Revenue model can be defined as the technique or method that is adopted by the e-commerce company in generating the business revenue from its website.
Basically, there are five types of revenue model which are stated as below:
(1) Sales revenue - Revenue generated by selling of goods, services, and merchandise information provided in the publisher's website.
(2) Transaction fee - Commission earned by the company based on either the volume of successful transaction or fixed fee per transaction successful conducted.
(3) Advertising fee - Fee that is charged by the web publisher company to advertiser, by letting the space in publisher's website to advertise the product in different form of advertisement.
(4) Subscription fee - The users have to pay a fixed amount of fees for subscription of contents or services provided by the website.
(5) Affiliate fee - Fee that earned by the company for referring customers to other websites.
Now we will identify and compare the revenue model for Google, Amazon.com and eBay respectively.
Google is the most widely-used web search engine in the world. There are thousands million of internet users all around the world search information via Google search engine everyday. Besides that, it also provides a variety of free of charge internet services such as Blogger (web log), Google Mail (electronic mail) and etc.
Google does not charge any fee on the internet services that it provided for example Gmail, G-talk, but how does it gain huge profit every year? In fact, its revenue model mainly from advertising fee related to its internet services. This consists of about 99 percent of overall revenue. Besides that, Google also earns revenues from sale of its advertising-free version of the internet services. The advertising fees of Google mainly consist of Google Adwords and Google Adsense.
Google Adwords is the main revenue source of Google. It offers pay-per-click (PPC) advertising, and site-targeted advertising for both banner ads and text. Pay-per-click (PPC) advertising means that the advertisers need to pay to Google every time the advertisement received a click. The advertisement is designed to appear beside the search result pages of the Google seach engine in text form. It allows the advertisers to present advertisements to users when the users are searching for information related to what the advertisers have to offer.
Amazon.com is a marketplace where allows sellers to offer their good alongside Amazon's offerings. A website can use a combination of revenue models to generate revenue. Amazon.com is a prime example of the e-commerce model or e-tailing. Amazon generates revenue primarily by selling books, videos, electronics, and kitchen equipment on domestic and international website, such as Amazon Marketplace. However, Amazon is also a pioneer in affiliate partnership marketing. An Amazon partner website can display Amazon books ( and review etc.) directly on their website, and sends customers to the Amazon's website when the visitor is ready to buy it. In turn, Amazon pays a commission for the sale to the site owner.
An e-commerce model is the most well known revenue stream where the website sells products or services online. Every e-commerce entity on the internet should have a business model that performs on the internet.
E-Tailing (electronic retailing) is the selling of retail goods on the internet. E-tailing is synonymous with business-to-consumer (B2C) transaction.
Besides sale of goods, Amazon.com also generates revenue through sale of web services, for example Amazon Simple Storage Services (S3), Amazon Elastic Compute (EC2) and etc. Amazon S3 is an online storage web service that provides unlimited storage through a simple web services interface. Amazon EC2 is a commercial web service that allows customers to rent computers on which to run their own computer applications.
Advertising fee is also one of the revenue sources for Amazon.com. It offers a suite of advertising channels for advertisers including online products ads, online display advertising, and Clickriver ads, which ads promote services alongside with Amazon's products.
EBay is an online aution and shopping website. It provides an electronic marketplace for people to buy amd sell various merchandise and servise worldwide. It has millions of transactions listed, bought and sold daily, the items sold including collectibes, decor, appliances, computers, furnishings, equipment, vehicles and others. It has set up localized websites in about thirty countries including Malaysia.
EBay generates revenue by of various fees nand commissions such as insertion fees, promotional fees and final value fees. To start with, eBay charged an insertion fees based on the openning price of the merchandise.
-Insertion fees ~ when an item listed on eBay, this nonrefundable fee is charged.
-Promotional fees ~ an extra fee that charged for additional listing options which can enhance the advertising and promotion of an item, such as highlighted or bold listings.
-Final value fees ~ the commissions that charged to the seller at the end of the auction.
Besides that, eBay earns transaction fee from owning paypal, an online paying service system for users to buy items online more conveniently. Ebay also gains sales from the service of listing customer's product to be sold to other users as well as some advertisement fee. Ebay's revenue increases with seller surplus. Its liquidity promotes a lock in, which keeping current customers happy and acquires new customers.
In conclusion, Goodle, Amazon.com and eBay have proved that every e-commerce comany would adopt different method of revenue models in its own way. Gogle relies mostly on advertising fees and small portion of sales. Amazon.com gains mostly on sale of products and services and relatively small amount in advertising and transaction fees while eBay mainly on transaction fees.