ebay's business model and Amazon's ecommerce

In the United States, people often sell their own junk in their front yards and garages, known as yard Sale and garage Sale. For example, children are big, childhood toys do not need, parents let children in their front yard to put a stall, toys a few cents or a few dollars to sell, earn some pocket money. Sometimes to catch a move, the old furniture no longer needed, just at the intersection tree a sign, let neighbors to reduce a little bargain. Some cities in the United States, as well as thrift markets known as flea market (flee Market), can sometimes pick up some good things. When the internet boom began in the world in 1995, Pierre Omidea, an Iranian-American engineer, came up with a strange idea to omidyar the front yard garage and flea market, originally called Webauction, and later called Ebay. It is said that when he went to the Dune road to find VCs to seek investment, others asked him what to do, Omidea a word to his intention to make clear, he wants to do an online flea market. A lot of VC Company's total partnership people laughed and said: "We are to invest in High-tech companies, not flea markets." "But it's always easy to change money in the dotcom bubble, and it's an unprecedented and very good idea to move the flea market to the Internet." So Midea found millions of dollars in less than two years (of which only benchmark VC invested 5 million dollars).

ebay's business model is clear, very easy to understand, and has a good foundation in the United States. In the United States, in addition to their own front yard yard disposal and flea market, there are many old cars, old furniture and other second-hand large newspapers classified ads. Now ebay offers a platform to communicate with people who sell junk and buy junk. It lets junk people put their stuff on the internet (called listing). Instead of dozens of dollars in a classified ad in a local newspaper, a small fee to ebay and a wider range of buyers to reach, sellers like it, and in a short time a large number of sellers sell their junk to ebay. On the other end, ebay uses auctions to let buyers negotiate their own prices and deal directly with sellers. In this way, ebay, in addition to the basic operating costs, there are almost no other costs, it is actually equal to the sitting fees. So for a long time, ebay has a gross profit margin of more than 80%.

        ebay's business model is a perfect banknote printing machine mode. But to make this money-printing machine work, ebay must address two issues, namely, credit issues and payment issues. Since the two sides cannot meet each other on the Internet, it is difficult to avoid one or both sides of deception. ebay's solution is to allow buyers and sellers to evaluate each other, and over time, each ebay user has a record of ratings and transactions, including the number and percentage of positive reviews and the details of recent deals. It's a bit reassuring to trade on ebay. Next, ebay must solve the problem of online payment. The previous major payment methods were cash, cheques and credit cards, which were not suitable for both sides of ebay's transactions in three ways. Cash cannot be used because the buyer and seller cannot meet. and the cheque transaction is also very inconvenient, on the one hand the seller is afraid to receive a false check (100 yuan in the account of 1000 yuan in the cheque), on the other hand buyers are also afraid of the other party received a cheque not to pay the goods, not to mention the cheque sent to send also delay time. Credit cards were supposed to be a better way to pay online, but individuals and many small businesses were unable to receive credit cards. On the other hand, customers are generally not comfortable with credit card information to the small businesses do not know. So ebay needs a special payment for online transactions, so it paid a high price to buy PayPal company, solve the problem. In this way, the printing presses of the ebay have been built.

The amount of money that the

        Ebay "Prints" depends on the volume of transactions and the amount of trading, and it is clear that selling junk alone is not going to sustain exponential growth. No one can sell their old junk on ebay every day except the black sheep of the family. ebay has materialize a small shift in its business model, gradually turning from an online flea market to an online free market. ebay is starting to help e-commerce small businesses to open their own stores via ebay. ebay offers them a place to reach global consumers without having to spend money to advertise their websites, and these small businesses take part of their sales as a percentage of ebay. This business model is actually a subversion of the traditional retail business model. In the traditional business model, advertising is almost the only way to get consumer groups, so the cost of advertising becomes part of the business cost. In the case of ebay, it turns advertising fees into ebay's listing fees (Listing Fee) and (very low) sales commissions. E-commerce Small business is easy to score this account, is to advertise their own website good or through ebay business good. ebay can easily control its own fees less than traditional advertising costs, so a lot of e-commerce companies and individuals to go to ebay to sell things. ebay is no longer selling junk at flea markets, but mainly new consumer goods. In fact, there are more items on ebay than any chain store in the world. Readers who have been to ebay may have noticed that some of its users have done tens of thousands of or even hundreds of thousands of of deals, not individuals, but retail and wholesale outlets for E-commerce. The goods sold on ebay now come mainly from these businesses, not from their own junk. Of course, the large number of individuals buying and selling on ebay has contributed enough to the popularity of ebay. ebay has since hooked up to an E-commerce Express.

