Electronic commerce fundamentals ch10

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Chapter 10
Strategies for Web Auctions,
Virtual Communities, and
Web Portals

Electronic Commerce

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Objectives
Key characteristics of the six major
auction types
◆ Strategies for general and specific
consumer Web auction sites
◆ Strategies for business-to-business
Web auction sites
◆

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Objectives
◆

How businesses use virtual
communities to increase brand

awareness and sales

◆

Strategies for Web portal sites

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Auction Basics
Earliest known auctions were in Babylon
around 500 B.C.
◆ Entire Roman Empire was auctioned in
193 A.D. after the death of Emporer
Pertinax
◆ Buddhist temples held auctions to sell
the possessions of deceased monks
◆ Auction firms Sotheby’s and Christie’s
began in the 17th century
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Auction Basics
◆

English Auctions
● Bidders

publicly announce their successively
higher bids until no higher bid is offered
● Minimum price can be used to set the price
at which the auction will begin
● Reserve price is the minimum price the seller
will accept
● Yankee auctions allow the bidder to choose
the quantity of multiple items offered at the
auction
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Auction Basics
◆

Dutch Auctions
● Form

of open auction in which bidding
starts at a high price and drops until a
bidder accepts the price
● Usually the seller offers a number of

similar items for sale
● Good for moving large numbers of
commodity items quickly

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Auction Basics
◆

Sealed-Bid Auctions
● Bidders

submit their bids independently
and are usually prohibited from sharing
information with each other
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First-price sealed-bid
❖

◆

Highest bidder wins

Second-price sealed bid
❖

❖

Highest bidder wins, but at the second-highest
bidder’s price
Encourages all bidders to bid their private
valuations, reducing collusion
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Auction Basics
◆

Double Auctions
● Buyers

and sellers each submit combined
price-quantity bids to an auctioneer
● The auctioneer matches the seller’s offer
(lowest price, then up) to the buyer’s offers
(highest price, then down)
● New York Stock Exchange conducts
sealed-bid double auctions of stocks and
bonds
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Six Major Auction Types
Figure 10-1

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Web Auction Strategies
1999 PC Computing magazine survey
reported that 37% of people responding had
made purchases and 12% had sold items
using an on-line auction service
◆ 15% of the survey’s respondents stated that
they would never use an on-line auction site
◆ Analysts and researchers predict the on-line
auctions will account for 30% of all ecommerce by 2002
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General Consumer Auctions
◆

eBay
● Search

for specific items

● Browse by categories of items
● Seller options include bold-face type and
featured listings
● Rating system to provide feedback to
alleviate fears concerning seller reliability

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eBay Home Page
Figure 10-2

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Additional General
Consumer Auctions
◆

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Auction Universe, owned by Classified
Ventures, a partnership of eight major
newspapers
● Apartments.com
● Cars.com
● NewHomeNetwork.com

◆

Yahoo! and Excite have created
auctions based on the eBay model
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Excite Auctions Home Page
Figure 10-3

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Additional General
Consumer Auctions
◆

Amazon.com
● Offers

“Auctions Guarantee” to reimburse
any buyer for merchandise purchased that
was not delivered, or “materially different”
than represented
● Provides escrow service for items over $250

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◆

Klik-Klok Dutch Auction

● Short

time-period auctions for quantity
offerings
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Klik-Klok Dutch Auction in Progress
Figure 10-4

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Specialty Consumer Auctions
◆

Technology-related items auction sites
● Haggle

Online
● CNET.com
● ZDNet
● Onsale uBid, and Bid.com

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◆

Numerous specialty auction sites
● Golf

Club Exchange
● Cigar-Bid.com
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Golf Club Exchange Web Auction
Figure 10-5

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Business-to-Business Auctions
Typically used to dispose of excess
inventory
◆ Large companies use liquidation
specialists to find buyers for unusable
inventory, create their own auction sites
◆ Smaller companies often sell their
excess inventory to liquidation brokers,
who, in turn, create auction sites
◆

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CompuUSA Auctions Home Page

Figure 10-6

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Examples of Third-Party Auction
Sites
◆

Auction IT
● Computer

◆

equipment

Going, Going...Sold!
● Laboratory

◆

FastParts.Com
● Electronic

◆

equipment

components

J.R. Metals Quick Bid Auction
● Steel
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Auction-Related Services
◆

Escrow service
● Independent

party holds buyer’s payment
until the item is received and the buyer is
satisfied with the purchase

◆

Directory of available auctions
● Auction
◆

Guide

Guidance for new auction participants

● AuctionInsider
◆

Links to auctions sorted by category
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AuctionInsider Directory
Figure 10-7

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Seller-Bid Auctions and
Group Purchasing Sites
◆

Reverse auctions
● Sellers

of goods and services bid the
prices at which they are willing to sell

◆

Group purchasing sites
● Items

are posted with a price, as the
number of bids increase, the seller
negotiates a better price with the item’s
provider
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Virtual Community Strategies
◆

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Gathering places for people and
businesses that does not have a physical
existence
● Usenet

newsgroups
● Chat rooms
● Web sites
◆

Helps companies, customers, and suppliers
plan, collaborate, transact business, and
interact in a mutually beneficial way
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