first movers or followers in e-commerce sites
DESCRIPTION
This is a pdf document made in fulfillment of our E-commerce project. The project was to find out which of the above mentioned areas (first movers or followers) have found to be a success. I have carried this research favoring second-movers namely Facebook and Pet smart. *Sharing Is Caring*TRANSCRIPT
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April 6th, 2011
Enrollment No. 01-111091-117 | Saniya Raza Tiwana
FIRST-MOVERS OR FOLLOWERS
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ABSTRACT
Since the “dot-com” arena has come up, people are more responsive
towards the e-commerce sites. A few say first movers have higher market share.
On contrary to that, others believe first movers are only like a firework, all the toilsome
by the first movers is eroded with imitation by the followers. Now which out of
the two has proven to be a nirvana must be oppugned (called into question).
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Facebook vs Orkut:
One thing that has definitely changed over the past five to ten years is our way of socializing.
Verbal greetings about one’s health and family has all became virtual in most cases. Social
networking has now become the most common way of keeping in touch.
My research report would favor the followers like Facebook as compared to orkut (first-mover).
Orkut launched itself on January 24, 2004 as a social networking site. Its immediate competitor
Facebook launched itself in February 2004. The time difference hardly seems to exist but meant
a lot to the users of social networking sites. More and more orkuteers switched over facebook
due to its differentiated features like increased privacy and the like.
The business models and The Revenue models in context to facebook
Value proposition:
Facebook helps
Games and quizzes
Posit their statuses
Multi-line comment text box
People keep in touch
To locate lost friends easily
Provide increased privacy
Clear profile details
Revert friend requests
And that is how they create their value proposition as compared to orkut that does not has a
multi-line comment text box.
Revenue models:
The most of the revenue for the follower (facebook) comes through
Advertisements on the right side of the page
Application performance like Farmville by Zynga and Anita the Psychic reader.
Facebook gifts like sending online birthday cakes.
Search Partnerships
Orkut completely lagged behind to increase their revenue through these means, due to which
facebook became a leading social networking site.
o Advertising: Facebook is normally tight-lipped about their revenue numbers, just
like any other company, since that typical of private firms.
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“Bloomberg News reported that facebook has earned revenue of nearly $2 Billion in
year 2010 as compared to 2009 which was $800 Million. Financial Analysts have said
that this massive revenue is due to spread of their Advertising policies, facebook credit
cards”.
While for Orkut it is high time now to establish an advertising presence to attract all the
die-hard fans who just adopt whims and fancies in the name of Google.
o Subscription: news regarding facebook charging a subscription fee to users was just
a rumor. Charging the users would more likely deviate users to other social
networking sites.
“Facebook does not charge you for using Mobile Texts. However, your
mobile provider's standard rates for sending and receiving text messages still apply”.
o Transaction fee: facebook’s majority of the revenue comes through advertisement.
Other than that, facebook has now a growing source of revenue: transaction fee. For
instance, facebook earns on games by Zynga; the makers of Farmville. According to
Mashable.com, there are 11million facebook users that flock towards virtual farming
daily. That gives us an idea, what proportion of revenue would facebook be earning
merely by one of its application; Farmville.
“Zynga’s revenues will be about $1 billion this year, and Facebook shaves a cool 30%
transaction fee off of that. If Zynga continues to grow, Facebook is golden.”
[Source Google]
o Sales: digital gifts are one source of adding to the sales revenue for facebook.
Digital goods constitute a meaningful secondary revenue stream for the company.
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o Affiliate: affiliate links can work as an income generator for facebook users, due to
which they will spend more time using facebook, which in turn is beneficial for facebook
itself. An affiliate sample is visible below
Market opportunity:
Facebook markets itself worldwide. Penetration of population in Pakistan is nearly 2.19%.
Facebook is now nearly twice the size of orkut (first-mover) worldwide.
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Users of orkut in pakistan for the last 6 months.
Users of orkut in pakistan for the last 6 months.
