Revenue model and comparison of Google, Ebay and Amazon

Revenue model outlines how the organizations or e-commerce companies will generate profits. 5 major revenue models nowadays are sales, transaction fees, subscription fees, advertising fees, affiliate fees, and other revenue sources.

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.

Subscription revenue model: A company charges a subscription fee for the users that access to the content and services offered.

Advertising revenue model: A company provides a forum for advertisements and receives fees from the companies that advertise their products.

Affiliate revenue model: A company receives commissions for referring customers to others web sites.

Google offers targeted advertising solutions and global Internet search solutions. Its principal products and services include:

Google AdWords: Google AdWords is a pay per click advertising program of Google designed to allow the advertisers to present advertisements to people at the instant the people are looking for information related to what the advertiser has to offer. When a user searches Google's search engine, ads for relevant words are shown as "sponsored link" on the right side of the screen, and sometimes above the main search results.

Pay per Click Advertising: Pay-Per-Click (PPC) is the best way to send immediate, targeted traffic to your website. It is an online advertising payment model in which payment is based onqualifying click-throughs. An advertiser has to pay every time his ad receives a click.

Google AdSense: AdSense is an ad serving program run by Google. Website owners can enroll in this program to enable text, image and, video advertisements on their sites. Revenue is generated on a per-click or per-thousand-ads-displayed basis and the ads are administered by Google. AdSense program includes AdSense for search and AdSense for content.

Google’s new revenue model:Google is currently testing a new advertising program that pays site owners based on a Cost-Per-Click model. The program, called Cost-Per-Action, was revealed via an invitation e-mail from the Google AdSense team to Web site owners.

EBay is an online auction and shopping website in which people buy and sell goods and services worldwide. Buyers are allowed to browsing and bidding on items which free of charge, but the sellers will be charged. The charges are based on promotional fees, insertion fees and final value fees which are the main revenue of eBay.

Insertion fees : A nonrefundable fee which will be charged when an item listed on eBay. Where promotional fee will be charged for additional listing options that help attract attention for an item, such as bold listings or highlighted. Final value fee is a commission that charged to the seller at the end of the auction.

Promotional fees: Fees that charged for additional listing options that help attract attention for an item, such as highlighted or bold listings.

Final value fees: Commission that charged to the seller at the end of the auction.

Furthermore, Ebay generate revenue by sales revenue model through its subsidiary, Half.com, offers fixed price, person-to-person selling of goods, including books, CDs, videos and games, charging a 15% commission on completed sales.

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.

Amazon was one of the first major companies to sell goods by Internet. Amazon generates revenue primarily by selling books, videos, electronics, and kitchen equipment on domestic and international Web sites, such as Amazon Marketplace.

Amazon Marketplace is Amazon.com’s fixed price online marketplace that allows sellers to offer their goods alongside Amazon’s offerings. Buyers can buy new and used items sold directly by a third party through Amazon.com using Amazon Marketplace. This sales strategy and program has been very profitable for Amazon.com.

Amazon charges a commission rate based on the sale price, a transaction fee, and a variable closing fee. Which are sales revenue model and transaction fee revenue model.Moreover, Amazon.com also generates revenue by Affiliate revenue model. Amazon 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’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.