Technological Aspects to Support Ebusiness Essay Example for Free

Technological Aspects to Support Ebusiness Essay Introduction: For this assignment I am going to compare, contrast and look at the history of two internet giants: Ebay and Amazon. They are two sites that I regularly use, one more so than the other and find both as user friendly as I do interesting. I will look in detail at the history of the two and also the internet as a global network. Finally I will make a brief conclusion and some recommendations. The evolution of e-business: The term e-business or electronic business was first coined by Microsoft’s marketing and internet team in 1996 but businesses started using websites to marketing their products in the early 1990’s shortly after graphic based web-design became available. They quickly shifted from simply using the web for providing customers with information about their products to selling them when the software to encrypt credit card data became widely available in 1994. Netscape developed Secured Socket Layer (SSL) and websites developed the ability to encrypt sessions, making credit card transactions over the Internet safer for all concerned. With an encrypted connection between a companys server and a client computer, credit numbers could be hidden so they could not be intercepted by a third party, which made the theft of card information more difficult. This security led to the birth of e-business and changed the way we shop for ever. After this period the floodgates opened for opportunities in business to trade online but many people still didn’t trust giving out their credit details over the internet and it proved too expensive to trade on line with transactions of under a dollar or its equivalent. These payments were called micro payments and many companies came and went trying to facilitate these transactions. Paypal has been the most successful business to date that operates in this area and made it fast, cheap and most importantly secure for people to pay for goods online. Even with the emergence of these secure payment businesses, popularity with on line sales was still was not hitting the heights as expected and the .com bubble burst in the early 2000’s. The collapse of the bubble took place during 2000-2001. Many companies failed completely. Others lost a large portion of their market capitalization but remained stable and profitable, e.g., Cisco, whose stock declined by 86%. Some later recovered and surpassed their dot-com-bubble peaks, e.g; Amazon.com whose stock went from 107 to 7 dollars per share, but a decade later exceeded 200. After the bubble burst, many dot-coms liquidated or were acquired by other companies; the domain names were snapped up by domain investors or businesses with more traditional business models who had survived the crash. A few of the larger dot-com companies did survive, however: Amazon and Ebay are good examples. According to some sources, about 50% of dot-coms survived. Unfortunately, there were still thousands of technical experts such as programmers and web designers who were laid off and found themselves in a highly competitive job market. The acquisition of YouTube by Google, Skype by Ebay, and others, has led to speculation that there may be a second, similar bubble on the horizon. Consolidation of websites where top ten sites buy up competition or others go bust. Comparison of 2 web sites For this assignment I am going to explain, compare and contrast possibly the two most popular internet shopping sites; Ebay and Amazon. I’ve used both of these sites myself and have had little or no problem with either and find them both very user friendly. Ebay: Like most of the first really big internet sites, Ebay was started by one person and a computer from a bedroom or in this case a living room. Pierre Omidyar first created eBay (originally stood for echo bay technology but that domain name had already been taken) in 1995 to offer a marketplace where unwanted goods or collectables could be sold online with little knowledge of how much a global phenomenon it would become and how many times people would attempt to replicate it. The success of Ebay rose greatly for 3 years in which it amassed revenues of approx $4 miollion by its third year of trading. In March 1998, Pierre and his cofounder Jeff Skoll brought in the now multi billionaire Meg Whitman to sustain the success and take it to the next level. This proved pivotal in the world wide success of Ebay although her 9 year spell as CEO was not without controversy. Meg had studied at the Harvard Business School and had learned the importance of branding at companies such as Hasbro. Within 6 months as CEO of Ebay Whitman turned Ebay from a popular online garage sale to a multi billion dollar empire by splitting the company into 23 different business sections, and 35,000 sub categories. She made the company public and shares went from 7 cents a share to as high as $170 a share. This made Ebay the tech darling of the web and many tried and many failed to replicate their success. Ebay now stands at number 64 on the Forbes most powerful brands with 27,700 employees and annual sales of 11.65 billion. Ebay makes its money from a number of ways: Every time someone puts something up for sale on Ebay they have to pay an insertion fee (fee for starting an auction). Usually in the region of 55 cent for smaller to mid-priced auctions. So even if a product does not sell, Ebay will have made money. From each successful auction Ebay will also take a percentage from each sale. Advertising Companies pay to advertise on their site. Google adsense and various other advertising companies use ebay to advertise company’s products on the site. Paypal. Ebay own Paypal and the majority of buyers and sellers use it when making transactions on Ebay. Paypal in turn gets a cut of each transaction. In October of 2002 eBay acquired Paypal Inc. for 1.5 billion dollars. Paypal is the preferred way of making payments for eBay auctions and is growing in popularity for other