Week Eight Exercises

Online Auctions

Question One

eBay's business model, is to put people in contact with one another, rather than selling products itself, to be in the business of connecting people — not selling products to them. Rather, they've created a person-to-person marketplace on the Internet

Every time there’s a sale, eBay takes a cut of the action. As a result, eBay’s market value is now worth more than Bloomingdale’s, Macy’s, Sears, and Toys ‘R Us combined. “It was an entirely new idea that took advantage of the Net," says Whitman. “There’s no land-based analog for eBay. We hold no inventory, we ship no product.” . http://www.cbsnews.com/stories/2002/10/30/60II/main527542.shtml

eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. http://en.wikipedia.org/wiki/EBay

The lure of a bargain, combined with the excitement of a Las Vegas gamble, is what brings in millions of Internet customers. The loyalty and enthusiasm of devoted eBay users all over the country is what has helped build eBay into the powerhouse it is today. http://www.cbsnews.com/stories/2002/10/30/60II/main527542.shtml

eBay can attribute most of its success to the fact that they have very low overheads, whilst continuing to rake in large amounts of revenue. eBay does not require a lot of operational costs, as it is purely a buyers/sellers introduction service.


Question Two

This question seems to be a trick question, because if you look at the revenue raised by these companies, you notice that Amazon actually raised more than double the revenue of eBay last year, and Yahoo dragged in a very tidy $7,208,500,000 US in revenue last year. http://money.cnn.com/magazines/fortune/fortune500/2009/snapshots/10867.html

If that is not successful, I don’t want to succeed!

However, I guess the usual cornerstone measurement of success is profit, and on this side of things eBay has the other two licked. This is as I mentioned above, due to the ability of eBay to maintain low overheads to maximise profits on revenue generated.


Question Three

eBay has implemented many tools and information for buyers and sellers to educate themselves about the best way to conduct themselves during an auction. For example, all eBay buyers and sellers are evaluated by the peers they do business with, so everyone has a ranking and anyone can read their feedback trail. If there are problems, eBay has a section of its Web site called Security Center where members can lodge complaints and bring eBay in as a mediator. http://www.pcworld.idg.com.au/article/2192/online_auction_providers_grapple_fraud?fp=2&fpid=1

Legitimate auctions pulled quite regularly and, although it is frustrating, it should make buyers more confident when they purchase items sold through drop of stores. eBay simply can't police all auctions and so the big sellers accounts get micro-managed while the little seller can put up a listing for a conterfeit item and not get caught. http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2007/5/1179681903.html

NORWALK, Calif. -- One of eBay Inc.'s official tenets is that "people are basically good." George Fawrup wants to find the eBay users who are altogether bad.
For the last 2½ years, Mr. Fawrup, a veteran California police detective, has been battling one of the Internet era's signature crimes: online-auction fraud. Most of the fraudsters use eBay, the Internet's biggest auction site, and they get craftier by the year. http://online.wsj.com/article_email/SB109148425481880978-IdjgYNplaB3opuuZ3qGcKiEm4.html

By the research I have done online, there seems to be literally 1000’s of people who are less than impressed by the implementation of “Fraud Filter’s” on eBay. These people target their anger mostly toward Rob Chesnut, Vice President of eBay's Trust & Safety Department.

Police crack eBay scam
"POLICE have cracked a Ballarat eBay fraud scam which netted more than $12,000 in three months.
Unsuspecting eBay users from all parts of Australia were lured into paying for Nokia mobile phones they were never going to receive.
A Ballarat man has been jailed for six months over his part in the scam.
eBay - a website where people bid online for items - covers users for losses when their auctions run the full term." http://ebay-fraud.blogspot.com/


Question Four

eBay are trying to make people who use their facilities feel like they are part of a community, as opposed to being on one side of the fence or the other, and pigeon-holing people as either sellers or buyers. This way people who use the site do not just view themselves in one light, and may be more inclined to participate in both sides of the transactional process. eBay can benefit from this by generating more sales and activity on their site.


Question Five

A brand name vendor has the opportunity to reach a huge market on an online auction site such as eBay. One that would otherwise, be mostly unattainable. If the brand name vendors had their own versions of eBay, then they would simply become a competitor and become lost in the crowd.
Also, the brand name vendors would only have people visit their site that are specifically searching for their product. On eBay the brand name vendors can obtain exposure to customers that may just be browsing, and then take an interest in their product. A sort of passing trade, if you will.