Competitive environment:
When talking about competitors, facebook has a long list, Orkut being on the top. LinkedIn,
Myspace, Friendster and hi5 also have a market share more or less equivalent to orkut.
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Competitive advantage:
Most of the orkuteers became Facebook users since their privacy and personal control
was in jeopardy. Orkut allowed visiting and seeing everyone’s profile as an open
platform. Facebook took notice and gained a competitive advantage over orkut by
introducing improved efficient privacy settings.
Also nude images at orkut were the bigger wave that led people use facebook.
Market strategy:
Facebook was founded by college roommates of Harvard University but later was expanded to
other colleges. It gradually added support for students at various other universities before
opening to high school students, and, finally, to anyone aged 13 and over while the main
intention behind orkut was to create a social networking service.
Management team:
Facebook employed people who could communicate what facebook stands for and how the
company is going to act. Currently the company is working towards expanding their
management team.
Organizational development:
The organizational structure of facebook is as below;
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The Second supportive example: PetSmart.com
PetSmart turned out to be a fast follower of Pets.com and petstore.com.
It exploited the opportunities and got catch of the weaknesses of pets.com at a chop-chop.
PetSmart (follower) at a glance
PetSmart is a business to customer E-tailer.
It was founded in 1986
It sales specialty pet services such as grooming and dog training.
It does business in USA & Canada.
Value proposition:
The main value proposition of PetSmart is that it offers the broadest
collection of pet supplies at the lowest prices.
Revenue models:
The most of the revenue for the follower (PetSmart) comes through
Sale revenue
Market opportunity:
Petsmart operates in a niche retail market space and focuses on the pet supplies
specialty products and services, for instance dog training, cat boarding etc
o Subscriptions:
PetSmart can get people to subscribe to their news alert for
Mark Zuckerberg
CEO
Melanie Deitch
Director of marketing
Ethan Beard
business developmen
t director
Matt Cohler
VP strategy & Bus OP's
ChristopherCox
Director of Product
Sheryl Sandberg
COO
Elliot schrage
VP of communication
s & public policy
Mike SchroepferDirector
of Engineering
Dustin Moskovitz
Co-Founder & Vice Presidebt of engineering
Tom Arrix
SVP Sales & strategic marketing
Vince thompson
VP Sales
Kevin Colleran
Sales Executive
Mike Murphy
VP of Sales
Ted Ullyot
General Counsel
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pet adoptions
pet embellishments etc
o Advertising: PetSmart does not really advertise about other related sites. However, it does promote its
own charities, grain free food and photo contest etc.
o Sales:
PetSmart generates revenue be selling
Pet related buying guides to their customers. For instance clothing sizing guide,
dog toys buying guide etc.
Pet food, treats and litter
Collars, leashes, health care supplies, beauty aids, toys, apparel, pet beds and
carrier
Space in stores for adoption and welfare organizations
Pet services, on-call veterinarian and day camps for dogs.
Competitive environment:
PetSmart has a flock of talented competitors that are similar to an elephant in the room. Major
competitors are Pets.com and Petstore.com
Competitive advantage:
PetSmart’s competitive advantage is its brand name.
Market strategy:
PetSmart uses the market strategy of
Low prices commonly termed as low pricing strategy.
Providing interesting content and community customized for its target market
Email marketing through free email newsletters
Affiliate marketing
Organizational development:
The organizational structure within PetSmart is as under
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Management Te
The management team of PetSmart strongly believes that their employees make the difference in
their success. They have made creative advertisement that grabs the attention, desire, action and
interest of candidates.
Guidance and support is provided to the new employees to enhance their interaction with
all breeds.
PetSmart only requires their employees to have the passion and excitement to work with
pets.
Employees have the autonomy to influence the improvements of their work stations.
Philip L. Francis
Executive chairman
Robert F. Moran
President and chief
executive
Donald Beaver
Senior Vice President
Emily Dickinson
General Counsel & Secretary