Internet uses. Paypal allows a person to send or receive money via an email address. Money in a Paypal account can be spent on the Internet, sent by check to the account owner, or deposited into a bank account. Paypal also offers credit cards, debit cards, and a bill paying function. Amazon Amazon.com like ebay is one of the largest online retail websites in the world. Also like ebay it started up from one man and a computer from home but in this case, a garage, and went from a small operation to an international business employing thousands of people in a short space of time. Much the same as Ebay. People all over the world purchase books, music, movies and products from Amazon and hundreds of partner companies. Amazon.com was started by Jeff Bezos in 1994. At the time, his company was run completely from his garage in Bellevue, Washington. He was able to secure funding from Nick Hanauer. This first investment of $40,000 was joined by a larger, $100,000 investment from Tom Alburg that helped make the new website more user-friendly. Like eBay both men would probably not have turned their brand into a global force without the help of outside parties. During the first month of business, Bezos fulfilled and shipped orders to all 50 states, and to 48 countries. Books were t he only product available at that time. Bezos wanted Amazon.com to be more than just a retail website; he wanted to create an online community. Early on, he added a feature that enabled readers to add their own book reviews for all customers to view. In 1997, Amazon.com added movies and music to its offerings. On May 15, 1997, the company went public. The initial public offering (IPO) was targeted at $18, but by the end of the day, public demand had pushed the share price to more than $24 per share. The company had raised $54 million. Amazon.com is listed on Nasdaq as AMZN. In 1998, Amazon opened its first international sites in the United Kingdom and Germany, where it quickly enjoyed success. In 1999 the company opened four order fulfillment centers in Fernley, Nevada; Coffeyville, Kansas; and Campbellsville and Lexington, Kentucky to handle the large mass of orders. Time Magazine featured Jeffrey Preston Bezos as Person of the Year in 1999, calling him king of cyber commerce. The Look Inside the Book feature, added in 2001, was immediately popular as a tool for consumers to see if the book they were looking at would fit their needs. Later, the Search Inside the Book feature, added in 2003, made it possible for consumers to search key words in the text of the book. Amazon added Marketplace, where sellers of used books could offer products for sale with a small commission collected by Amazon. Amazon also teamed up with many companies to offer their products through the website. In January 2009, Amazon reported $6.7 billion in fourth quarter 2008 sales. The company now has centers in 12 U.S. states and eight countries. Its headquarters are in Seattle, Washington, and the company employs more than 21,000 people worldwide. In 2009 Amazon released the Kindle. The kindle is an ebook viewer that lets users download ebooks to the device and read them without physically every owning the book. Users can now also view films and connect to the internet through it. It was through the kindle that helped amazon sales increase ten fold. By 2011 amazon had recorded sales of $48 billion. There are a lot of similarities between Ebay and Amazon which I will now outline below. Both set up around the same time Both set up from home by one man and a internet connection. Both companies became very popular very quick. Both needed the addition of outside help to take it to worldwide success Both companies went public around the same time and made everyone involved overnight millionaires†¦ Both let users sell their unwanted items online Where they differ is Ebay sells anything and everything, new and used and owns its payment service. Ebay doesn’t sell any of its own products and relies heavily on user input, paypal and advertising to bring in income. Ebay is unique in that it actually doesn’t stock any products and is selling other peoples items which it never comes in contact with. This means they don’t have any overheads like warehousing rental, handling fees, shipping/transporting costs and all the labor costs that are attached with the above. If people stop buying or selling on the site, their business plan fails and will cease to exist, so keeping their brand in the public eye and keeping a positive public image is of more importance than most. Ebay has to spend a whopping $83 million a year on advertising and although this only represents 1% of revenue it’s still the third highest of tech companies in the modern climate. This can be viewed as an extremely proactive move but also highlights how the top brass at Ebay think and what position the company could find itself in if not continuously in the public’s mind. The annual $83 million spent on advertising is roughly double what amazon spends a year. That in itself tells you a lot about the differences between the two company’s business plans. [pic] Amazon sells books, music and film, new and used but only accepts credit card/debt card payment does not own the payment facility. Interestingly it doesn’t accept paypal as a form of payment. Amazon has more arms to its business and potentially better equipped to survive if interest drops in the brand or another dot com bubble burst arises. Amazon is like any retailer that buys and sells a product for profit and has all of the overheads that come along with it including stock management and cost issues. Amazon has its own creation in the kindle that it manufactures wholesales and retails itself which proves very profitable. Similar to Dell computers but without the wholesale part. Security: Ebay Paypal is renowned for its safety aspect of shopping securely online. If your paypal account has been hacked and money is taken out then a refund is provided by paypal. If you purchase something on Ebay trough paypal then you