Chapter 11

Case Study:

1.  Contrast eBay’s original business model with its current business model.

eBay’s business model was originally just an online auction Web site.  It was where small sellers could sell unwanted goods.  It later involved more professional type of sellers who bought goods to sell on eBay. 

Their current model is on an “easier and simpler methods of buying fixed-priced goods from retailers such as Amazon.”

2.  What are the problems that eBay is currently facing?  How is eBay typing to solve these problems?

eBay is having problems with increasing revenue.  They moved eBay “away from its origins as an online flea market” and stared “partnering with retail chains to simply serve as another channel for current merchandise.” It still remains a trusted online brand and they are still working to improve its market offerings.

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

eBay is trying to keep up with competitors like Amazon.  It’s a solution that better fits the habits of online shoppers who do not want to wait or bid on goods and would rather buy the item immediately.   The other solutions is that eBay could present both auction and retail for their customers to choose.

4.  Who are eBay’s top three competitors online, and how will eBay’s strategy help it compete?  Will eBay be providing a differentiated service to customers?

eBay has several competitors online.  They could be in either auction or general retail market like is Amazon, eBid, Walmart, uBid and Costco. 

eBay does not seem to provide a differentiated service but they provide both auction and non-action service to customers.  They do however, dominate the online auction market.


1.  What do social networks, auctions, and portals have in common?

They involve a group of people who share an area for interaction or interest.  All attract large audience.

5.  Why are mobile social networks growing so fast?

Mobile social networks are growing fast because of their “focuses on messaging, either sending of text or photos.”  These sites let users send text, photos, and videos using cellphones and sometimes to other cellphones using the Internet.  “About 82% of Facebook’s users are mobile users although not exclusively.  Several of the largest newer social networks like Instagram, Snapchat, and Vine are almost entirely mobile.”

10.  How does a Name Your Own Price auction, such as Priceline’s, work?

Priceline customers state what they are willing to pay for the goods or services they want, and multiple  providers bid for their business.  Prices do not descend and are fixed: the initial consumer offer is a commitment to purchase at that price.

15.  Name and describe five types of possible abuses and frauds that may occur with auctions.

1.    Bid rigging:  Agreeing offline to limit bids or using shills to submit false bids that drive prices up.

2.    Price matching:  Agreeing informally or formally to set floor prices on action items below which sellers will not sell in open markets.

3.    Shill feedback, defensive:  Using secondary IDs or other auction members to inflate seller ratings.

4.    Shill feedback, offensive:  Using secondary IDs or other auction members to delate ratings for another user (feedback bombs).

5.    Feedback extortion:  Threatening negative feedback in return for a benefit.

6.    Transaction interference:  E-mailing buyers to warn them away from a seller.

7.    Bid manipulation: Using the retraction option to make high bids, discovering the maximum bid of the current high bidder, and then retracting the bid.

8.    Non-payment after winning:  Blocking legitimate buyers by bidding high, then not paying.

20.  Why has Yahoo struggled in the last three years?

“One part of the problem is falling price of display ads, which are the mainstay of Yahoo’s ad platform.  Another key issue is declining user engagement with materials on the site and the amount time spent on the site . . . The key to display ad revenue is content and engagement: the more you can show users, the longer they stay on your site, the more ad revenue can be generated.  So far, Yahoo and the other general portal sites have not been able to compete with social network sites on these dimensions of engagement and time on site.”



#4.  Visit one social networks listed in Table 11.1 and compare it to Facebook.




·       People connect to you

·       You can connect to several groups

·       Post pictures and info

·       You can request to link to a person

·       There’s the: Like, Comment and Share buttons

·       Find people



·       Groups are made up of professionals not family and friends

·       Your connecting to professional groups and not individuals

·       You can post jobs

·       Profile is like a resume

·       You can search for jobs