FACULTY OF BUSINESS MANAGEMENT

SEPTEMBER 2016

BBED 4103

E-COMMERCE

CONTENTS

PAGE

1.0 INTRODUCTION
1.1 Definition of E-Commerce 2
1.2 Overview of the Company 3-6

2.0 ELEMENTS OF BUSINESS MODEL

2.1 Value Proposition..7
2.2 Revenue Model.7-9
2.3 Market Opportunity. 9
2.4 Competitive Environment.9
2.5 Competitive Advantage 9
2.6 Market Strategy 10

3.0 ANALYSIS
3.1 Value Proposition. 10-13
3.2 Revenue Model 14
3.3 Competitive Environment 15-16
3.4 Competitive Advantage.. 17

4.0 RECOMMENDATIONS 18-20

5.0 SUMMARY.21

6.0 REFERENCES22

1.0 INTRODUCTION
-Definition of E-Commerce
E-commerce is another name is electronic commerce encompasses all activities that firm or
individual performs for selling and buying products and services using internet and
communications technologies. The four major categories of e-commerce include business-toconsumer (B2C), business-to-business (B2B), consumer-to-consumer (C2C), consumer-tobusiness (C2B) and mobile commerce (M-Commerce) (Bachok & Seng, 2011, p. 18-22)
E-commerce creates new opportunities for conducting commercial activities online
by generating and delivering timely and relevant information through computer networks,
and thus it fosters easier cooperation between different groups: branches of a multinational
company. In Malaysia the E - Commerce showed tremendous growth.
Here are a few advantages and benefits through e-commerce:
Credit cards payments for commercial online sales
Creating online advertising revenue
Gaining information of the company via it own website or page.
The business pages can be updated without having to redesign and faster
An online store is open twenty four hours a day and seven days a week

1.2 Overview of the Company (About Qoo10 & Giosis Malaysia)

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Figure 1.2.0 Image of Qoo10 desktop page

Giosis or Qoo10 is a joint venture company formed by e-Bay and Mr.Ku Young Bae in late
2010, being the second largest online marketplace on the basis of sales and user performance
and effort to become Asia's leading online marketplace. Giosis provides a powerful online
marketplace platform that allows its buyers enjoy highly secure and convenient shopping
experience. The company currently operates 7 localised online marketplaces in 5 countries
including Japan, Singapore, Indonesia, Shanghai and Hong Kong. Among the countries,
Singapore remains to be its most profitable market. They plan to expand it into more Asian
countries in the near future. The Malaysias official website is www.qoo10.my which very
useful for customers to view. Giosis currently has partnerships with various companies
involving advertising, promotion, event, payment, and shipping services. Besides them
encouraging more people to sell with them because it is low service fee, easy and direct
communication with merchandise directors, quick selling and global sales in various
countries.
Types of products and services can get in Giosis are as below:
According to sales estimate, 75% of Qoo10s users are female, and their average age is 27.
This demographic drives a significant majority of the business, as Qoo10 appeals due to its
large listings in fashion categories. They also selling woman clothing, watch, jewelry,
cosmetics, men clothing, sports equipment, home and living furniture, baby items,
entertainment CDs and leisure & travel.

Their vision is uniting and creating business opportunities to buyers and sellers of diverse
backgrounds, all over Asia, with an amazing trading experience. It also promises to change the
shopping culture and creation of new opportunities in E-commerce by building trust between sellers

Other than, they ensure all the buying and selling deals should protected under security and
resolution center. They secure with item Security Center, IPR protection center, privacy
center for customer account or information and service policy center for user conveniences
and guide service policies of what we proceed currently.

E-commerce advertisers most love by Google search is Qoo10 which is in third place in top
10 list of e-commerce business. Qoo10 currently claims to have 19.6 million registered users
and made a total of $408 million in gross merchandise volume on 2014.

2.0

ELEMENTS OF BUSINESS MODEL

Definition of Business Model

A business model describes the rational of how the organisation creates, deliver, and capture
value (Osterwalder and Pigneur (2010)). Another one is Johnson et als (2008): The
business model fulfills a potent value proposition in a profitable way using certain key
resources and key processes. It means set of business plan activities to generate profit in
marketplace. An e-commerce business model is used to expand the unique qualities and
importance of Internet and the World Wide Web. There are six elements of business model
here to discuss:
2.1) Value proportion
Value proposition means the way a companys products or service fulfills the customers
needs. It is the primary reason a prospect should buy from a company. A strong and unique
value proposition thus becomes one of the most powerful weapons can employ to defend,
help expand online business and attract the customers.
The successful value proposition consists of:
I.
II.
III.
IV.

Personalisation and customisation of products selling.

