Running head: ANALYZE HOW SERVICE PROVIDER E-COMMERCE FIRMS DEVELOP 1
ANALYZE HOW SERVICE PROVIDER E-COMMERCE FIRMS DEVELOP THEIR
STRATEGIES AND COMPETE IN THE ERA OF NEW TECHNOLOGY
Dang Quoc Hung, Tran Phi Linh, Vo Thi Phuong Huyen,
Pham Thi Thu Trang, Nguyen Thi Lan Anh, Mai Gia Tung
Open University Malaysia
7th Semester

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Table of Contents
Introduction & Overview.................................................................................................... 3
Market Opportunity............................................................................................................. 3
Revenue model.................................................................................................................... 4
Value proposition ................................................................................................................ 5
Competitive advantage........................................................................................................ 5
Signup Driven Homepage............................................................................................... 5
Easy Signup Process ....................................................................................................... 6
Sharing with Simplicity .................................................................................................. 6
Availability on Multiple Devices & Platforms ............................................................... 6
Competitive environment.................................................................................................... 6
Direct competitor ............................................................................................................ 6
Indirect competitor.......................................................................................................... 7
Market strategy ................................................................................................................... 7
Evaluation & Conclusion.................................................................................................... 8
References.......................................................................................................................... 9

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Introduction & Overview
Dropbox was born in 2007 and is headquartered in San Francisco. It is a backup services,
online data storage, and using cloud computing technology (cloud storage) with the ability to
synchronize in real time and automatically perform backups. Through the archive in the cloud,
sync folders, files, Dropbox lets users keep the data stored in the cloud and use the data to keep it
anywhere else without the need of other devices.
The idea of Drew Houston, co-founder and CEO of Dropbox, comes from the fact that he
always forgot the USB flash drive in times of need. In addition, viruses, malware can infect
personal computer when using USB flash drive for data storage. Therefore, Drew Houston has
created a program for their needs. When he noticed the same needs from people around, in June
2007, at the Symposium on Technology "2008's TechCrunch50" Dropbox has officially launched
after receiving first investment from Y-Combinator Company.
Market Opportunity
Statistics show that more than 1 billion Dropbox files received each day and more than 500
million mobile devices using Dropbox (Shankland, 2013). Dropbox client's objectives include all
people from all over the world, of all ages, levels and work. Basically, the service Dropbox is a
hard drive "on the cloud" of all users. Everyone can store everything like photos, videos, files...
and share with everyone.
Besides, Dropbox like a platform than a service. Dropbox can work with a lot of devices,
from Apple devices, phones - Android tablet, RIM's devices... Another advantage is the flexibility
of Dropbox for sharing. It allows users to select their documents are private or for friends to visit.
It is this flexibility helps Dropbox like a social network documentation.

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Dropbox is embarking on a new phase of international expansion as it tries to stay a step
ahead of a rash of “me-too” companies that have sprung up around the world. The push coincides
with a shift in focus to business customers, where the company hopes to cash in on its popularity
among individual users by getting their employers to pay. While it claims 300 million personal
accounts for people to store information and “sync” it across their different devices, less than 2
percent are estimated to pay for the service (Locsin, 2014).
Dropbox plans to open an office in the UK, where it already has 16m users, with other
major European countries and Japan and Australia to follow (Covic, 2014). Dropbox, which
introduced a business service last year, already has 80,000 customers, more than twice the number
claimed by Box, a US rival that only sells to the business market. Seeking to reach all 3 billion of
the world connected people, Dropbox will be pre-installed on the phones of one of Europe's biggest
telecoms firms.
Revenue model
The business model of Dropbox is the freemium model, users are offered a free account
and a certain storage capacity, if it exceeds the capacity and the demand for more capacity, the user
will pay a certain fee for Dropbox. Therefore, revenue mainly from Dropbox to charge users. By
the end of 2013, Dropbox estimated revenue of about $200 million. (Kepes, 2014)
Dropbox has a very straightforward business model: it charges customers directly. No
advertising or selling customers' information. It follows a very old fashion logic: what you want is
what you will pay. To be clear, the company maximize a freemium model: customers get the basic
service for free and then they will upgrade if needed for a fee. The Pro plan comes with 100 GB
of space (compared to 2 GB for the Basic plan) for $9.99 a month—which comes up to about $120

