Business Revolution – Online Auctions

1. THINKING Business Revolution – Online Auctions The Experience david.king@mmv.vic.gov.auNovember 2000

2. What’s the problem? • didn’t want? • couldn’t inspect goods? • was it value? • no trust? • remedies if something went wrong? • did I get the best price?

3. eBay – some facts and figures … • Operating, profitably, since 1995 • 18.9 million registered users - buyers and sellers (was 7 million 18 months ago) • Around 4 million items at any time- 4,500 categories- 600,000 items added/auctions per day • 2.1 million unique visitors per day- use 2hrs/month • $US0.01 to $10K’s – average $US50

4. eBay – model … • NEW MODEL – electronic one-to-one trading in an auction format • electronic listing/bidding/introduction system (Pez container trading) • NOT a traditional Auction House - doesn’t handle money or goods • most litigious society on earth • issues faced – trust, ease of use/training, payment, adding new value, ethical, global market

5. eBay – how does it work … • anyone can look • buyers and sellers must register • Name, address, contact details, email • “nickname” • Sellers – account for paying eBay fees • sellers “list” an item, with a finishing date/time, starting price • buyers bid up to the finishing date/time • notification, Winner and Seller agree shipping, payment (by email, 3 days to contact)

6. Bidder 2 bids $22.00 (max.) System sets top bid to $19.00 Bidder 3 bids $18.00 (max.) System sets top bid to $11.00 Bidder 1 bids $10.00 (max.) Current top bid System sets top bid to $5.00 Seller sets $5.00 minimum($1 bid increment) Current topbid Seller’s minimum Seller’s minimum eBay – bidding (simplified)… $25 $20 $15 $10 $5

7. eBay – payment … • eBay charges Seller $US0.25 to $2.00 to list, +1.5% to 5% for successful sales • Buyer pays Seller direct, inc shipping • Cash, or • Money order/cheque (usually $US), or • Credit card direct – email or secure server or • Billpay, Bidpay, Paypal, or • iEscrow • Seller then sends the goods

8. eBay – experience … • 18 months, 3-person household, buyer only, 80+ things • “the mother-load” • exposed to most behaviours

20. Feedback rules? • can only be posted by the successful buyer, seller in a transaction • once posted, can’t be changed – by anyone - (can respond) • overall negative and you’re out (???) • some sellers say they won’t deal with ANYONE with negative feedback

34. Important to buyers? • trustable, impartial, transparent system • critical mass, find things (despite poor grading), and tracking • (“good buy”/bargain) • seller who • describes accurately • communicates clearly • easy to pay, won’t abscond • ships promptly, economically, safe and sound • privacy • recourse if things go wrong

35. Important to sellers? • trustable, impartial, transparent system • critical mass of bidders • best price • bidder who • communicates clearly, promptly • pays • won’t falsely claim goods didn’t arrive, damaged • privacy • recourse if things go wrong

36. Changing the world? • NEW – market which didn’t exist • global, with global prices ($A = ouch) • service industries/spawning • middlemen - payment, escow • umbrellas – AuctionWatch • postal and shipping calculation online • (training?), ease of use, clear process maps • balance of trust – look mum, no certificates • NEW – track sellers, buyers, prices, market intelligence, tools (eg sniping).

37. Challenges for eBay … • litigation - really an Auction House? • fraud - >10% (20%?) of all internet fraud estimated to be in Auction envt. • responsibility for listing: • guns • body parts • soul? • flawless 24 x 7

38. Lessons, and fun