Lower costs for search products
Decrease of value discovery cost.
Helping of exchanges by overseeing item delivered.

(By David Khim, Nov 30th, 2015)

2.2) Revenue Model (http://www.businessdictionary.com/)
A revenue model is a guideline which describes how a business generates revenue streams
from its products and services on invested capital. A profit not enough for a successful
company while must produce returns greater than investments. For example, when we have
decided to start online business, must consider will earn money from the site by selling
products and services with reasonable and profitable price. Firms should earn best returns to
stay in online business. Most companies will rely on one or few combination of the major
revenue models as:
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Advertising Revenue
Model
Affiliate Revenue
Model

Title Subscription
Model
Major Revenue
Model

Sales Revenue
Model

Transaction Fee
Revenue Model

Figure 2.1.0 E-commerce Revenue Models

a) Advertising Revenue Model

A website provides or offers clear description, content for free, hoping to sell
advertising to businesses that want to the audience.

Receives fee for advertisement from advertiser.( by Sam Ashe-Edmunds, studioD)

b) Title Subscription Revenue Model

Website offers its users content or information charges a subscription fee for access
Content must be perceived as a high added premium
It shows the interest of customers to view or know the page.

c) Transaction Fee Revenue Model

Websites will charge service fee according the number of transaction they process.
Offer web search the information they need, and earn commission for successful
transaction.(Nency Rawal,2014)

d) Sales Revenue Model

In this model, businesses will sell products, information or services to get profit.
Most of sales goods are consumer items such apparel, computers, home appliances
and electronics.

e) Affiliate Revenue Model

Here they resell items from other retailers on their site, so will receive referral fee or

commission.
Driving new customers to the merchant, benefits to both sellers

2.3 Market Opportunity

-It means firm must start find opportunity by obtaining a global overview of the overall
market potential. How large is the industry, and what are the current trends to the companys
intended market space or potential commercial value, financial opportunities available to the
firm in that market space.
(Susan Solovic, http://articles.bplans.com/)
2.4) Competitive Environment
- Competitive environment refers to the number and types of companies against and operate
which a given business competes in its industry. Direct competitors are those that sell very
similar goods and services. For example, McDonalds is a direct competitor with Burger King.
Indirect competitors are those that sell unrelated goods and services, but to similar target
markets or tend to be those that can be substituted for one another.
(http://imtebiz2013.blogspot.my/2013/10/8)
2.5) Competitive Advantage
- Competitive advantage model achieved when an organisation can produce a superior
product, bring the product to market, at a lower price than most, or all, of their competitors.
From this, they able to obtain different access to the factors have loyal employees and their
product cannot be imitated by others. According to D. Passemard and Brian H. Kleiner, that
defining the source of innovation is equivalent to describing the ways to create competitive
advantages. It is in fact possible to distinguish five main sources of innovation as following:

The new technologies;

The modification of the demand or a new demand;

The occurrence of a new segment;

The changes in the costs or the availability of means of production;

The changes in the regulation.

2.6) Market Strategy

-A proper plan and market strategy is important to win a business vision and mission. Market
strategy or analysis is defining the market in terms of size, structure, growth prospects, trends
and sales potential. Then have to develop strategies to enter or promote their market,
products to attract new customers efficiently.
(https://www.entrepreneur.com/)

3.0 ANALYSIS OF BUSINESS MODELS OF QOO10.MY

3.1 Value Proposition

As we know, value proposition means how firms introduce, promote and attract their
customers to view and shop with them without any hassle. They understand customer wont
ever buy from them if they dont even understand why they should pay attention to their
goods and services. So Qoo10 ensure they have a strong and clear value proposition. The
Qoo10 also developing their business through improve 5 important categories, which are:
Convenience and innovation- Qoo10.my is their website which includes their
products and services list, price list, promotions, discounts, mega sale, rewards, points
for buyer, new products. Consumer can choose their prefer language. In the front page
Price- Qoo10s price is just as good, reasonable and sometimes much lower than their
competitors. We can get exciting variety of goods from overseas markets, Qoo10 are
able to pass on their discounts to us, resulting in items much cheaper than retail price
and the competitors.
Speed service- They use the search box to remind people of their big selection and
make customer believe they can deliver all kind of products. Customers have to press
the keyword and search to find more items needed. There is column to register as
member in the Qoo10. Member can view the products, choose and save in the cart to
purchase. Qoo10 provides its user with multiple payment options including Pay pal,
credit card, online banking, and Q Account.
Security and confidential- Qoo10 manages Qsafe program to provide more clean
and secured market. So Qoo10 supports all activities of QbrandSafe and details of
customers and sellers are confidential.
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 Information and support- consumers attracted to shop in Qoo10 due to their

accurate information of goods and services they provided. For example, for high
audio equipment, like electronics they provide detailed specifications, professional
and consumer reviews. They have a professional customer service team to assist buyer
and seller.

