Description
What are the principal e-commerce business and revenue models? How has e-commerce transformed marketing?
reply#1
There are a great variety of e-commerce business and revenue models. There are traditional ways like selling products directly to customers or other businesses to earn money. And there are also creative ways like Payment for Order Flow (PFOF) used by Robinhood which offers commission-free trading to not make money from users but from certain market makers. Today I am going to discuss two principal e-commerce business and revenue models used by many major technology giants.
First, acting as an intermediary between customers and merchants and charging money from merchants for the incremental revenue created by the intermediary. One good example is Groupon, they provide discount coupons to local consumers to encourage them to shop at nearby stores by using their coupons. They then charge merchants for a fraction of the incremental revenue they brought to the businesses.
Second, charging users subscription fees to allow them to gain access to certain products and services. One good example is Amazon Prime. It offers its members certain privileges over non-members such as quick delivery and video services. Customers need to pay a membership to maintain these privileges.
All these behaviors have deeply transformed marketing. Merchants nowadays rely heavily on social media platforms and e-commerce giants to market their products and services. Physical advertising is no longer a popular way to attract consumers especially young generations.
Reference:
Li Weiwei, Dai Yue (2015). Research on Value Evaluation of E-commerce Business Model. Procedia Computer Science, Volume 60, 2015, Pages 1328-1336
reply#2
The e-commerce business model is e-retailer. The main revenue models of e-commerce are advertising, sales, commission, subscription, free/freemium, transaction fees, and membership. We can use Amazon to be an example. Amazon is one of the largest e-retailers. Amazon’s main source of revenue is the commissions and fees it earns by satisfying sellers. Amazon itself does not sell many things. It just provides a market and guarantees a standardized experience for buyers and sellers. Amazon also sells advertising space on its website. Amazon.com is one of the most visited pages in any region. Therefore, sellers can expect to promote sales by placing advertisements on them. This is only a small part of the revenue generated by the company, but it is still very impressive.
The internet provides marketers with new ways to identify and communicate with millions of potential new customers, but the cost is much lower than traditional media. In addition, people are using their mobile devices more than watching ads at home. Therefore, we can know that the marketing method is completely different from before. The way consumers consume has changed the way businesses sell.
Reference
The business model of Amazon. (n.d.). Retrieved from
https://www.managementstudyguide.com/business-mode…
