Online Advertising and Revenue Models in E-Commerce: A Focus on B2C, Slides of Fundamentals of E-Commerce

Download Online Advertising and Revenue Models in E-Commerce: A Focus on B2C and more Slides Fundamentals of E-Commerce in PDF only on Docsity! E-Commerce B2C E-Commerce (Continued) (Acknowledgement: Helen Chiang) Docsity.com Revenue Models for B2C • Sell goods and services and take a cut (just like B&M retailers). (e.g., Amazon, E*Trade, Dell) ☯Advertising – Ads only (original Yahoo) – Ads in combination with other sources • Transaction fees • Sell digital content through subscription. (e.g., WSJ online, Economist Intelligence Wire) Docsity.com Top Online Advertisers Top 15 Advertisers by Impressions Jan. 2001 3534 1761 847 646 622 543 488 410 387 386 377 348 344 336 316 0 500 1000 1500 2000 2500 3000 3500 4000 A m az on .c om ba rn es an dn ob le .c om C la ss M at es .c om W a l-M ar t A st ro C en te r. co m N ex tC ar dE ba y 80 0. co m C as sa ve E nt e rp ris esLy co s U bi d M ic ro so ft B es t B u y G et S m ar t.c om Jo bs O nl in e. co m Impressions (in millions) Docsity.com WWW Growing Faster Than Ad Supply • Immediate problem: Too many pages, too few advertisers • Current Price: $1 per thousands of impressions • Price ~3 Years Ago: $10 to $50 per thousands of impressions Docsity.com Inherent Difficulty with Online Ads • Downward Spiral – Banner ads easy to ignore – Average click through has fallen to less than 1 in 200 – Leads to creation of more obnoxious ads, e.g., “pop-ups” • Entertaining? – Getting the “right” ads requires time, effort, and money. – Internet market not large enough to justify it. – 5 of the world’s top 10 advertisers each spent less than $1 million on online ads last year. Docsity.com Amazon.com • Full Name: Amazon.com, Inc. • Employees: 9,000 • Stock Price: – $14.67 (at close April 12, 2001) – 52 Wk Range: $8.10 to $68.44 • 2000 Sales $2,762 M 1-Year Sales Growth: 68.4% • Internet’s largest retailer. Best known for books, CDs, DVDs, and Videos. Docsity.com Brand Strength Source: U.S. Bancorp Piper Jaffray (July 24, 2000) Company Mind Share (1) Company Company Online Purchaser Share (2) 1 Amazon.com 24.1% Amazon.com 18.7% 2 eBay.com 16.1% eBay.com 15.8% 3 Yahoo.com 4.9% BarnesandNoble.com 6.0% 4 priceline.com 2.7% BMG.com 3.9% 5 buy.com 1.9% CDNow.com 3.3% 6 BarnesandNoble.com 1.8% ColumbiaHouse.com 3.1% 7 CDNow.com 1.3% JCPenney.com 3.0% 8 AOL.com 1.1% priceline.com 2.7% 9 Egghead.com 1.0% buy.com 2.6% 10 Iwon.com 0.9% Yahoo.com 2.3% JCPenney.com 0.9% 1800flowers.com 2.3%(1) Mind Share = the percent of Internet users for whom the site first came to mind when asked to think of Web sites that sell products or services over the Internet(2) Purchaser Share = the percent of online buyers that bought from the site Docsity.com Main Lines of Business • Retail – Broad product range, from textbooks to household tools • Shopping Mall – Individuals and companies pay Amazon.com to offer their products on its site. • “Overseeing” other websites – Has invested in some of them – Broad range of offerings, from prescription drugs to wedding planning • 2000 Sales – 71% books, CDs, DVDs, Videos – 78% US Docsity.com History (continued) • 1999: More Expansion – Raised $1.25 billion in a bond offering. – Spending spree with deals to buy all or part of several dot-coms • Some have since been sold (HomeGrocer.com), and others have gone out of business or bankrupt -- Pets.com, living.com • It also bought the catalog businesses of Back to Basics and Tool Crib of the North. – Began conducting online auctions and partnered with Sotheby’s. – Added distribution facilities, including one each in England and Germany. Docsity.com History (continued) • 2000: Yet More Expansion – Placed a link to drugstore.com on its homepage; drugstore.com paid more than $100 million for that access. – 10-year deal with toysrus.com to set up a co-branded toy and video game store. – Added foreign-language sites for France and Japan. Docsity.com 2001: End of the Beginning • Investors demand profits • Amazon announces plans to restructure and layoff of 15% of its workforce. • Takes a $150 million charge. • Announces a deal with Borders to provide inventory, fulfillment, content, and customer service for borders.com Docsity.com Clicks and mortar market capitalisation Sbn market capitalisation $bn dio 8 8 8 8 Steet ete ieee tes Sources: Company reports; Primark Datastresm Docsity.com Financials and Employees Source: Hoovers Year Revenue ($mil.) Net Income ($mil.) Net Profit Margin Employees 2000 2,762.0 -1,411.3 9000 1999 1,639.8 -720.0 7600 1998 610.0 -124.5 2100 1997 147.8 -27.6 614 1996 15.7 -5.8 151 1995 0.5 -0.3 33 1994 0.0 -0.1 Source: Hoovers Docsity.com