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E-Commerce: The Second Wave Fifth Annual Edition

E-Commerce: The Second Wave Fifth Annual Edition. Chapter 6 Online Auctions, Virtual Communities, and Web Portals. Origins of Auctions. In an auction Seller offers an item for sale, but does not establish price Bidders Potential buyers Bids Prices bidders are willing to pay for an item.

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E-Commerce: The Second Wave Fifth Annual Edition

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  1. E-Commerce: The Second WaveFifth Annual Edition Chapter 6 Online Auctions, Virtual Communities, and Web Portals

  2. Origins of Auctions • In an auction • Seller offers an item for sale, but does not establish price • Bidders • Potential buyers • Bids • Prices bidders are willing to pay for an item

  3. English Auctions (e.g. eBay) • Bidders publicly announce their successive higher bids until no higher bid is forthcoming • Open auction (vs. private auction) • Bids are publicly announced • Minimum bid • The price at which an auction begins • Reserve price • Minimum acceptable price (not announced on eBay until bids exceed it)

  4. English Auctions (Continued) • Yankee auctions • English auctions that offer multiple units of an item for sale • Called Dutch on eBay • Disadvantages • Winning bidders tend not to bid their full private valuations • Bidders risk becoming caught up in the excitement of competitive bidding

  5. Dutch Auctions • Also called descending-price auctions • Form of open auction in which bidding starts at a high price and drops until bidder accepts price • Often better for the seller • Good for moving large numbers of commodity items quickly • Not same as Dutch on eBay

  6. Online Auctions and Related Businesses • Three categories of auction Web sites • General consumer auctions • Specialty consumer auctions • Business-to-business auctions • Largest number of transactions • Occurs on general consumer auction sites

  7. General Consumer Auctions • Most common format used on eBay • Computerized version of the English auction • eBay English auction • Allows seller to set a reserve price • Bidders are listed (unless Private) • Bid amounts are not disclosed until after auction • Allows sellers to specify that an auction be made private

  8. Specialty Consumer Auctions • Specialized Web auction sites • Meet the need of special interest market segments • Specialty consumer auction sites • Golf Club Exchange, Cigarbid.com, and Winebid • Gain an advantage by identifying a strong market segment with readily identifiable products

  9. Consumer Reverse Auctions and Group Purchasing Sites • Reverse bid • Buyer can accept lowest offer or the offer that best matches buyer’s criteria • Priceline.com • Completes many of its transactions from an inventory • Operates more as a liquidation broker

  10. Consumer Reverse Auctions and Group Purchasing Sites (Continued) • Group purchasing site • Seller posts an item with a price • As individual buyers enter bids, site can negotiate better price with the item’s provider • Posted price ultimately decreases as number of bids increases

  11. Business-to-Business Auctions • Liquidation brokers • Firms that find buyers for unusable inventory items • Online auctions • Logical extension of inventory liquidation activities to a new and more efficient channel, the Internet

  12. Business-to-Business Auctions (Continued) • Ingram Micro • Major distributor of computers and related equipment to value-added resellers • Often finds itself with outdated items turned over to liquidation brokers • Now auctions those items to its established customers • Auction prices received average about 60 percent of the items’ costs

  13. Auction-Related Services • Auction escrow services • An independent party that • Holds buyer’s payment until buyer receives purchased item and is satisfied with it • Auction directory and information services • Offer guidance for new auction participants • Offer helpful hints and tips for more experienced buyers and sellers along with directories of online auction sites

  14. Auction-Related Services (Continued) • Auction software • For sellers • Software offer services that can help with or automate tasks such as image hosting • For buyers • Software observes auction progress and places a bid high enough to win the auction

  15. Auction-Related Services (Continued) • Auction consignment services • Create online auction for an item • Handle the transaction • Remit balance of proceeds

  16. Virtual Communities and Web Portals • Cellular-satellite communications technology • Can be packaged with • Notebook computers • Personal digital assistants (PDAs) • Mobile phones • Wireless Application Protocol (WAP) • Allows Web pages formatted in HTML to be displayed on devices with small screens

  17. Electronic Marketplaces • Marketplaces • Can serve people who want to buy and sell a wide range of products and services • AvantGo • Provide PDAs with downloads of Web site contents, news, restaurant reviews, and maps

  18. Intelligent Software Agents • Programs that search the Web and find items for sale that meet a buyer’s specifications • Some software agents • Focused on a particular category of product • mySimon • One of the best shopping agents currently available

  19. Virtual Communities • Gathering place for people and businesses that does not have physical existence • Exist on the Internet in various forms • Usenet newsgroups • Chat rooms • Web sites • Offer people a way to connect with each other and discuss common issues and interests

  20. Virtual Communities (Continued) • Virtual learning community • One form of virtual community • Can help companies, their customers, and their suppliers plan, collaborate, and transact business • Google Answers • Gives people a place to ask questions then answered by an expert for a fee

  21. Web Community Consolidation • Virtual communities for consumers • Can succeed as money-making propositions if • They offer something sufficiently valuable to justify a charge for membership • Web portal revenue models • Strategies that build on a combination of virtual communities and other activities

  22. Web Portal Revenue Models • Advertising supported web portals • One rough measure of stickiness • How long each user spends at the site • Nielsen//NetRatings • Determines site popularity by measuring the number of unique visitors

  23. Web Portal Revenue Models (Continued) • Web portals • High visitor counts can yield high advertising rates • Companies that run Web portals • Believe in the power of portals • Add sticky features such as chat rooms, e-mail, and calendar functions

  24. Internal Web Portals • Run on intranets • Can save significant amounts of money by • Replacing the printing and distribution of paper memos, newsletters, and other correspondence • Can become a good way of creating virtual community among employees

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