To plan a portal venture successfully, careful analysis of the revenue models and customer adoption trends is essential. Make a mistake and you are liable to lose millions of dollars. So, what are the different revenue models? There are five basic portal revenue models: 1) access revenues, 2) advertising revenues, 3) subscription revenues, 4) transaction revenues, and 5) micro-transaction revenues. I will explain more on these revenue models when I pin point each of the models for three different companies which go online, Google, Amazon and eBay.
First and foremost, Google is a very famous, established and stable company that goes online. Its revenue models are Google AdWords which is a pay per click advertising program designed to allow the advertisers to present advertisements to the public at the second the people are looking for information related to what the advertiser has to offer.
The more recent revenue model of Google is the Google Publication Ads Program through which they distribute their advertisers’ ads for publication in magazines. Google recognize as revenue the fees charged advertisers when their ads are published in magazines.
Another model Google generate revenue is through Pay per Click Advertising. This model worked in such a way that it sends immediate, targeted traffic to public’s website. It is an online advertising payment model in which payment is based on qualifying click-through. An advertiser has to pay every time his advertisement receives a click. The Advertisers decide the keywords relevant to their offer that should display their advertisement and the maximum amount they are willing to pay per click for that keyword.
More than that,Google AdSense is also another revenue model. Website owners can enroll in this program to enable text, image and, video advertisements on their sites. Revenue is generated on a per-click or per-thousand-ads-displayed basis and the ads are administered by Google.
Furthermore, Google Answers is another revenue model too. Instead of performing a search ourselves users pay someone else to do the same. Customers ask questions, offer a price for an answer, and researchers answer them. Researchers are not Google employees. Prices for questions range from $2 to $200; after a question is answered, Google keeps 25% of the payment, sends the rest to the Researchers.
Last but not least, Froogle, a service from Google that makes it easy to find information about products for sale online. Froogle is a price engine website launched by Google Inc. Froogle is different from most other price engines in that it neither charges any fees for listings, nor accepts payment for products to show up first. Also, it makes no commission on sales. Any company can submit product information (via a “data feed”) and be included in the Froogle engine. Advertising space is available for purchase to be displayed in Froogle in the form of an AdWords ad.
eBay on the other hand generate its revenue from a number of fees.There are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. For instance, the U.S.-based eBay.com takes $0.20 to $80 per listing and 5.25% or less of the final price.Besides, the Mexican eBay "mercado libre" takes 1% (price of the article × number of articles to be sold), and 4.99% of the final price if there is a successful trade. Other than that, the UK based ebay, it takes from £0.15 to a maximum rate of £3 per £100 for an ordinary listing and from 0.75% to 5.25% of the final price.
In addition, eBay now owns the PayPal payment system which has fees of its own. Revenues from PayPal's transaction fees were $243.9 million, a gain of 51 percent from the year-ago quarter and 145 percent from 2003. And the number of registered PayPal users shot up to 79 million from 50 million a year ago.
Under current U.S. law, a state cannot require sellers located outside the state to collect a sales tax, making deals more attractive to buyers. Although state laws require purchasers to pay sales tax to their own states on out-of-state purchases, most non-professional sellers ignore this requirement. However, most sellers that operate as a full time business do follow state tax regulations on their eBay transactions.However for the tax called Value Added Tax(VAT), eBay requires sellers to include the VAT fees in their listing price and not as an add-on and thus eBay profits by collecting fees based on what governments tax for VAT.
Another interesting aspect of eBay's revenue model is it's somewhat evenly spread out among a number of categories, with one glaring standout. Among the categories delivering more than $1 billion in gross market value are:
- Clothing and accessories -- $3.3 billion
- Consumer electronics -- $3.2 billion
- Computers -- $2.9 billion
- Home and garden -- $2.5 billion
- Books/Movies/Music -- $2.4 billion
- Sports -- $2.1 billion
- Collectibles -- $2.0 million
- Toys -- $1.6 billion
- Jewelry and watches -- $1.5 billion
- Business and industrial -- $1.5 billion
- Cameras and photos -- $1.3 billion
Moreover, the company's current business strategy includes increasing revenue by increasing international trade within the eBay system. eBay has already expanded to over two dozen countries including China and India.
Amazon.com has finished its 13th Christmas season and the results are the best ever season, with its busiest day being December 10. On that day, Amazon customers ordered more than 5.4 million items, which is 62.5 items per second. Amazon Worldwide 2007 (Including results for the US, UK, Germany, France, Japan and Canada) shipped more than 99 percent of orders in time to meet holiday deadlines worldwide and on the peak day this season, Amazon's worldwide fulfilment network shipped over 3.9 million units to over 200 countries.
Amazon.co.uk received orders for over 950,000 items on its busiest day in the run up to Christmas this year – at a rate of 11 orders per second – exceeding all previous sales records. At its busiest, Amazon.co.uk shipped over 700,000 units in one 24 hour period, which represents 375 tonnes of goods. That means that on average, a delivery truck was leaving an Amazon.co.uk distribution centre once every seven minutes."
Like eBay, Amazon.com was born in 1995. The name reflected the vision of Jeff Bezos, to produce a large scale phenomenon like the Amazon River. This ambition has proved justified since just 8 years later, Amazon passed the $5 billion sales mark – it took Wal-Mart 20 years to achieve this. These are Amazon’s revenue models.
These three companies had indeed amazing e-commerce revue models. No one company started well and still doing well, so are these companies. They faced their ups and downs and had gone stable for the mean time, but in the future, no one will know what the outcome of these companies is. It depends on them, how they manage the company. Whatever it is, it would be great to see more e-commerce successes than failures.