E-commerce is undoubtedly the fastest growing business area in all countries of the world today. According to recent statistics from the U.S. National Bureau of Statistics on the development of E-commerce in the last decade, the proportion of E-commerce in the entire retail industry has been a linear development (see chart), from 0.6% 10 years ago, up to today's 3%. By the second quarter of 2008, the US E-commerce market had reached a scale of $135 billion per quarter. Even in the recession of 2008, E-commerce sales grew by 20% over a year earlier, compared with a 1% per cent increase in commercial retailing. After 10 years of rapid development, E-commerce also accounted for 3% of the retail industry, so its prospects are still very optimistic. ebay, which has been listed in 1998 to 2005, has not only had its turnover and profits been better than Wall Street's expectations, but it is the only company that has a return on equity that has exceeded the market. In the 1998-2005, when the US stock market went through a great bull market to a big bear market and back to a bull market, star tech companies like Cisco and Apple outperformed the market in a bull market, and fell faster than the market in a bear market, and a conservative company like Chahasave, Although it was very resilient in a bear market (actually, it was growing in 2001-2003, when the US stock market slipped One-third). , but it did not perform well in the 1998-2000 bull market. ebay is the only company that has been able to perform well over the past seven years, largely due to its access to the E-commerce Express, and the ebay business model is the simplest and most efficient of all e-commerce.

The biggest problem for ebay is not the saturation of E-commerce, which is unlikely to happen in the short term, but how best to prevent fraudulent online transactions. Although ebay has been sparing no effort to combat fraud, it has not been able to stop the phenomenon altogether. First, some unscrupulous businesses, using ebay to sell counterfeit branded goods, pirated books and audio-visual products, have damaged many consumers and have directly harmed ebay's credibility. These unscrupulous businesses are not only difficult to track, and even if caught, also can not pay how much money, so some brand-name manufacturers and consumers turned to sue ebay. The 2007 British Times reported that the author of Harry Potter sued ebay for selling pirated books, and in the same year Louis Vuitton sued ebay for the sale of counterfeit LV branded goods, claiming 37 million euros to ebay, a similar lawsuit filed by the famous jeweler Tiffany.

There are also fraudulent gangs that use the ebay trading Feedback (comment) system to sell a few dollars of small items at a very cheap price, get a high positive feedback ratio (percentage of positi*e Feedback), and then sell hundreds of thousands of dollars of big-ticket goods, He took the money and fled. What's more, they also register ebay stores at other people's addresses, and they find their personal information and home addresses abused by criminal gangs when the FBI finds the confused residents on ebay's address. These problems have seriously affected the reputation of many businesses on ebay and on ebay, making it hard for many customers to buy even if they feel the price of a commodity on ebay is cheap. Although ebay has adopted PayPal payment system, rely on PayPal address confirmation to eliminate some fraud, but all kinds of fraud on ebay still emerge.

The fundamental flaw in ebay's business model is that it cannot control the flow of money between buyers and sellers, making it hard to cure online commercial fraud. ebay's growth has been saturated since 2005, when shopping on ebay has become less reassuring. In some quarters, it was only a little higher than the inflation rate, excluding PayPal, the online payments department. And the challenge of ebay in the E-commerce Arena is Amazon.

