E-commerce in Malaysia: implementation and application

E-commerce is increasingly becoming important and is now a common online business format on the internet. The emergence of e-commerce as an alternative medium to conduct business is changing the way that businesses are conducted in Malaysia. Examples of applications of e-commerce are in E-banking, Online Advertising, Own company Web Sites, Electronic Catalogues, Marketing by E-mail, Online Purchasing, Online Selling, Online Order Processing, Tracking or Detecting Delivery of Goods and Online Payments using Credit Card.

When implementing e-commerce, the technical issues to be considered are the Website Design, Layout, website navigation system, Technology support, shopping cart process, Search Engine Optimization, and etc. There are some requirements in maintaining e-commerce websites, including: Product updates, Presentation modifications and Search Engine Optimization revisions. To implement e-commerce successfully, we must plan in advance on how to deal effectively the web site content, pricing variables, stock management, fulfillment of orders and delivery, payment issues, policy on returns, and security support, among other matters.

With e-commerce, the transaction process is paperless because everything can be done electronically at buyers’ convenience. In the case of e-banking, Maybank launched the first Internet banking services in June 2000 and this was followed by other local banks in Malaysia. More and more, local companies nowadays opt to have an online presence with their own corporate websites to cater to a wider audience target in terms of advertising and marketing  and better customer interaction.

E-payment method is one of the issues in implementing e-commerce in Malaysia. Some merchants do not want to install specialized hardware or software to receive payments. For instance, debit card payment system is not widely used in Malaysia because most of the merchants do not want to install the hardware and software required. Security is also one of the factors that affect the application of e-commerce. Users worry that their personal information will be stolen for the purpose of identity theft or fraudulent activities.

In conclusion, although the level of adoption varies within the retail industry, the level of adoption of e-commerce is still encouraging but not extensive. There is room for improvement.

Reference(s):

Ainin S and NoorIsmawati. (2003). E-Commerce Stimuli and Practices in Malaysia. Retrieved Feb 3, 2011, from http://www.pacis-net.org/file/2003/papers/e-business/258.pdf

E-commerceAdvisor.com. (2007). E-commerce Business Plan. Retrieved Feb 3, 2011, from http://www.e-commerceadviser.com/101businessplan.php

Norudin Mansor. (2010). The Application of E-Commerce Among Malaysian Small Medium Enterprises. Retrieved Feb 3, 2011, from http://www.eurojournals.com/ejsr_41_4_11.pdf

PowerHomeBiz.com.(2010). Key Issues in Implementing an E-commerce Strategy. Retrieved Feb 3, 2011, from http://www.powerhomebiz.com/vol103/implement.htm

Identify and compare the revenue model for Google, Amazon.com, and eBay.

Sales revenue is the revenue received from sales of goods or services. Transaction fees are commissions paid on the volume of transactions. Subscription fees are monthly or yearly fixed amounts paid to get some services.

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Advertising fees are payments from advertisers because they want to advertise their products or services on the particular websites. 

Affiliate fees are commissions for referring customers. These fees include cost per thousand impression (CPM), cost per click (CPC) and cost per acquisition/action (CPA).

Google
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The revenue models of Google are subscription fees, advertising fees and affiliate fees. Google generates 99% of its revenue from advertisement. Google charges subscription fees for services. Depending on the subscription, users will automatically be charged on a monthly or yearly basis through Google Checkout. When users use Google Checkout to process their sales, they will be charged 1.9% + $0.30 per transaction.

Google uses Google AdSense as an affiliate tool to earn affiliate fee. It is a free program that empowers online publishers to earn revenue by displaying relevant ads on a wide variety of online content. Webmasters of popular sites with interesting content can sign up on Google's Adsense page and begin displaying Google advertisements to their users. Google pays the webmaster a portion of the advertising revenue and keeps the rest. Users can also promote on Google using Google Adwords.

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Amazon.com
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The revenue models of the company are sales revenue, transaction fees, advertising fees, subscription fees and affiliate fees. Most of the revenue of Amazon.com comes from sales revenue because it sells many things online such as books, magazines, DVDs, videos and electronics.

Sellers may put their things to sell on Amazon.com. Sellers will be charged once customers click through to the seller's website and purchase the product directly from the seller because it is a cost per click advertising program. Subscription fees applies with respect to Digital Content made available to use on a subscription basis.

EBay
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The revenue models of eBay are transaction fees, subscription fees, affiliate fees and advertising fees. When users list an item on eBay, users are charged an insertion fee. If the item sells, they are also charged a final value fee. The basic cost of selling an item is the insertion fee plus the final value fee.