In value proposition model, Qoo10 deliver same or more quality service compare to
the competitors Theonemall, Lazada, Amazon and 11street.my. It gives business
opportunity to many people where they can sell their product here and earn good
profit.

Figure 3.1.0 Detailed specifications of an electronic item in Qoo10

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3.2 Revenue Model

Qoo10 rely on one type of revenue model to earn more profit:a) Transaction Fee Revenue Model- Qoo10 predefines a percentage, service fee or
commission which is charged on each products and services sold on their website by various
sellers which is money that they can subsequently re-invest into their activity in order to
achieve a perennial growth and to achieve business goal.
There are many sellers in Qoo10, such are:
1. myhome

2. sport world
3. funshop001

Figure 3.2.1 Sellers in Qoo10

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-Qoo10 charge seller service fee depends on seller grade and only charged when transaction
is completed.
Seller Grade

Under USD200

Item Price
Over USD200 ~
Under USD500

Over USD500

Power

9% of Total
Transaction Amount

8% of Total
Transaction Amount

7% of Total
Transaction Amount

Good

10% of Total
Transaction Amount

9% of Total
Transaction Amount

8% of Total
Transaction Amount

Normal

12% of Total
Transaction Amount

11% of Total
Transaction Amount

10% of Total
Transaction Amount

Total Transaction Amount = Selling Price + Optional Fee + Shipping Fee (Discounted fee is
excluded
Figure 3.2.2 Seller service fee
3.3 Competitive Environment
Qoo10 must analysis its competitor to gain competitive intelligence; determining the
strengths and weaknesses of the competitors within their market and provide a competitive
strategy to grow business. Qoo10 also have direct and indirect competitors. Their direct
competitors are Lazada, Zalora, Rakuten, and Tabao.
Nowadays consumer like to compare Qoo10 and Lazada before decide to buy or search
items because both are large business and get cheaper items. So Qoo10 must analyse
Lazadas active, share, profit, price and activity. For example consumer more satisfied with
Lazadas website than Qoo10. As shown image below Lazada user-interface has fewer
advertisements as compared to Qoo10. The website is designed to look like a virtual
shopping mall. Items in each category are neatly displayed in an effort to help customers find
what they are looking in a shorter span of time. While, Qoo10s interface is busy with
advertisements, discounts and offers for different products. These advertisements contribute
to revenue although it can be a confusing experience for the customer and may even drive
away potential shoppers. So that, Qoo10 should takes initiative to upgrade and keeping up to
date their website to attract online users.

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Figure 3.3.1 Front page of Lazada

Figure 3.3.1 Front page of Qoo10

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The indirect competitor of Qoo10 is Trivago.com which the leading company in reserve or
booking hotel internationally. Qoo10 offers hotel reservation service to most of the country.
They must ensure consumer aware that can find and book hotel through their website itself.
They already have customer for buy and sell the retail products. So Qoo10 must do some
research on hotels and accommodation to provide best service.

3.4 Competitive Advantage

First of all, Qoo10 ensure that to reach the competitive advantage model they must coming up
with completely new and highly useful solutions, make customers life easier. Since Qoo10
did not a manufacturing company, they should sell unique and new products or services to the
customers according to their needs. They have more than 68000 registered merchants from
all over the country.
Qoo10 have to encourage their seller to introduce more innovative, useful and user friendly
products to attract the buyers. They ensure all products carefully selected for the quality,
originality and no compromise to offer the best price. Even, there is a low price guarantee
that promise every product labeled best price is the cheapest in market both offline and online
stores.
Moreover, attracting consumer and converting large sales is not enough. In order to create
sustainable competitive advantage, Qoo10 retain their consumer in many ways like providing
shopping voucher, email newsletter, affiliate program and offline activity such as blogger
gathering and business partnership opportunity. They also actively post article and
information in their blog. The image below shows that Qoo10 initiatives to stable in their
online business.

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Figure 3.3.2 Qoo10 Programs to retain customers

4.0 RECOMMENDATIONS TO IMPROVE COMPETITIVE ADVANTAGE
Even though, Qoo10 is doing well in selling products, introduce new merchants or seller,
reward the customers and earn high profit, it should implement few new strategies to improve
the competitive advantage. There are as:
1. Product strategy
As an online store, Qoo10 must specify exactly how their product is higher quality where its
important to meet the need of the shopper information. The claim of quality has to be backed
up with hard facts when they talking about items that will be purchased without even seeing
or touching by customers.
Then, they carry a wide selection of related products; can make a customers complete
purchase easier. For example, a mattress reseller that also offers sheets and comforters may
find easy in promoting the complete package. This advantage meets the demands of
customers who are looking to save time and comfortable shopping
Another example is, now Apple released its IPhone 7 Plus and Lazada started to take preorder and started to selling to customers but Qoo10 not even selling and promote the phone in
their website. Most customers not satisfied and moved to Lazada to buy. So that, Qoo10 must
start to sell product as todays trend for not lose their customers because individual has
specific needs and desires.

