Chapter 10
Strategies for Web Auctions,
Virtual Communities, and
Web Portals
Electronic Commerce
E-commerce 2000 James D. Clark
Objectives
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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
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Shifting Competitive Dynamics
The Experience Differentiation
E-commerce 2000 James D. Clark
Dynamic Pricing
Applications and Markets
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Dynamic Pricing Types
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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
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Efficient markets are realized by:
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Providing a mechanism to eliminate imperfect
information.
Eliminating geographic boundaries..
Streamlining processes
Better experiences are realized through:
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Better entertainment
More community•
Increased personalization.
E-commerce 2000 James D. Clark
Efficient Markets
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Increase revenues on inventory
Decrease overhead costs
Eliminate costly middlemen
Increase inventory turns
Create new intermediaries
Test pricing
Increase revenues with new and oneof-a-kind items
E-commerce 2000 James D. Clark
Better Experiences
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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
Product
Life Cycle
E-commerce 2000 James D. Clark
Auction Basics
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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
E-commerce 2000 James D. Clark
Six Major Auction Types
Web Auction Strategies
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1999 PC Computing magazine survey reported
that 37% of people responding had made
purchases and 12% had sold items using an online 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
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eBay
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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
E-commerce 2000 James D. Clark
eBay Home Page
Additional General
Consumer Auctions
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Auction Universe, owned by Classified
Ventures, a partnership of eight major
newspapers
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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
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Amazon.com
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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
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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
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Technology-related items auction sites
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Haggle Online
CNET.com
ZDNet
Onsale uBid, and Bid.com
Numerous specialty auction sites
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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
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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
E-commerce 2000 James D. Clark
CompuUSA Auctions Home Page
Examples of Third-Party Auction
Sites
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Auction IT
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Going, Going...Sold!
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Laboratory equipment
FastParts.Com
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Computer equipment
Electronic components
J.R. Metals Quick Bid Auction
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Steel
E-commerce 2000 James D. Clark
Auction-Related Services
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Escrow service
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Independent party holds buyer’s payment
until the item is received and the buyer is
satisfied with the purchase
Directory of available auctions
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Auction Guide
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Guidance for new auction participants
AuctionInsider
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Links to auctions sorted by category
E-commerce 2000 James D. Clark
AuctionInsider Directory
Figure 10-7
Seller-Bid Auctions and
Group Purchasing Sites
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Reverse auctions
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Sellers of goods and services bid the prices
at which they are willing to sell
Group purchasing sites
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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
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Gathering places for people and businesses
that does not have a physical existence
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Usenet newsgroups
Chat rooms
Web sites
Helps companies, customers, and suppliers
plan, collaborate, transact business, and
interact in a mutually beneficial way
E-commerce 2000 James D. Clark
Milpro Business-to-Business Virtual Community Site
Figure 10-8
Web Communities
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WELL
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Whole Earth ‘lectronic Link
Predates the web, began as a series of dialogs
among San Francisco authors and readers
Purchased by Salon.com
GeoCities
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Free web space for members
Sells advertising to generate revenue
Owned by Yahoo!
E-commerce 2000 James D. Clark
Web Communities
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Tripod
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Similar to GeoCities
Owned by Lycos
Theglobe.com
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Created by Cornell University students
News feeds, art gallery
E-commerce 2000 James D. Clark
Web Portal Strategies
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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
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Typically ask members to provide
demographic information about
themselves
Very high potential for targeted
marketing
High visitor counts yield high
advertising rates
E-commerce 2000 James D. Clark
homebid.com Home Page
Figure 10-9
10-9