EBay is also charging subscription fees for eBay store which is a part of eBay where individual sellers can display all of the items they have for sale and tell you more about their business.  Affiliates will be paid for each click that is directed to an eBay site on a Cost per Action (CPA) model. Payment will be charged to advertisers who advertise on eBay. EBay has a few other programs such as eBay partner network and eBay affiliate program.

Reference(s):

Amazon.com. (2009). Amazon Kindle: License Agreement and Terms of Use. Retrieved Feb 1, 2011, from http://www.amazon.com/gp/help/customer/display.html?ie=UTF8&nodeId=200144530&qid=1213378239&sr=1-2  

Amazon.com. (n.d.). Explore Advertising Opportunities with Amazon.com. Retrieved Feb 1, 2011, from http://www.amazon.com/Advertising/b/?node=276241011

Bala Iyer. ( 2009). Retrieved Feb 1, 2011, from http://www.balaiyer.com/tabid/1475/bid/4501/New-revenue-model-for-Google.aspx

Boutell.Com, Inc. ( Jan 1, 2007). Retrieved Feb 1, 2011, from http://www.boutell.com/newfaq/sitespecific/googlemoney.html

eBay. (2011). About eBay. Retrieved Feb 1, 2011, from https://publisher.ebaypartnernetwork.com/files/hub/en-US/aboutEbay.html

eBay. (2011). Fees for selling on eBay. Retrieved Feb 1, 2011, from http://pages.ebay.com/help/sell/fees.html

Google. (2010). Google Checkout fees. Retrieved Feb 1, 2011, from http://checkout.google.com/seller/fees.html

Google. (2010). Subscriptions. Retrieved Feb 1, 2011, from https://checkout.google.com/support/bin/answer.py?hl=en&answer=1090911

An example of an E-commerce failure and its causes

One example of an e-commerce failure is Pets.com.

 

Pets.com was an online provider for pets' supplies and accessories directly to the customer over the World Wide Web. It was  launched in August 1998 but went into liquidation in 268 days. In early year 1999, however, the domain and site was purchased by a venture capitalist and it started a media advertisement blitz through the radio, television and a Pets.com magazine. Its mascot, the Pets.com sock puppet, was very famous and  became well known and the company expanded their  market and went public in February 2000. Click here: Pets.com


However, by fall 2000 the dot.com bubble burst, and despite their efforts, the company was unable to raise further capital, had to sell some of its assets as they were unable to find a purchaser or financial banker and had to shut down its operations on 9th November 2000. Click here: Pets.com goes belly up


Lack of a workable strategy plan is another reason for Pets.com to close down its business. They were always giving more discounts and free shipping to their valued customers. In fact, they were unable to turn in a profit because of the heavy cost for the shipping of bags of dog litter and cans of pet food. The company did not make any profit from the selling of merchandise because the company was selling them at about one-third of the original cost price to its customers. The company had negative gross profit margin for the first two quarters in the year 1999, while in the third quarter, net sales before operating expenses amounted to $1.62 million.  Other than that, the company was trading below $1 for the few months before it closed down its business. Click here: Pets.com

Employees who resigned from the company were not replaced which  caused the company to operate less effectively and efficiently, and was also another reason for Pets.com to close down its business.

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Reference(s):

Austria Farmer, M. (Sept 7, 2000). Pets.com moves part of litter to Midwest. Retrieved Jan 31, 2011, from http://news.cnet.com/Pets.com-moves-part-of-litter-to-Midwest/2100-1017_3-245416.html.  

Barrett, L. (Nov 7, 2000). Pets.com goes belly up. Retrieved Jan 31, 2011, from http://news.cnet.com/Pets.com-goes-belly-up/2100-12_3-267376.html.

Junnarkar, S . (Dec 13, 1999). Pets.com to play in public market. Retrieved Jan 31, 2011, from http://news.cnet.com/Pets.com-to-play-in-public-market/2100-1040_3-234303.html.

Mast, C. (Dec 13, 2000). Living Through the Death of a Dot-Com. Retrieved Jan 31, 2011, from  http://www.businessweek.com/careers/content/dec2000/ca20001213_830.htm.

Pets.com. (Nov 7, 2010). Retreived Jan 31, 2011, from http://en.wikipedia.org/wiki/Pets.com

An example of an E-Commerce success and its causes

An example of an E-Commerce success is Dell.com.

The founder of Dell, Michael Dell, emphasised on the ability to sell their products directly to customers via http://www.dell.com/ rather than through a retail store. This marketing channel has enabled Dell to become a dominant supplier of computers in the 1990s and early 2000s.

