Strategies for Web Auctions, Virtual Communities, and Web Portals

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Chapter 10

• Strategies for Web Auctions, Virtual Communities,
  and Web Portals

Electronic Commerce
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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

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The Emerging Demand Paradigm

• Shifting Competitive Dynamics
• The Experience Differentiation

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Dynamic Pricing Applications and Markets

• Dynamic Pricing Types
• Auctionone entity selling to many buyers
• Haggleonly one buyer and one seller bargaining,
  or haggling, to reach an
• agreed-upon price
• Exchangemany buyers and sellers negotiating
  prices
• Bidding Processa single buyer with multiple
  sellers offering varying pricesto supply goods

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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.

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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

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Better Experiences

• Higher repeat purchase rates
• Sticky Web sites
• Personalization

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Auction Applications over the Entire ProductLife
Cycle
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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 Sothebys and Christies began in
  the 17th century

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Six Major Auction Types
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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 surveys 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

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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

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eBay Home Page
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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

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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

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Klik-Klok Dutch Auction in Progress
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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

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Golf Club Exchange Web Auction
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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

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CompuUSA Auctions Home Page
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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

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Auction-Related Services

• Escrow service
• Independent party holds buyers 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

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AuctionInsider Directory Figure 10-7
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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 items provider

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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

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Milpro Business-to-Business Virtual Community
Site Figure 10-8
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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!

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Web Communities

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

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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!

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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

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