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

E-commerce 2000 James D.

Clark

Auction Applications over the Entire ProductLife 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 17th 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 DirectoryFigure 10-7

E-commerce 2000 James D.

Clark

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

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 SiteFigure 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 PageFigure 10-9