Revenue model is a description of how the company or an e-commerce project will earn revenue. Basically, revenue of a company can be generated through sales, transaction fees, subscription fees, advertising fees, affiliate fees, and other revenue sources.
Google Inc.’s revenue for the year ended 31 December, 2007 was US$ 16,593,986,000. This included advertising revenue for Google websites (approximately US$ 10,624,700,000 or 64%) and Google Network websites (approximately US$ 5,787,900,000 or 35%). Another 1% of the revenue model was from licensing and other revenue (approximately US$ 181,400,000).
As for Amazon.Com, the revenue models are primarily generated from sales. For the year ended 31 December 2007, the total net sales were US$ 14,835,000,000. This sales amount could be classified into two geographical areas which are North America and International. The net sales for North America were US$ 8,095,000,000 whereas the net sales for International were US$ 6,740,000,000. Now, Amazon.Com also takes the opportunities of using advertising fees as a passive income for advertisers to promote their advertisements to earn extra income.
On the other hand, the total net revenue for eBay Inc. for the year ended 31 December, 2007 was US$ 5,969,741,000. The revenue of eBay Inc. mainly generated through transaction fees. The total net transaction revenue was recorded as US$ 5,797,920,000 or in other words, the transaction revenue was 97.1% of the total net revenue. The total net transaction revenue could be further breakdown into Marketplaces net transaction revenue (US$ 4,203,340,000 or 70.4%), Payments net transaction revenue (US$ 1,401,824,000 or 23.5%) and Communications net transaction revenue (US$ 192,756,000 or 3.2%). The other portions of the total net revenue were advertising and other net revenue, which stated as US$ 171,821,000 or 2.9%.
In summary, Google Inc. earning revenue from advertising related to its Internet search, web-based email, online mapping, office productivity, social networking, and video sharing as well as selling advertising-free version of the same technologies. Its principal products and services include Google AdWords and Google AdSense. In contrast, Amazon.Com started as an online bookstore, but soon diversified to product lines of VHS, DVD, music CDs, MP3 format, computer software, video games, electronics, apparel, furniture, food, toys, etc. Its primary products include A9.com, Alexa Internet, and IMDb. On the contrary, eBay Inc. earning revenue through online auction and shopping website in which people and businesses buy and sell goods and services worldwide. Its major products and services include online auction hosting, electronic commerce, shopping mall, PayPal, Skype, Gumtree, and Kijiji.
Labels: e-commerce, week3
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