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Chapter 10. Strategies for Web Auctions, Virtual Communities, and Web Portals. Electronic Commerce. 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. Objectives.

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chapter 10
Chapter 10

Strategies for Web Auctions, Virtual Communities, and Web Portals

Electronic Commerce

  • 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
  • How businesses use virtual communities to increase brand awareness and sales
  • Strategies for Web portal sites
auction basics
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
auction basics5
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
auction basics6
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
auction basics7
Auction Basics
  • Sealed-Bid Auctions
    • Bidders submit their bids independently and are usually prohibited from sharing information with each other
      • 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
auction basics8
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
web auction strategies
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 e-commerce by 2002
general consumer auctions
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

eBay Home Page

Figure 10-2

additional general consumer auctions
Additional General Consumer Auctions
  • Auction Universe, owned by Classified Ventures, a partnership of eight major newspapers
  • Yahoo! and Excite have created auctions based on the eBay model
additional general consumer auctions15
Additional General Consumer Auctions
    • 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
  • Klik-Klok Dutch Auction
    • Short time-period auctions for quantity offerings
specialty consumer auctions
Specialty Consumer Auctions
  • Technology-related items auction sites
    • Haggle Online
    • ZDNet
    • Onsale uBid, and
  • Numerous specialty auction sites
    • Golf Club Exchange
business to business auctions
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
examples of third party auction sites
Examples of Third-Party Auction Sites
  • Auction IT
    • Computer equipment
  • Going, Going...Sold!
    • Laboratory equipment
  • FastParts.Com
    • Electronic components
  • J.R. Metals Quick Bid Auction
    • Steel
auction related services
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
seller bid auctions and group purchasing sites
Seller-Bid Auctions andGroup 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
virtual community strategies
Virtual Community Strategies
  • 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
web communities
Web Communities
  • WELL
    • Whole Earth ‘lectronic Link
    • Predates the web, began as a series of dialogs among San Francisco authors and readers
    • Purchased by
  • GeoCities
    • Free web space for members
    • Sells advertising to generate revenue
    • Owned by Yahoo!
web communities28
Web Communities
  • Tripod
    • Similar to GeoCities
    • Owned by Lycos
    • Created by Cornell University students
    • News feeds, art gallery
web portal strategies
Web Portal Strategies
  • Combinations of virtual communities, search engines, and Web directories
  • Provide a high degree of “stickiness” that is extremely attractive to advertisers
  • Examples include AOL, Excite, Infoseek, Lycos, MSN, Netscape Netcenter, Snap, and Yahoo!
web portal strategies30
Web Portal Strategies
  • Typically ask members to provide demographic information about themselves
  • Very high potential for targeted marketing
  • High visitor counts yield high advertising rates