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

Objectives Key characteristics of 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

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 How businesses use virtual communities to increase brand awareness and sales Strategies for Web portal sites

Objectives How businesses use virtual communities to increase brand awareness and sales Strategies for Web portal sites

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 Emperor 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 Basics English Auctions Yankee 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 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 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 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

Six Major Auction Types Figure 10-1

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 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 Must build trust – “Just in Time Trust”

eBay Home Page http://pages.ebay.co.uk/help/basics/n-index.html

Additional General Consumer Auctions 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

Excite Auctions Home Page http://auctions.excite.com/

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

Dutch Auctions http://www.excite.co.uk/directory/Shopping/Auctions/Dutch

Speciality Consumer Auctions Technology-related items auction sites Haggle Online CNET.com ZDNet Onsale uBid, and Bid.com Numerous speciality auction sites Golf Club Exchange Cigar-Bid.com

Golf Club Exchange Web Auction http://www.golfclubexchange.com

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

CompUSA Auctions Home Page www.compUSA.com

Reverse Auction for Car Parts http://www.covisint.com/

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 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

AuctionInsider Directory http://www.auctioninsider.com/

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

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

Milpro Business-to-Business Virtual Community Site Figure 10-8

Milpro Business-to-Business Virtual Community Site www.milpro.com

Web Communities WELL GeoCities Whole Earth ‘lectronic Link Predates the web, began as a series of dialogs among San Francisco authors and readers Purchased by Salon.com GeoCities Free web space for members Sells advertising to generate revenue Owned by Yahoo!

Web Communities Tripod Theglobe.com Similar to GeoCities Owned by Lycos Theglobe.com Created by Cornell University students News feeds, art gallery

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 Strategies Typically ask members to provide demographic information about themselves Very high potential for targeted marketing High visitor counts yield high advertising rates

Excite.com Portal Home Page http://www.excite.com/

Summary Key characteristics of 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