10 Chapter 10 Strategies for Web Auctions, Virtual Communities, and Web Portals Electronic Commerce 10 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 ◆ How businesses use virtual communities to increase brand awareness and sales ◆ Strategies for Web portal sites 10 10 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 ◆ 10 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 10 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 10 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 10 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 10 10 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 ecommerce by 2002 ◆ 10 Specialty Consumer Auctions ◆ Technology-related items auction sites ● Haggle Online ● CNET.com ● ZDNet ● Onsale uBid, and Bid.com 10 ◆ Numerous specialty auction sites ● Golf Club Exchange ● Cigar-Bid.com 17 Golf Club Exchange Web Auction Figure 10-5 10 18 10 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 ◆ 19 CompuUSA Auctions Home Page Figure 10-6 10 20 10 Examples of Third-Party Auction Sites ◆ Auction IT ● Computer ◆ equipment Going, Going Sold! ● Laboratory ◆ FastParts.Com ● Electronic ◆ equipment components J.R Metals Quick Bid Auction ● Steel 21 10 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 22 AuctionInsider Directory Figure 10-7 10 23 10 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 24 Virtual Community Strategies ◆ 10 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 25 Milpro Business-to-Business Virtual Community Site Figure 10-8 10 26 10 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! 27 10 Web Communities ◆ Tripod ● Similar to GeoCities ● Owned by Lycos ◆ Theglobe.com ● Created by Cornell University students ● News feeds, art gallery 28 10 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! ◆ 29 10 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 ◆ 30 10 homebid.com Home Page Figure 10-9 10-9 31 ... auction site ◆ Analysts and researchers predict the on-line auctions will account for 30% of all ecommerce by 2002 ◆ 10 10 General Consumer Auctions ◆ eBay ● Search for specific items ● Browse by... Auction Sites ◆ Auction IT ● Computer ◆ equipment Going, Going Sold! ● Laboratory ◆ FastParts.Com ● Electronic ◆ equipment components J.R Metals Quick Bid Auction ● Steel 21 10 Auction-Related Services