Revenue Model
Revenue model is a description of how the organization will earn revenue, produce profits, and produce a superior return on invested capital. The major revenue models are:
Sales revenue model: A company gets the revenue by selling goods, information or services.
Transaction fee revenue model: A company receives a commission for enabling or executing a transaction. It is based on the volume of transactions made.
Advertising revenue model: A company provides a forum for advertisements and receives fees from the companies that advertise their products.
Subscription revenue model: A company charges a subscription fee for the users that access to the content and services offered.
Affiliate revenue model: A company receives commissions for referring customers to others web sites.
A major percentage of Google yearly income is generated by the advertising revenue model. Google advertising revenue model includes Google AdWords, Google AdSense and Froogle.
Google AdWords is pay per click advertising program of Google designed to allow the advertisers to present advertisement to people are looking for information related to what the advertiser has to offer. Google generates most of the revenue from Google AdWords.
Google AdSense is an ad serving program. Website owners can enroll in this program to enable text, image and, video advertisements on their sites. These ads can generate revenue on either a per-click or per-thousand-impressions basis.
Froogle is a price engine website launched by Google. It is a service from Google that makes it easy to find information about products for sale online.
Besides, Google is currently testing a new advertising program that pays site owners based on a Cost-Per-Click model, called Cost-Per-Action. It differ from AdSense ads in that a site owner gets paid whenever a visitor clicks on an ad and performs a specific action, such as purchasing a product from the advertiser.
Moreover, Amazon.com also generates revenue by Affiliate revenue model. Amazon.com was one of the first online businesses to set up an affiliate marketing program. AStore is an Amazon.com affiliate product which website owners can use to create an online store on their site. The store does not allow website owners to sell their own products directly. Website owners pick products from Amazon.com’s store and earn referral fees on the products purchased by their readers. The fee structure is currently the same as for the other affiliate links and ranges from 4% to 10% of the product price.
ebay's Revenue Model
ebay is an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. Millions of collectibles, appliances, computers, furniture, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily. eBay generates revenue from a number of fees such as insertion fees, promotional fees, and final value fees.
Additionally, a portion of ebay’s revenue also comes from direct advertising on the site, as well as end to end service providers whose services increase the speed of transactions. The acquisition of PayPal, whose products allow the exchange of money over the Internet, brings additional transaction based fee revenue.
Comparison: These three companies have showed a success in e-commerce by adopting different type of revenue model. Google are adopting advertising revenue model and access revenue model which can be show the major revenue of Google are contribute by advertising services. While Amazon.com are adopting sale revenue model by their selling activity throughout their website. On the other hand, eBay is adopting subscription revenue and transaction revenue by charging the seller on the item listed on their website and the commission charged on each completed sale transaction.
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