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E-commerce

Published: Mar 31, 2009

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The retail that wags the dog

When the internet first became widely known in the mid-1990s, pundits predicted that its biggest successes would come from content, or web-based news and information sources. What took some time to figure out, and what is still being debated today, is how companies and web sites are supposed to make money on content that is largely available for free. Throughout its brief existence, the web has been most profitable in e-commerce and online advertising, though subscription-based content sites have shown some staying power of late, as have fee-based community forums and job boards.

E-commerce drives the popularity and payback potential of the internet. Both web-specific retailers, as well as established traditional brands have seen their share of success and failure as Australians become more accustomed to doing their shopping online. Revenue continues to rise for online companies of every shape and size, including B2C (business-to-customer) sites, such as renaissance vendor Amazon.com, auction sites such as eBay, and B2B (business-to-business) sites, which use automated processes to link trading partners. Many e-commerce sites combine principles of other forms of internet business, such as travel sites which operate like search engines, allowing users to search for low-cost airfare, travel accommodation and car rentals.

People will also pay to find online what they used to get for free. Fee-based reunion services hook folks up with former classmates and information about family members, while dating services link the lovelorn with potential mates.

As the internet-surfing populace grows ever more advertising savvy -- and wary -- companies trolling for customers have found ways of using social networking sites to generate hype around their brands. Sites like Facebook, MySpace and Bebo are online communities that allow their members to link up to other people, as well as upload personal music, blogs and pictures -- a high-tech incarnation of the standard see-and-be-seen motivation. These sites are free to their members and earn revenue through banner advertisements and product placement.

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