: Google is Changing Everything

Google nowadays has indeed evolved to become an essential part of our life. It is the most popular search engine in the world of World Wide Web. I believe that most of us have a default web browser and the default web page will be Google Search. This proves that Google Search Engine is widely used nowadays. Students and researchers especially, will need to access to Google Search Engine to search for any information they want. Most of us are satisfied with Google Search because it provides efficient and effective search technology which gives a convenient and user-friendly environment for its users.

Past studies has proven that Google is now expanding on its services. From a search engine, it is now developing its own user-friendly application software. Its goal is to develop technologies in order to organize the information from all around the world and make it easily accessible and useful. Besides providing a useful space for advertising, Google is now inventing in web-based application spreadsheet software to help users organize their information. This program helps users to organize information easily and also overcome the limitations in Microsoft Excel.

Apart from software businesses, Google also offers a range of Web services including Google Earth, Google Maps, Google Mini, Froogle and many other services. They also partner with other enterprises in order to improve their services and performance. For example, America’s largest nonprofit health maintenance organization, Kaiser Permanente.org has used Google to share information with its members and has a wide, established network to enable its members to connect and share information with each other.

From all the services offered by Google today, we can see that one day in future, Google will be offering more and more services that are needed for us users, which will become an important service we can obtain online. This is indeed a good idea for other search engines to follow because expanding services will increase revenues for these online services companies.

Sources: Turban, E., King, D., McKay, J., Marshall, P., Lee, J., & Viehland, D., (2008).

Electronic Commerce: A Managerial Perspective 2008 (International Edition).

Upper Saddle River, NJ: Pearson-Education International, pg 38

An Example of an E-commerce Success and Its Causes -Ebay

Ebay is a major auction service on the Web. It popularises the concept of buying and selling online,and both individuals and commercial enterprises list items for sale. The process of buying and selling is through price bidding, whereby the person with the highest price bid will be able to purchase the product and a transaction will be taken place. EBay is one of the successful examples for e-commerce and also the most favourable website among online shoppers.

EBay's incorporation was launched in 1995. It is founded by a French-born Italian computer programmer Pierre Omidyar who wrote the code for an auction website that he ran from his home computer. In the earlier stage, it is meant to be a marketplace for the sale of goods and services for individuals.



Nowadays, EBay is the world’s largest online marketplace. It has built an online person-to-person trading community on internet, using the World Wide Web. Every user or seller can sell or purchase anything throughout this website (www EBay.com). They can browse the listed items in a fully automated way. The items are arranged by topics, where each type of auction has its own category. These facilities are easy for the buyers to explore and enable the sellers to immediately list an item within minutes of registering.





The factor that causes EBay to be successful is the provision of an open trading platform where the market determines the values of items that are sold. EBay also provides many things for users to buy such as accessories, toys, clothing, and household goods to attract people to browse through eBay. It brings convenience and saves time for us because we can buy those goods without going shopping to shopping malls. Besides, it is a secured online transaction because it uses credit card payments under the Paypal service to make purchases so that the users will have lesser risks in terms of payments.

Furthermore, the users really enjoy the competition of the bidding process. They enjoy looking around for merchandise and gather more information from many sources so that they can make comparison of prices and product details for the same product. It gives more comfort for people to make use of purchasing goods and services online.

Ebay history
About Ebay
http://www.pcmag.com/encyclopedia_term/0,2542,t=eBay&i=42306,00.asp
http://www.ecommercetimes.com/story/2127.html?welcome=1213184390

Comparison of The Revenue Models of Google, Amazon.com and eBay

The Revenue Model, according to Turban(2006), is a description on the way a company or an E-commerce project will earn its revenue. Revenue models include sales revenue model, transaction fees, subscription fees, advertising fees, affiliate fees, online donations and other revenue sources. It is a way businesses earn revenue mainly through advertising and charging to its customers.



In Google, the revenue model used is focused on advertising and search solutions. The types of revenue models used are Google Adwords, Google Adsense, Google Answers, Froogle and the latest revenue model, Google-as-per-email.


Now, let me share with you what are all these revenue models are about. When advertisers want to advertise on the Google website, Google allows them to do so by using the Google Adwords revenue model. It is a pay-per-click advertising program that enables users to view the advertisements on the Google web page when they search through the Google search engine.
The relevant advertisements will be shown on the ‘sponsored links’ column located at the right side of the search results and some of the other advertisements can be found on top of the search results. The advertisers will have to pay every time their advertisements receive a click from the users. When they advertise, they have to decide on the keywords used or the advertisement and the rate of payment they are willing to pay for a click on their advertisement.


