E-commerce 2000 James D. Clark Chapter 10 Strategies for Web Auctions, Virtual Communities, and Web Portals Electronic Commerce

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark The Emerging Demand Paradigm Shifting Competitive Dynamics The Experience Differentiation

E-commerce 2000 James D. Clark Dynamic Pricing Applications and Markets Dynamic Pricing Types Auction—one entity selling to many buyers Haggle—only one buyer and one seller bargaining, or haggling, to reach an agreed-upon price Exchange—many buyers and sellers negotiating prices Bidding Process—a single buyer with multiple sellers offering varying pricesto supply goods

E-commerce 2000 James D. Clark Dynamic Pricing Benefits Efficient markets are realized by: Providing a mechanism to eliminate imperfect information. Eliminating geographic boundaries.. Streamlining processes Better experiences are realized through: Better entertainment More community Increased personalization.

E-commerce 2000 James D. Clark Efficient Markets Increase revenues on inventory Decrease overhead costs Eliminate costly middlemen Increase inventory turns Create new intermediaries Test pricing Increase revenues with new and one- of-a-kind items

E-commerce 2000 James D. Clark Better Experiences Higher repeat purchase rates “Sticky” Web sites Personalization

E-commerce 2000 James D. Clark

Auction Applications over the Entire Product Life Cycle

E-commerce 2000 James D. Clark 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 17 th century

Six Major Auction Types

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark 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 Klik-Klok Dutch Auction Short time-period auctions for quantity offerings

E-commerce 2000 James D. Clark Klik-Klok Dutch Auction in Progress

E-commerce 2000 James D. Clark Specialty Consumer Auctions Technology-related items auction sites Haggle Online CNET.com ZDNet Onsale uBid, and Bid.com Numerous specialty auction sites Golf Club Exchange Cigar-Bid.com

E-commerce 2000 James D. Clark Golf Club Exchange Web Auction

E-commerce 2000 James D. Clark 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

CompuUSA Auctions Home Page

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark 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 Figure 10-7

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark 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

E-commerce 2000 James D. Clark Web Communities WELL 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!

E-commerce 2000 James D. Clark Web Communities Tripod Similar to GeoCities Owned by Lycos Theglobe.com Created by Cornell University students News feeds, art gallery

E-commerce 2000 James D. Clark 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!

E-commerce 2000 James D. Clark 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

10-9 homebid.com Home Page Figure 10-9