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2. Price strategy
That is right where offering the lowest price can provide incentive for customers to buy from
Qoo10 even they are well known for selling cheapest goods compared to other online stores.
Shopping online gives the consumer the opportunity to check out prices without visiting
multiple retail locations. If they are shopping on price, then they not are going to pay much
attention to everything else, like Qoo10 fantastic web design and fancy logo. So Qoo10 must
state their prices easy to find with the proper information of discount or promotion was given.
Besides, some consumers will research online stores before making a purchase at Qoo10.
They want to compare the price with other stores. Qoo10 can indicate the differentiation
discount or promotion they offer to customer than others. They can say their competitor price
and their own price to customer make decision.
3. Stocks and shipping
Qoo10 has many seller who are active and some not active for quite long time. Customer may
not aware and ordered item to the seller who does not have stock. Qoo10 team must handle it
even if they dont have that control, they can think of ways to make that out of stock
frustration a little less painful for their customers, potentially creating a competitive
advantage. For example, offer to notify them when they have more of the product and give a
discount or throw in a free item if they sign up to be notified. Qoo10 can make their customer
happy that acknowledged the inconvenience and lessened the effort required to make the
purchase when the item is in stock.
Meanwhile, for the shipping Qoo10 can offer faster shipping as now the normal delivery time
will be 3 to 4 working days, they can make it faster, free shipping, auto ship and a service that
customer can change their shipping address when they have to relocated for emergency
purposes. Customer might feel satisfied and glad to purchase from Qoo10 which really
concern about customers priority.

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5.0 SUMMARY
E-commerce is widely considered the buying and selling of products over the internet and.
day by day E-commerce is playing very good role in online retail marketing and peoples very
interested in using this technology now. The business models are consumer (B2C), businessto-business (B2B), consumer-to-consumer (C2C), consumer-to-business (C2B). The selected
online store Qoo10 was discussed under the six key elements. There are value proposition
-reason to buy from Qoo10, revenue model-how Qoo10 earn profit, market opportunity
where Qoo10 sell their products and services, competitive environment means Qoo10s
competitors, competitive advantage where their creative and unique products to be sell, and
last but not least market strategy are plans that to sell or promote their products and services
to customers. Qoo10 have to create innovative products and ideas to stay stable at online
market. They have to implement proper ways to improve competitive advantage like product
strategy with selling higher quality products, determining a right price, concern on shipping
and stocks availability of products and deliver a great support and customer service to attract
more customers. If Qoo10 can follow and continue their good service they can become
number 1 online store.
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(3560 words)

6.0 REFERENCES
1. Analysis on top 10 online shopping sites in Malaysia-Retrieved fromhttp://www.ecommercemilo.com/2015/11/analysis-top-10-online-shopping-sitesmalaysia.html
2. Business model .Retrieved from-https://en.wikipedia.org/wiki/Business model
3. Essays, UK. (November 2013). The 8 Key Elements Of Business Model Marketing
Essay. Retrieved from https://www.ukessays.com/essays/marketing/the-8-keyelements-of-a-business-model-marketing-essay.php?cref=1
4. E-commerce Retrieved from- https://en.wikipedia.org/wiki/E-commerce
5. Lazada vs. Qoo10 Who is the King of Ecommerce in Asiahttp://www.demystifyasia.com/
6. Osterwalder, A., Pigneur, Y., In Clark, T., & Smith, A. (2010). Business model
generation: A handbook for visionaries, game changers, and challengers

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7. Qoo10-Retrieved from https://www.qoo10.my/gmkt.inc/CS/GuideDefault.aspx

8. Revenue model. BusinessDictionary.com. Retrieved October 10, 2016, from
BusinessDictionary.com website:
http://www.businessdictionary.com/definition/revenue-model.html
9. Rae Hoffman on January 26, 2016- http://marketingland.com/affiliate-marketingviable-business-model-2016-159804
10. Terence Lee (Apr 11, 2013). Retrieved from -https://www.techinasia.com/qoo10transactions-grew-14-fold-in-3-years-hits-usd-73m
11. The Few Sentences You Need to Dominate Your Market-Retrieved from
https://blog.kissmetrics.com/

Men & Sports

Digital & Mobile
Home & Living
Baby & Food
Deal & Entertain

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