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a year. The Business plan comes with unlimited space, unlimited version history, and allows up to
five people to use the account and costs $15 per month per user (Merino, 2014).
Forbes indicates that only 1% of Dropbox’s users are paid customers (Rogowsky, 2013).
Dropbox unveiled its Business service the same day Amazon announced Amazon WorkSpaces, its
new cloud storage service for enterprises which target Box cloud storage service provider who
only targets business firms. Dropbox has raised $507 million to date from investors like Sequoia
Capital, Accel Partners, Index Ventures, Greylock Partners, Goldman Sachs, and more (Weiss,
2014).
Value proposition
Dropbox is a favorite in the cloud storage world because it's reliable, easy to use, and a
breeze to set up. Your files live in the cloud and you can get to them at any time from Dropbox's
Web site, desktop applications for Mac, Windows, Linux or the iOS, Android, BlackBerry, and
Kindle Fire mobile apps.
You can store any kind of file in Dropbox, by either uploading to the Web site or adding
it with the desktop apps. There is no size limit on files you upload to Dropbox with the desktop or
mobile apps, but larger files can take several hours to upload, depending on your connection speed.
Dropbox's greatest strength is that it works equally well on PCs and Macs, Android and
iOS. The service is so simple and elegantly designed, that it's easy for anyone to master. Its desktop
applications seamlessly blend with your computer's file system.
Competitive advantage
There are several unique features that make Dropbox stand out of others:
Signup Driven Homepage: First time visitors to the Dropbox website will notice the
simple layout, which list down the rest of the Dropbox product. The 2 minutes short clip gives a

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gist explanation of the Dropbox product, something that Dropbox has had on their website from
the very beginning until now. This will remove the confusion and messy situation which make a
friendlier approach to all type of customers.
Easy Signup Process: The signup process is only a few steps and a user can sign up on
their desktop from the application without using web browser. There is no requirement in credit
card number, phone number or event physical address and Zip code. Just email and password and
you are good to go.
Sharing with Simplicity: Dropbox makes it simple for people to share files. Both the
sender and the receiver have little work to do. With a few click away, users can send their files and
folders to anyone from any devices or web browsers anytime.
Availability on Multiple Devices &Platforms: The nature of the Dropbox product makes
it important for them to be on multiple platforms. People need to access their products from
anywhere at any time. Being available everywhere is key for Dropbox, according to Co-Founder
& CEO Drew Houston. There are an estimated 20 million Ubuntu (Linux) users worldwide.
Dropbox released their Linux program as soon as they launched to the public. These millions of
Linux users did not have a free cloud storage solution at the time. By adding Linux support and
continuing to this day to be on as many platforms as possible, Dropbox is making it easy for anyone
who wants a Dropbox account to have one.
Competitive environment
Direct competitor: Box (formerly Box.net) is an online file sharing and personal cloud
content management service for businesses. Although Box only provide the service for business
firm, it stays the same as Dropbox in service provider market. The company adopted a freemium

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business model, and provides up to 10 GB of free storage for personal accounts. A mobile version
of the service is available for Android, BlackBerry, iOS, WebOS, and Windows Phone devices.
Indirect competitor: Google Drive is a file storage and synchronization service created
and managed by Google. It allows users to store documents in the cloud, share files, and edit
documents with collaborators. Google Drive encompasses Google Docs, Sheets and Slides, an
office suite that permits collaborative editing of documents, spreadsheets, presentations, drawings,
forms, and more. Files shared publicly on Google Drive can be searched with web search engines.
Google Drive is more likely a feature comes along with users who are using Android devices and
Gmail services than a cloud storage service provider as Dropbox. But the threat come from Google
is huge because of the storage space, pricelist and other document collaborative tools.
Market strategy
In the summer of 2008, Dropbox started facing a competitive environment, they had limited
resources and very little marketing experience. The team invested in a big launch event at
TechCrunch50 and began to buy AdWords to put a search engine marketing program. By early
2009, Dropbox had officially launched the product, and were enjoying some successes, but none
of its traditional marketing method has an acceptable cost for a startup company with a small
income as Dropbox.
Keywords marketing were too expensive for the startup, and second or event third page
search wasn’t providing good stand for the company. Using ads and link to other affiliates didn’t
work out either because it will ruin the simplicity of Dropbox. Therefore, Dropbox marketers gave
users best referring feature in order to share the brand with their friends and to earn reward both
existing customers and their referred friends. Dropbox sent out surveys to users in an effort to
optimize rewards, improve the signup flow and encourage sharing, and made significant