Amazon began in the online bookstore, and it was hard to say whether it was a technology company for a long time. Its founder, Bezos, is a Wall Street analyst in New York. Amazon has been talking about such a Bezos to create a company joke. In the beginning of the Internet in 1994, Bezos decided to open an online delivery company. He knew that Silicon Valley had many good engineers, and drove across North America from New York on the Atlantic to the Pacific coast of the United States, and as he drove to the West coast of the United States, Bezos went the wrong way, and was supposed to go south to the Valley of California, but north to Seattle. He later discovered that Seattle also had a large number of excellent engineers, and decided to develop there and run Amazon. In fact, the reason Bezos chose Seattle instead of California was to save California customers a whopping 8.25% sales tax to boost Amazon's sales. In the United States, it is possible to waive this week's sales tax by buying from outside the state via the Internet. (The practice is controversial, when President Bill Clinton decided to put the issue on hold, which in part spurred the development of E-commerce.) California's residents account for One-tenth of the U.S. population, and one-fifth of the online purchasing power, and for that reason, online stores are not to be built in California.

Amazon's E-commerce in the early days to sell books the most successful, because buying books is not like selling clothes, do not "try", and can not be returned casually, so more suitable for online sales. With the rapid development of the Internet in the last century, Amazon has only spent seven years to reach the largest chain bookstore in the United States Barnes & Noble has spent 130 years to achieve the turnover (2002 Amazon's turnover reached 3.9 billion U.S. dollars and the same time Barnes & Noble for 3.7 billion dollars). Even after the dotcom bust of 2001, Amazon did not close the door and made its first profit. Of course, by selling Books Online, Amazon's development will be over in a few years. But Amazon has made a few changes to its business model, from the world's largest online bookstore to the U.S. Online department store, and it has been the space for sustainable development.

Amazon's web site, which includes its own online stores and other E-commerce companies ' online retail outlets, is like a grocery store that has its own counter and a factory-owned rental counter. Unlike the department store, Amazon's rental counter can be infinitely large in its "business area". For all kinds of shops on the Internet, they can do business through their own advertising, or go to the Amazon to rent a counter, which is like some manufacturers can open their own sales department, but also to the mall rental counters. Of course, many online stores will choose to keep these two ways at the same time. Unlike ebay, the "store" in Amazon all deals must be done through Amazon. When a customer wants to go to a store on Amazon, such as Beach Camera, who sells cameras, and buys things, he pays the money to Amazon and notifies beach camera shipments, beach camera not knowing any customer payment information except to know the customer's address, Like a credit card number. When beach camera shipped, Amazon pays the money (after deducting the handling fee) to beach camera. If the customer does not receive the product within the time set by Amazon, he can tell Amazon that Amazon will refund the money to the customer. (Of course, it will also be from the merchant to return money, if it is not to come to the Amazon or insurance companies to bear the loss of customers.) Amazon also prescribes the highest billing for each commodity, avoiding the idea that some businesses attract customers at low prices and then charge high postage rates. (on ebay, some items are priced for a penny, but charge more than 10 dollars for postage.) Amazon buys an insurance policy for each transaction, so that if there are intentional frauds and inadvertent loss of goods, the insurer will pay Amazon's losses.

Shopping from Amazon, customers can rest assured that they will keep credit card information for their customers and be responsible for the smooth completion of each deal. In recent years, as consumers pay more and more attention to information security on the Internet, there is a growing lack of confidence in ebay's Shang model, and the pattern of centralized management and accountability for Amazon is becoming increasingly accepted. As a result, the number of online stores on Amazon has grown rapidly since 2006, with trading volumes growing at a two-digit rate each year. Of course, Amazon, in order to prevent other online bookstores and its own core business competition, it has very low fees for other businesses selling goods that are not in their stores, such as electrical appliances, and it is very expensive to sell books and other Amazon-driven goods, encouraging those stores that supplement its own commercial coverage.

Amazon's online shopping malls and online transaction processing platform once completed, it became a banknote printing machine. As long as there are businesses in the Amazon shop, as long as customers go to Amazon to find things, it does not need to spend any manpower, you can automatically make money. And the thing that Amazon does is to manage the platform well. The advantage of Amazon's banknote printing machine over ebay is that it can reassure consumers that the potential for long-term growth is greater.