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

2. 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

3. 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

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

5. 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

6. 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

7. 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

8. 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

9. 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

10. Six Major Auction Types Figure 10-1

11. 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

12. 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”

13. eBay Home Page

14. 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

15. Excite Auctions Home Page

16. 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

17. Dutch Auctions

18. 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

19. Golf Club Exchange Web Auction

20. 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

21. CompUSA Auctions Home Page

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

23. 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

24. 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

25. AuctionInsider Directory

26. 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

27. 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

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

29. Milpro Business-to-Business Virtual Community Site

30. 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!

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

32. 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!

33. 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

34. Excite.com Portal Home Page

35. 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