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investments in analytics to measure results. In short order, referrals increased signups by 60%, so
Dropbox abandoned other channels. In 15 months, Dropbox grew from 100,000 to 4,000,000
registered users by leveraging word of mouth, with 35% of daily signups coming directly through
the referral program and 20% through shared folders and other viral features. Dropbox’s
marketing spend on traditional channels went to $0. Almost more impressive is that they’ve been
able to drive sustained growth (of 15% to 20% month over month) by sticking to these strategies.
Evaluation & Conclusion
Dropbox is one of the most popular cloud storage services because it works well on a wide
variety of mobile devices. With over 100,000 apps that work with Dropbox account, it's a very
good file sharing site for business and personal use. These apps all have different purposes but the
main idea is the same: they allow you to share and receive files directly within the apps without
any complicated procedure. With the mobile app on almost any devices will give you the ability
to upload, download and share files easily from everywhere and anytime.
Dropbox is not considered the cheapest cloud storage service in the world. In fact, it can
be really expensive when you consider that storing 500GB of data will cost you $49.99 per month
but the 2GB of free storage (and the free space can go up to additional 23GB through some
methods) should give you plenty of room to play around without having to fork over a single cent.
Still, while other cloud storage options may be able to compete on price, few can compete on ease
of use, feature set, or cross compatibility – and making your life easier is often worth a few bucks.

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References
Covic, V. (2014, July 22). Dropbox Opens UK Office, Europe and Japan Next. Retrieved from
Cloudwards: http://www.cloudwards.net/news/dropbox-opens-uk-office-europe-and-
japan-next-4176/
Einstein, N. (2013, August 7). The Dropbox Epiphany. Retrieved from Extole:
http://www.extole.com/blog/the-dropbox-epiphany/
Kepes, B. (2014, February 24). Confirmation Of Dropbox's Monster Raise. Retrieved from
Forbes: http://www.forbes.com/sites/benkepes/2014/02/24/confirmation-of-dropboxs-
monster-raise/
Lerman, H. (2016, June 20). The 7 Ways Dropbox Hacked Growth to Become a $4 Billion
Company. Retrieved from http://petawawablog.typepad.com/map-the-mktng-
wilderness/digital-marketing/page/6/
Locsin, J. (2014, May 29). Dropbox hits 300 million users. Retrieved from GMA News:
http://www.gmanetwork.com/news/story/363256/scitech/technology/dropbox-hits-300-
million-users
Merino, F. (2014, January 23). How does Dropbox make money? Retrieved from vatornews:
http://vator.tv/news/2014-01-23-how-does-dropbox-make-money
Rogowsky, M. (2013, November 19). Dropbox Is Doing Great, But Maybe Not As Great As We
Believed. Retrieved from Forbes:
http://www.forbes.com/sites/markrogowsky/2013/11/19/dropbox-makes-hundreds-of-
millions-so-why-is-it-only-asking-for-an-8b-price/
Shankland, S. (2013, February 27). Dropbox clears 1 billion file uploads per day. Retrieved from
CNET: http://www.cnet.com/news/dropbox-clears-1-billion-file-uploads-per-day/

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Weiss, G. (2014, January 21). Head in the Clouds: Dropbox Reportedly Valued at $10 Billion.
Retrieved from Entrepreneur: http://www.entrepreneur.com/article/230969