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Chapter 10 Strategies for Web Auctions, Virtual Communities, and Web Portals Electronic Commerce Objectives Key characteristics of 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 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 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 Emperor Pertinax Buddhist temples held auctions to sell the possessions of deceased monks Auction firms Sotheby’s and Christie’s began in the 17th century 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 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 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 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 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 Must build trust – “Just in Time Trust” eBay Home Page http://pages.ebay.co.uk/help/basics/n-index.html Excite Auctions Home Page http://auctions.excite.com/ 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 Dutch Auctions http://www.excite.co.uk/directory/Shopping/Auctions/Dutch Golf Club Exchange Web Auction http://www.golfclubexchange.com 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 CompUSA Auctions Home Page www.compUSA.com Reverse Auction for Car Parts http://www.covisint.com/ 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 Directory http://www.auctioninsider.com/ Seller-Bid Auctions and Group Purchasing Sites Reverse Sellers of goods and services bid the prices at which they are willing to sell Group auctions 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 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 Site Figure 10-8 Milpro Business-to-Business Virtual Community Site www.milpro.com 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! 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 Excite.com Portal Home Page http://www.excite.com/ Summary Key characteristics of 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