Dell offers high quality; relevant technology; customized systems; differentiated products and superior services to customers that enable customers to purchase easily and use the product effectively. In fact, Dell focused on customers’ needs and desires, and constantly introduced new technology to satisfy their wants and achieve their dreams. Click here Helping you succeed is always a good story
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As mentioned above, Dell’s sales and marketing include customers can purchase Dell’s products online at http://www.dell.com/. Besides, customers can also purchase directly either from dedicated sales representatives, telephone-based sales and other methods. But still, the most successful marketing channel being used by Dell is the online-marketing method. 


Among the reasons for its successful online marketing strategy are:

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The ease of customization

Dell believed that customers would value the customization of their computers which could enhance the uniqueness of personal computers. Thus, Dell enables the facilities to customize computers on their websites that allow customers to select their favourite features effortlessly using the internet.

The convenience of purchase and delivery

Placing orders through Dell’s websites is not difficult because the steps involved are simple. Once customers have ordered the products, the process of delivery will be carried out immediately using parcel post or shipment. It increases the level of convenience because customers no longer have to purposely pick up the products that they have ordered from the retail stores.

The sufficient information of products

Unlike the paper catalogues being distributed by Dell that could only provide  limited information due to insufficient space, the internet has now enabled Dell to provide any sort of information related to its products, and customers can easily find the information needed.

The cost-effectiveness of its products

By using online marketing, Dell has eliminated most of the intermediaries that help Dell to reduce cost. In addition, while the manufacturing cost is reduced, thus the selling priced is reduced too. That is one of the reasons why Dell succeeds over their competitors which involve intermediaries to deliver products.

Reference(s):

Chaffey, D. (Apr 19, 2008). Dell case study / Dell.com case study. Retrieved Jan 31, 2011, from http://www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Dell-E-commerce-case-study/.

Dell Marketing Strategies. (n.d.). Retrieved Jan 31, 2011, from http://www.ehow.com/how-does_4963888_dell-marketing-strategies.html

Helping you succeed is always a good story. (n.d.). Retrieved Jan 31, 2011, from http://content.dell.com/us/en/corp/about-dell-our-story.aspx

The history and evolution of E-commerce

The development of the Electronic Data Interchange (EDI) is the history of e-commerce. It is a set of standards developed in the year 1990 to exchange business information and electronic transactions.
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In year 1984, through ASCX12 the Electronic Data Interchange (EDI) was standardized. Mosaic web-browser (first ‘point / click’ browser) was made available in year 1992. It was quickly adapted into Netscape, a downloadable browser, and introduced easier access to electronic commerce. By year 1995, two of the biggest names in e-commerce were launched which is Amazom.com and E-Bay.com. 

Another key moment in the development of e-commerce is DSL. It  provided quicker and persistent access connection to the Internet. In year 1998, "always on" internet services to subscribers using fast digital subcriber line or DSL was used across California. This prompted people to spend more money, and time, online. By the year 1999, the retail sector was already spending over the Internet $20 billion according to Business.com.

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In early 2000, the merger between AOL and Time Warner was another major push for electronic commerce.  The merger, worth $350 million, brought together a traditional company with a major online company. Yahoo , e -bay and Amazon's need for improved  security came to the forefront in the development of electronic commerce in February 2000. It caused the rise  of revenue up until 2006, to grow from 40% to 50% yearly so higher prices will earn more profit.  An experienced and traditional company such as Wal-Mart, will use  a mixed strategy of having stores online and offline in order to be successful.

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Today, Business-to-Business (B2B), which mean businesses selling their goods to other businesses, is the largest electronic commerce sector on the internet. Second, is Consumer-to-Consumer (C2C) where consumers sell to each other. Another form of e-commerce is Peer-to-Peer (P2P) that allows users to share files and resources directly. Online businesses selling to individuals also will be a large growth area in Business-to-Consumer (B2C) e-commerce. Click here: Electronic commerce aka e-commerce history, Electronic commerce

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Reference(s):

Electronic commerce aka e-commerce history. (March 16, 2008). Retrieved Jan 31, 2011, from http://www.ecommerce-journal.com/articles/electronic_commerce_aka_e_commerce_history

Electronic commerce. (Jan 30, 2011). Retrieved Jan 31, 2011, from http://en.wikipedia.org/wiki/E_commerce

Preetam Kaushik. (Jul 11, 2010). History of E-Commerce. Retrieved Jan 31, 2011, from http://www.suite101.com/content/history-of-e-commerce-a259972.