History & Evolution of E-Commerce...

In this era, e-commerce also known as electronic commerce is quite common and popular as numbers of internet user is growth rapidly in the world. E-commerce in sense of having trading of information, products or services over electronic systems. E-commerce are include business-to-business (B2B) and Business-to-consumer (B2C). According to a study by The Boston Consulting Group (BCG), one-forth of all US business-to-business purchasing will be done online by the year 2003.

Existence of World Wide Web in early 1990s by Tim Berners-Lee which make an opportunity to form an e-commerce environment. In an early development of e-commerce, electronic data interchange (EDI) and Electronic Funds Transfer (EFT) are used. EDI can formally defined as 'The transfer of structured data, by agreed message standards, from one computer system to another without human intervention'. While, EFT refers to computer based systems used to perform financial transactions electronically.

In 1994, internet began to advance in popularity among the general public. While, Netscape released the Navigator browser in October under the code name Mozilla. The 1st e-commerce is form by Pizza Hut which offered pizza ordering on its web page.

In 1995, Amazon.com launched by Jeff Bezos and eBay.com founded by computer programmer Pierre Omidyar as Auction Web which both are most popular and names in e-commerce until today.

In 1998, development of secutiy protocols (eg. HTTP) and Digital Subsciber Line (DSL) which allowed rapid acces and a persistent connection to the internet. In fact, people will spend more time online.
With the developement of internet, its create great numbers of business companies in US and Western Europe represent their services in World Wide Web.

In 2000, there is a dot-com burst and make numbers of e-commerce companies shut down. Not only that , it created a stock market bubble ( in financial markets term applied to a rise or boom in the share prices of stocks of a particular industry). The bubble caused an overvaluation of the company.

After the dot-com collapse in end of 2001 , people learn from the failure and make the largest form of e-commerce, B2B model had around $700 billion in transaction.

Source:http://www.ecommerce-land.com/history_ecommerce.html

An example of an e-commerce success and its causes

There are many successful examples of using e-commerce to do their business activities in the world such as eBay, Amazon.com and others. I would like to introduce an example of an e-commerce success which is eBay.

What is eBay? eBay is the world’s online marketplace where buyers and sellers to come together and trade almost anything. eBay was founded in Pierre Omidyar’s San Jose living room back in September 1995. Seller can lists items on eBay. Seller can sell their item in term of online auction. Seller will open a price and remain in eBay for few days. Buyers then can place bids on the item. When the listings end, the highest bid will win. Seller also can sell their thing in Buy It Now listing. In this way, the first buyer willing to pay the seller’s price gets the item which is in first come first get basic.

Nowadays, eBay is a very famous online business in the world. I think is because eBay allows people to often times connect with childhood memories. It could be anything from collecting baseball cards to toy soldiers to Barbie dolls to doll house. In addition, people can enjoy the competition of the bidding process by eBay. Everybody can get a bargain, in some way, or form, like to haggle a little bit over the price.

An example of e-commerce failure and its cause

Nowadays, there are so many companies expanding their business in the e-commerce world. This may because the companies want to struggle to meet the demand of the customers. And this can explain why there are so many retail worlds want to struggle so much in the e-commerce world. However, converting a once retail only company into an e-commerce giant is no an easy task and it sure does not happen over night like most of these companies would like to believe.


There are some of the problems that the big companies neglect when their jump into the e-commerce arena. This type of company may neglect some of the common factors that may cause the failure in e-commerce such as the shipping product takes man power and it tends to slow the process down simply by the sheer volume of orders the mail service industry receives in that short period of time. There may have some e-commerce’s companies know how to get the job done and they may incorporate an entire delivery division to handle these orders. While not all the companies have the enough capital to invest in such a large expansion, frankly, if they are going into the e-commerce industry, they cannot afford not to put in that investment.


In real world, there are some examples of the failure in e-commerce such as eToys.com. EToys.com launched in 1997 and closed in March 2001. The company raised $166 million in a May 1999 IPO, but in the course of 16 months, its stock went from a high of $84 per share in October 1999 to a low of just 9 cents per share in February 2001. It much likes Pets.com.


In an effort to avoid the shipping missteps of 1999, eToys spent a lot to build two enormous warehouses to handle inventory and delivery. But Christmas sales for the year 2000 season totaled $120 million, which is just half of the company’s projections. Since the company was run out of money and other funding options exhausted, eToys filed for bankruptcy in March 2001.


The reason behind eToys’s failure are similar to those of others failed brethren. eToys has spent too much on advertisement, marketing, and technology and battled a host of competitors. An immediate need for a large infrastructure and plenty of cash to support an untested business model lead to eToys spending outweighed of the company’s income, and investors quickly jumped ship. But after being owned for a period by KayBee Toys, it’s now back for a second run.

Revenue Model of Google, Amazon.com and eBay

eBay Inc. (eBay), incorporated in May 1996, provides online marketplaces for the sale of goods and services, as well as other online commerce, or ecommerce, platforms, online payments services and online communications offerings to a diverse community of individuals and businesses. The Company has three business segments: Marketplaces, Payments and Communications. Its main revenue model is from the Marketplaces. eBay’s Marketplaces platforms earn revenue from, as the case may be, listing, feature, subscription and final value fees paid by sellers, lead referral fees, transaction fees and advertising fees. eBay’s core platform is its traditional auction style and fixed format. These transactions of money are smoothen thru one of its business segments PayPal that is under the segment Payments. Paypal has provided quick payments on a real time basis and offers fraud prevention that is regarded as a core requirement in e-commerce.

Amazon.com, Inc. (Amazon.com), incorporated in 1994, operates retail Websites, which enables its consumer customers to find and discover anything they might want to buy online. The Company’s revenue model is sourcing and selling a range of products worldwide across dozens of product categories, including digital media. Amazon.com also designs, manufactures, markets and sells a wireless e-reading device, the Amazon Kindle. The Company has designed its Websites to enable millions of products to be sold by it and by third parties across different product categories, such as books, movies, music, games, digital downloads, electronics and computers, home and garden, grocery, toys, kids and baby, apparel, shoes and jewelry, health and beauty, sports and outdoors, tools, auto and industrial.

Google Inc., incorporated in September 1998, maintains an index of Websites and other online content, and makes this information freely available to anyone with an Internet connection. The Company’s automated search technology helps people obtain nearly instant access to relevant information from its online index. Google generates revenue primarily by delivering online advertising. Businesses use its AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party Websites that comprise the Google Network use its AdSense program to deliver relevant ads that generate revenue and enhance the user experience.

The difference of revenue between all of the above company is the difference in revenue model. Google’s main revenue is due to its advertising revenue that arises from its AdSense and AdWords programs that enables businesses to advertise their product in it. Amazon.com’s revenue is mainly through the sale of products from their websites and the revenue is gained from the sales of the products. eBay on the other hand, has the revenue model that is based on the auctions they host and that is in a form of transaction fees from successful transactions made from the seller and buyer and listing of items charged on seller.