Google Adsense, on the other hand is a more advanced advertisement tool offered by Google. It is a web serving program whereby the advertisers can use the program to edit text, graphics or videos for their advertisements rather than just a keyword in Google Adwords. The rates charged are on a per-click or per-thousand-ads-displayed basis.

Besides advertising, Google also offers Google Answers, an Internet search and research based service offered with a fee charged. The customers will ask the questions they want and offer a price for the answers. Then, Google, as an intermediary will help to look for researchers to answer those questions posted, and earn some money partially from the customers.

If customers want to buy or survey about goods or services offered online, Google launches the ‘Froogle’ service, which is a price engine website that makes it easy for the users to look for products and services for sale online. It does not charge sales commissions but will earn on the advertisements of the products.

Lastly, the latest revenue model of Google is the Cost-per-Action basis revenue model. It is different from the Google Adsense model because this model is more flexible in promoting. The advertiser will only need to pay if the users click on the advertisement and take some actions on the products offered like purchasing the product.




Founded since 1994 and launched online in 1995, Amazon.com started by selling books online. It caters to a revenue model of direct selling or e-tailing by selling specific products to customers like retailers online. From books, it now ranges from selling all types of products, including music, videos, electronic and household products. It has the largest supplies of products online. Not just selling products online, Amazon.com also offers excellent services on delivery, with combinations of lower price products and shipping promotions. It is certainly focused on retailing business by having good supplier and customer relationships.

Later on, Amazon.com shifted from direct retailing to the affiliate revenue model when it discovered that many small e-businesses would like to be an affiliate of Amazon.com. This model is also known as the ‘Click-through’ model whereby small online merchants will be an affiliate partner with Amazon.com and they will contribute a commission to Amazon.com when the customers clicked through the affiliate to the merchant and generated sales. By having affiliates like content-based websites, web Portals and small e-businesses will help to generate new traffic on the website in order to increase revenues. Today, Amazon.com is still using this method because it is effective in generating revenues for them.



If you like something new rather than fixed price goods, eBay will be a good choice for you because it is a popular online auction site which provides buyers and sellers worldwide to trade on goods and services. The auction is done ‘silently’ whereby the buyers will bid for the price in order to purchase the product from the seller. The highest bidder will be able to obtain the desired goods. eBay charges its sellers a small amount of listing fees in order to let the sellers to list the products to be sold online. From there, the sellers can start to bid their prices with the buyers. This is also known as the ‘Fees-per-transaction’ revenue model. Sellers who have good selling in their products can enjoy extra benefits from eBay by having its PowerSeller program, which will cost them lower fees for listing. Buyers too are guaranteed on their service by having goods delivered on time.

The types of selling fees that eBay will charge on its sellers are Insertion Fees and Final Value Fee. Insertion fees are charged if the sellers want to list an item for sale on eBay. The final value fee will take place if a transaction is being made, which includes Auction Listing Fees, Fixed Price Listing Fees and other optional feature fees in order for a sale to take place.

For buyers, they can pay for their goods using the credit card or bank transfer through the eBay Pay-pal system. This system will help the customers to track their payments made to eBay.

For more information, feel free to explore:
www.google.com
www.amazon.com
www.ebay.com

Example of an E-commerce Failure and Its Causes--Pets.com

Introduction

One of the example of an E-commerce failure is Pets.com. Pets.com is a dot-com enterprise that sells pets or pet accessories to the customers directly. It starts its operation in February 1999 to provide pet products, information, and resources to customers. The major competitors for pets.com are petopia.com, petsmart.com, and petplanet.com. Pets.com was the first of these pet stores to enter the online pet industry. pets.com is the successful online pet store in the beginning of 1999 but it closed down in November 2000. It is the second Amazon aligned e-tailer to shut down the business.

The causes of Pets.com failure

There are several factors that cause the failure of Pets.com in E-commerce. The main cause is it never brought profit for pets.com since it is having negative gross profit margin. pets.com lost money on every items sold because it sells its product at a lower price than the cost to purchase from the supplier. Therefore, pets.com had suffered $7.6 million loss on its sales.

Second, the shipping cost is extremely costly for customer because pets.com is a market that sells low-margin food and goods. Nowadays, customers would like to shop at discount stores which is near to their location because it is more convenient for them than shopping at online pet stores.

Third, pets.com business model are not unique since there are many competitors which are selling the same products. Also, in 2000, pets.com decided to go into public. However, it went into public and spent money too quickly, causing excessive spending on marketing and advertising costs.

Lastly, cost of doing business online are high because they tend to sell products below cost in order to compete with competitors. However, they still can't recover from their losses.

http://pets.com/