could be covered with buyer protection. Buyer protection can get you a refund including post and packaging costs if the item you purchase isn’t working properly, not as described or simply didn’t arrive. It’s a second to none approach to online buying that keeps the customer coming back. If customers don’t use paypal then it can prove to be a little more difficult in getting a refund and/or returning an item. Detail a few scams people do on Ebay [pic] Amazon Shopping on line with Amazon is by and large safe and secure and users often are usually very happy with it’s A to Z guarantee policy where by users are offered a full refund if item is not as materially described. In disputes Amazon usually sides with the buyer. In September 22, 2010, Amazon published a security advisory regarding a security flaw in its Amazon Payments SDK(software development kit). This flaw allows a malicious shopper to shop for free in web stores using those SDKs. Amazon mandated all web stores to upgrade to its new SDKs before Nov. 1, 2010. Amazon acknowledged security researcher Rui Wang for finding this bug. The detail of the flaw is documented in the paper How to Shop for Free Online Security Analysis of Cashier-as-a-Service Based Web Stores by Rui Wang, Shuo Chen, XiaoFeng Wang, and Shaz Qadeer Payment Metods: Amazon Payments accepts verified U.S. bank accounts. For the rest of the world it accepts credit cards and transfers from your available Amazon Payments account balance. Credit cards currently accepted include Visa, MasterCard, Discover, American Express, Diners Club, and JCB. You have to verify your bank account before you can use a bank account as a payment method. There are two methods of verification available: Instant Account Verification and Random Deposits. To verify with Instant Account verification, you use your bank login credentials through Amazons secure website to contact your bank. Verification using this method takes only a few minutes. To verify with Random Deposits, Amazon deposits two small random amounts to the checking account you specify. When the deposits are registered with your bank, you verify the amounts with Amazon. Verification using this method takes from five to seven business days. Ebay on the other hand offers many more methods of payment. Payments options for most sales are: Paypal: (as described above) Propay: When the buyers check out, they enter their credit card information. Payment is processed immediately and sent to your ProPay account. There are fees attached similar to paypal but payment protection applies also similar to paypal. Skrill (Moneybookers): Skrill is a business that allows payments to be made through the web. The Moneybookers payment system offers an online deposit accounts and a low-cost, internet-based alternative to traditional money transfer methods such as cheques, money ordersand wire transfers . To merchants, Moneybookers allows accepting online payments made with major cards or Skrills own online accounts. Skrill also has payment protection available and fees are attached. Paymate: Similar to Paypal but it puts funds directly into the sellers bank account. Only for people in Australia and New Zealand. Payment protection available. Fees attached. All major credit cards: Payment protection available. Payment on collection: payment protection available. Both companies make payment as easy as possible but Ebay are clearly out performing Amazon in this department. They offer more payment options but I think they have to in order to make it easier and appear safer for the customer to shop on their site. Internet as a global market: The internet today has become the largest shopping centre on earth accessible through your computer/tablet/mobile phone at home, work or on the go. The world has gotten smaller thanks to the advancements in technology, trading online has become available to the masses with great ease. Cyber Monday is a great example of this. High street retailers are down 0.2% on last year sales for the month of November. Not a crisis by a long shot but its main competitors, the on line retailers, were up 26% year on year for the same period and the credit card firm Visa expected 6.8 million online transactions with shoppers spending  £320 million on 2012’s Cyber Monday alone. That alone tells you how big a market the internet has become. People can now set up a business from home on the internet and become an entrepreneur over night. They can buy products from China and sell them in Argentina within a matter of days without ever having to touch it all from behind the comfort of their computer. Conclusion: Ebay and Amazon are no doubt two brilliant examples of how to make a success of an e-business and are global internet giants. They are both now and will be household names for years to come but Amazon have the advantage in my opinion in that they are retailers as well as middle men for online sales but more importantly they manufacture, wholesale and retail their own hugely successful product in the Kindle. If another worldwide credit crunch arises or dot com bubble bursts then no doubt Amazon is the better of the two equipped to survive. Ebay is in more danger of becoming last weeks news because the hits can drop on it easier and people can stop trading on it or using another similar web site much quicker than Amazon and it will become extinct. Through researching the two sites I now have a greater understanding of the humble beginnings of the two and how they got to where they are today. I now know and understand how the two operate and the security involved with the two. Most of all I would now feel confident in putting what I have learned into practise. Recommendations: Ebay should try follow Amazon by getting into the production market and expand the business to future proof its self. Amazon should focus on its strengths in the kindle and the future being the download market of movies/tv and books particularly in the market of tablets and phones. 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