Internet auctions are often called online marketplaces. They bring buyers and sellers together on the Internet for the purpose of trading goods and services. Most auction sites do not actually sell any products or services that they own themselves. They simply act as hosts or facilitators and provide the necessary structure for listing, displaying, bidding, and paying for goods and services online.
The auction site functions like a local farmers market its essentially a meeting place to buy and sell goods that vendors have brought with them from elsewhere.
3 History of eBay
eBay is one of the great successes of e-business. It started in 1995 when Pierre Omidyars fiancée mentioned that she would like to be able to use the internet to trade Pez dispensers with other collectors. Omidyar, en engineer at General Magic, decided to start an online auction in which individuals could sell collectibles and used items to other individuals.
4 Fast Rise of eBay
By mid-2000 eBay had 15.8 million registered users, and was hosting nearly 4 million auctions, with over 450000 new items in 4320 categories joining the for sale list every 24 hours.
5 What is eBay?
eBay is an online auction website.
No inventory, warehouses, sales force
Generate revenue one transaction at a time
A complementary marketing and sales channel
Intersection between commerce and Community people following their passions
Think town square marketplace, with virtual reputation through feedback
6 Homepage of eBay Australia 7 eBay International 8 Number of Registered Users 9 Gross Merchandise Volume 10 How eBay Works
Buyers and sellers meet and transact on eBay
Sellers list items one at a time or in bulk, at fixed or dynamic (auction) prices
Buyers pay sellers directly
Sellers ship the item after getting paid
Buyer and seller leave feedback for each other
eBay charges sellers for listing items and a success fee if item sells
11 Live Help
eBays live help is offered via a chat window. You can direct any inquiries to representative in an online chat.
12 Some Spectacular Facts 13 Some Spectacular Facts (cont.) 14 Some Spectacular Facts (cont.) 15 Trust Mechanisms
Both seller and buyer leave ( or or neutral) feedback for each other.
Buyer Protection Program
May cover up to 1500 on purchases. Works as an insurance.
User Identity Verification
Other Security Services
eBay has a security centre that offers all the above and much more.
16 eBays Sub-Organizations PayPal is an eBay company which allows the transfer of money between email users and merchants, avoiding traditional paper methods such as checks/cheques and money orders. PayPal also performs payment processing for e-commerce vendors, auction sites, and other corporate users, for which they charge a fee. Skype is a voice chat program working on a VoIP protocol. It features text messaging, voice chat and net meeting. Recently acquired by eBay who aims to increase level of communication between users with Skype. (Reached 100 million users recently) 17 References
Turban et al (2006), Electronic Commerce A Managerial Perspective, Pearson Educational, New Jersey, USA
Alter S. (2002), Information Systems The Foundation of E-Business, Pearson Educational, New Jersey, USA
Question 1. Discuss the advantages of dynamic pricing over fixed pricing. What are the potential disadvantages?
Dynamic pricing is determined based on supply and demand relationships. It provides a balanced pricing. Each item has a market value and it may be fixed priced below or above market price. In dynamic pricing usually the item is sold at a equilibrium price.
But when human factor is considered, dynamic pricing may end up with extreme results. Ambition of bidders in a competitive environment may cause the item to be sold above its value.
Question 3. Find some material on why individuals like C2C auctions so much. Write a report.
In C2C items most of the items listed are second hand, therefore they are cheaper. Even it is a brand new item, seller avoids paying a tax which makes it cheaper again. Online auctions are like entertaining strategic games which millions of people enjoy.
From sellers point of view, C2C auctions are a way of making money at home. The situation attracts students, housewives, pensioners, etc.
Stores use auctions as a efficient distribution channel and they find a lot of new customers.
Question 6. Identify three fraud practices in which a buyer might engage. How can sellers protect themselves?
Bid Shielding The use of phantom bidders to bid at a very high price when an auction begins is called bid shielding. The phantom bidders pull out at the last minute and the bidder (the friend of the phantom bidder) who bids with a very low price wins. A solution to this kind of fraud is to forbid bidders to pull out bids in the last 12 hours of the auction.
Switch and Return The seller has successfully auctioned an item but when the buyer receives it, the buyer is not satisfied. The seller offers a cheerful refund. However, what the seller gets back is a mess that does not much resemble the item that was originally shipped. Some buyers may attempt to swap out their junk for someone elses jewels. A solution to this kind of fraud is to require a minutes from buyer drawn by the delivery company reporting that the items details.
Failure to Pay Buyers do not pay after a deal is agreed upon. Sellers may accept bids only from buyers with a good reputation to protect themselves.
21 Discussion Questions
Question 1. Have you ever bought or sold on an internet auction website? If yes, is your opinion positive or negative with your experience? If no, is there a specific reason to avoid using them?
Question 2. What is your overall opinion about C2C e-commerce and internet auctions?