Week 8 - Online Auctions

This weeks topic is online auctions. I am sure you have all heard of eBay, and many of you may have bought or sold goods by online auction. The nature of (online) auctions has changed from selling mainly collectable goods, to selling everyday items. There are now thousands of businesses that get the majority of their income from auction listings.

Refer to Managing the Digital Enterprise find additional information yourself then answer the following questions -

Q1: eBay is one of the only major Internet "pure plays" to consistently make a profit from its inception. What is eBay's business model? Why has it been so successful?

eBay's business model is a broker. eBay has been so successful as it is a global enterprise that has branched into many different markets. It offers auction and 'buy it now' options, and eBay is now available through an easy to use app on smart phones.

Q2: Other major web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?

eBay was one of the first on line brokers to turn a profit from the very start. Its fantastic reputation over the years has resulted in a continuing and ever increasing industry image.

Q3: What method does eBay use to reduce the potential for fraud among traders on its site? What kinds of fraud, if any, are eBay users most susceptible?

eBay has a rating system which allows users to rate and comment on their service while dealing with sellers on eBay, this allows buyers to choose more wisely who the buy from. Sellers also have the ability to rate and comment on buyers, this helps sellers know whether their communication with the buyer is reliable or not.

Q4: eBay makes every effort to conceptualise its users as a community (as opposed to, say "customers" or "clients"). What is the purpose of this conceptual twist and does eBay gain something by doing it?

By conceptualising its users as a community eBay helps to make buyers feel more comfortable. Buyers gain the sense that they are on an equal ground to the sellers and as a result they are more likely to purchase goods and leave positive feedback.

Q5: eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?

A brand name vendor may set-up shop on eBay as it is just another source of profit. People also tend to search brand names on eBay with the assumption that the products offered on eBay will be at the best market price.