Junsang Lee

Professor Shin-Ping


CH. 11 Social Networks, Auctions, and Portals

ITS 380


Case study

Q1: Contrast eBay's original business model with its current business model.

A.    Auctioning were the first business model of Bay. However, as time went by, people began to buy goods more at a fixed price than to race for an auction. This changed the auction model of eBay to the basic model of e- commerce. But until this day, eBay 's kept little of its auction. Now eBay is selling out of season, refurbished and overstocked goods along with auctioning for some of the products. Main features of the current model are:

·         Advertising Revenue Model

·         Transaction Revenue Model: No listing fee for smaller sellers

·         Lower listing fee-Higher sales commission

Transaction Revenue Model: Q2: What are the problems that eBay is currently facing? How is eBay trying to solve these problems?


On major problem that eBay faced was the introduction to the VoIP service which provides free or low cost calls over the internet. eBay’s sellers were not interested in adding voice calls to their business models.

Another issue that eBay faced was related to varied taxation and foreign laws in different nation. For example, the auction site called Tabaco in China.

Another issue was of free and fair conduct of auctions, Creation of an auction divison meant that an extra cost was to be bear by eBay which would swipe out the profit. eBay took various measures to solve these issues. They created a comment and customer query section on the society. Also, eBay made sure to establish a fraud proof system to manage its payments. Also, they started their operations in smaller cities as well while starting same day delivery in bigger cities.


Q3: Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there any other solutions that eBay should consider?

-eBay’s market strategies are adapting in order to accommodate the frequent changes in the evolving technologies and internet users.

-The company has created an identity crisis and had a new focus on the secondary attracted the interest of bulk seller

-Tweaked search ordering algorithm favors power sellers

-Mobile e-commerce

-They just sent me a massive questionnaire, and boy did I enjoy filling it in! Frankly, as long as they let us leave SOME kind of bad feedback for the pathetic people who seem to join eBay just to buy my stuff and then not pay.


Q4: Who are eBay's top competitors online, and how will eBay's strategy help it compete?


Top three competitors:

· Google

· Amazon

· Eid and/or craigslist.

The Major competitors to eBay according to the case study are: amazon, Alibaba and its U.S. site 11 main, and Google.

-Some other main competitors are: overstock, Groupon, Kijiji, BestBuy, and Walmart. A) Amazon: The similarities between the two websites is that both eBay and amazon operates online shopping sites where they provide the ability to browse through products listed for sale or auction.

-As there are many cases of forgery cheques and demand draft one case which is mentioned in the case also for the possible solution eBay has purchased PayPal, PayPal is online money Transfer Company which gives security to seller of the goods for its payment.

-As if we analyze the case we can clearly see that eBay is trying it’s hard to face the problems and for their possible solutions.

eBay provides a differentiated service to customers;

a)      Offering Returns

And speaking of returns, one of the best ways to ruin your business and alienate buyers is to not accept returns. In all but the rarest of cases, there is absolutely no reason why you shouldn't accept returns. When you say you don't accept returns, most buyers immediately become very suspicious.


a)       Language and Tone in your Online Content-

here are hundreds if not thousands of eBay listings out there which include statements like these: no late payments, no returns, no bidding if you have less than 5 feedback, no negative feedback without contacting us first.

c)  Avoiding Getting Burned by Serial-Returners-
Now I realize that sometimes this happens even if you did send the item as described, and even if you acted properly and exceptionally in every way throughout the transaction. That's why I always suggest that if you suspect the buyer may try to do something like that.




Q1: Find two examples of an affinity portal and two examples of a focused-content portal. Prepare a presentation explaining why each of your examples should be categorized as an affinity portal or a focused-content portal. For each example, surf the portal and describe the services each provides. Try to determine what revenue model each of your examples is using and, if possible, how many members or registered users the portal has attracted.

A)    Affinity group portals are the ones where audiences have one common affinity which acts as a reason for them to be connected to that portal for e.g. FB & iV.com is an affinity group portal as it is based on friendship among people. They are the ones which allows a large number of people to connect, share and engage in talks. These portals are providing varied services like an online space to interact, discuss general to specialized topics, games, entertainment, sharing photos, ecommerce, shopping, chat services.

Focused content portal are the ones where consumer can get information related to a particular subject and also all the discussions revolves around the same subject for e.g. WebMD & LinkedIn is a portal providing medical related content and also all the discussion are related to medical fields only. WD is a portal which is specialized to provide medicinal information, it allows people from medicine related fields to interact, discuss and connect with people in same community. Facilities provided includes information to a large pool of medicinal content, discussions, chat, e-mail services. In L portal people from different industries can connect with each other professionally. It allows building professional associations, job references, messages, job search services, news etc. Both have millions of users connected.


Q2: Examine the use of auctions by businesses. Go to any online auction of your choosing and look for outlet auctions or auctions directly from merchants. Research at least three products for sale. What stage in the product life cycle do these products fall into? Are there quantity purchasing requirements? What was the opening bid price? What are the bid increments? What is the auction duration? Analyze why these firms have used the auction channel to sell these goods and prepare a short report on your findings.

A)    Online auctions are sales transactions that result from a competitive bidding process conducted over the Internet. Whether the sales take place between individuals, between consumers and merchants, or between businesses, online auctions have enjoyed rapid growth with the spread of Internet access. The value of goods and services traded through online auctions is not tracked but is estimated to have grown rapidly in the last five years, from under $10 billion in 2000 to well over three times that figure in 2005. According to anEntrepreneur magazine article about online auction marketplace leader eBay, sales through that company's online auction space alone accounted for more than $32 billion in 2004.

The consumer online auction process has been described as being similar to a garage sale, with commonly offered items including collectibles, antiques, toys, clothing, art, cars, tickets, electronics, and even real estate. Online auctions appeal to individuals who enjoy the competitive bidding process and like to feel as if they are getting a bargain. Most Web sites that host auctions allow buyers and sellers to negotiate payment methods and shipping details. Auction-related costs are usually limited to a small percentage of the final sales price.

Auctions have been a means of economic transaction for centuries. By moving onto the Internet, auctions have become accessible to a much larger number of participants, increasing the size of the marketplace dramatically. Although transactions between individuals are an important driver of the online auction market, the business-to-consumer and business-to-business portions of the market are growing rapidly. Online auctions offer potential benefits to all types of businesses. For example, since 2000 the firm Salvage Sales has been helping insurance companies and their clients sell damaged shipments of commercial and industrial goods. In the past these salvage sale operations would have been handled locally, but the online auction option offered by Salvage Sales has increased the size of the marketplace that can be easily reached in salvage sales. The same increase in market size is being seen across the board for both used and new products. Another example of an online auction-based business is Casco 1000, Inc., a business started by a stay-at-home mother who wanted to try something she could manage from home while raising her children. Founder and owner, Angle Cash expected her business to sell $500,000 worth of home-decorations on eBay in 2005.