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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. Objectives. In this chapter, you will learn about: Origins and key characteristics of the seven major auction types

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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. Objectives In this chapter, you will learn about: • Origins and key characteristics of the seven major auction types • Strategies for Web auction sites and auction-related businesses • Virtual communities and Web portals E-Commerce: The Second Wave, Fifth Annual Edition

  3. 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 • Shill bidders • Can artificially inflate the price of an item E-Commerce: The Second Wave, Fifth Annual Edition

  4. English Auctions • Bidders publicly announce their successive higher bids until no higher bid is forthcoming • Open auction • Bids are publicly announced • Minimum bid • The price at which an auction begins • Reserve price • Minimum acceptable price E-Commerce: The Second Wave, Fifth Annual Edition

  5. English Auctions (Continued) • Yankee auctions • English auctions that offer multiple units of an item for sale • Disadvantages • Winning bidders tend not to bid their full private valuations • Bidders risk becoming caught up in the excitement of competitive bidding E-Commerce: The Second Wave, Fifth Annual Edition

  6. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  7. Coldwater Creek Dutch Auction of Closeout Merchandise E-Commerce: The Second Wave, Fifth Annual Edition

  8. Other Types of Auctions • Sealed-bid auctions • Bidders submit their bids independently • Second-price sealed-bid auction • Highest bidder is awarded the item at the price bid by the second-highest bidder • Open-outcry double auctions • Buy and sell offers are shouted by traders standing in a small area on the exchange floor E-Commerce: The Second Wave, Fifth Annual Edition

  9. Other Types of Auctions (Continued) • Double auction • Buyers and sellers each submit combined price-quantity bids to an auctioneer • Reverse (Seller-Bid) Auctions • Multiple sellers submit price bids to an auctioneer who represents a single buyer • Bids are for a given amount of a specific item that the buyer wants to purchase E-Commerce: The Second Wave, Fifth Annual Edition

  10. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  11. 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 • Bid amounts are not disclosed until after auction • Allows sellers to specify that an auction be made private E-Commerce: The Second Wave, Fifth Annual Edition

  12. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  13. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  14. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  15. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  16. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  17. CompUSA Auctions Home Page E-Commerce: The Second Wave, Fifth Annual Edition

  18. Business-to-Business Reverse Auctions • U.S. Navy and the federal government’s General Services Administration • Experimenting with reverse auctions • Need for trust and long-term strategic relationships with suppliers • Makes reverse auctions less attractive in some industries • Use of reverse auctions • Replaces trusting relationships with a bidding activity that pits suppliers against each other E-Commerce: The Second Wave, Fifth Annual Edition

  19. Supply Chain Characteristics and Reverse Auctions E-Commerce: The Second Wave, Fifth Annual Edition

  20. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  21. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  22. Auction-Related Services (Continued) • Auction consignment services • Create online auction for an item • Handle the transaction • Remit balance of proceeds E-Commerce: The Second Wave, Fifth Annual Edition

  23. Portion of Andale Products Page E-Commerce: The Second Wave, Fifth Annual Edition

  24. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  25. Web Page Displayed on a PDA E-Commerce: The Second Wave, Fifth Annual Edition

  26. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  27. AvantGo Channels Subscription Page E-Commerce: The Second Wave, Fifth Annual Edition

  28. 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 • Simon • One of the best shopping agents currently available E-Commerce: The Second Wave, Fifth Annual Edition

  29. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  30. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  31. JA-SIG uPortal Home Page E-Commerce: The Second Wave, Fifth Annual Edition

  32. Google Answers Page E-Commerce: The Second Wave, Fifth Annual Edition

  33. Early Web Communities • The WELL ( “whole earth ’lectronic link”) • One of the first Web communities • Predates the Web • Tripod • Founded in 1995 in Massachusetts • Offered its participants free Web page space, chat rooms, news and weather updates, and health information pages E-Commerce: The Second Wave, Fifth Annual Edition

  34. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  35. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  36. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  37. Stickiness of Popular Web Sites E-Commerce: The Second Wave, Fifth Annual Edition

  38. Mixed Revenue Portals • Time Warner’s AOL unit • One of the most successful Web portals • Charged a fee to users and has always run advertising on its site • Yahoo! • Now charges for the Internet phone service originally offered at no cost E-Commerce: The Second Wave, Fifth Annual Edition

  39. 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 E-Commerce: The Second Wave, Fifth Annual Edition

  40. Summary • Companies are now using Web to • Operate auction sites, create virtual communities, and serve as Web portals • Consumer online auction business • Dominated by eBay • B2B auctions • Give companies a new and efficient way to dispose of excess inventory • B2B reverse auctions • Provide an effective procurement tool E-Commerce: The Second Wave, Fifth Annual Edition

  41. Summary • New companies have formed that • Capitalize on Web’s ability to bring together geographically dispersed people and organizations • Organizations are using mobile commerce to • Sell goods and services to users of handheld devices • Companies are using internal Web portals to • Communicate with employees E-Commerce: The Second Wave, Fifth Annual Edition

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