5 February 2015
CH2 E-commerce Business Models and Concepts
Examine the experience of shopping online versus shopping in a traditional environment. Imagine that you have decided to purchase a digital camera (or any other item of your choosing). First, shop for the camera in a traditional manner. Describe how you would do so (for example, how you would gather the necessary information you would need to choose a particular item, what stores you would visit, how long it would take, prices, etc.). Next, shop for the item on the Web or via a mobile app. Compare and contrast your experiences. What were the advantages and disadvantages of each? Which did you prefer and why?
Ever since the inception of the Internet and E-commerce, online shopping has been growing ever-exponentially due to the variety of items available and its convenience but how does it stack up against traditional shopping? Consider buying a new cellphone from a retailer, whether it be Verizon, AT&T, T-Mobile, etc. In order to purchase the phone you would need to locate the store, drive there (time determined by your location), pick out the phone in the store, purchase the phone (waiting in line if necessary for an unknown amount of time), walking out the door, driving home, and finally getting to use it; for all we know this could take 30 minutes or 2 hours. Online shopping is a whole different animal, no line, no wait, no hassle. If I were to purchase a cell phone online, I would probably search Google to find the most reasonable price (because online prices vary quite a bit), probably pick Amazon (because that is the e-commerce site I use most often), search the phone on their site, add to cart, enter shipping and payment information, place order, and then wait 1 to 14 days depending on the retailer it was purchased from and what shipping preferences were selected. In my opinion, they each have their pros and cons. Traditional shopping is great if the item you are looking for is available in a store near you, because it is almost instant acquisition and excitement, while if it were purchased online there would be some sort of wait time. Online shopping has many perks, though, having no line or wait, and often being able to find much lower prices than those of in-store counterparts. In the end, being a college student, I prefer online shopping due to the amount of money it saves me.
During the early days of e-commerce, first-mover advantage was touted as one way to success. On the other hand, some suggest that being a market follower can yield rewards as well. Which approach has proven to be more successful – first mover or follower? Choose two e-commerce companies that prove your point, and prepare a brief presentation to explain your analysis and position.
Although there was theoretical existence of “e-commerce” well before the 90’s, true e-commerce started up around 1994 when Jeff Bezos decided to create a business plan and join the “internet boom”. His company was incorporated as Cadabra on July 5, 1994, but by the time the site went online in 1995, the name changed to Amazon. Initially the site was primarily an online bookstore, but changed to sell a vast variety of products. Amazon’s first profit was in the latter part of 2001 of 5 million dollars. Amazon is a B2C company.
E-bay started out similarly to Amazon, by the idea of one person, Pierre Omidyar. In 1995 he began to write the computer code for his P2P/B2C auction website and on September 4, 1995, the website was launched as Auction Web; in 1997 the name was changed to eBay. In March of 1998 revenues boasted $4.7 million in the United States alone. Although the website was launched, it did not go public until September 21, 1998.
After having a brief background, both sites operate on a similar frequency, having both C2C and B2C transactions. In the beginning, even though Amazon was started first, eBay turned a larger amount of profits sooner, making eBay more successful at first; but this is not so anymore according to revenue. According to 2014 numbers the revenue of Amazon is $88.988 billion while eBay sits little at $16.05 billion. In conclusion, being a first-mover can have a very variable outcome.