CH11 Social Networks, Auctions, and Portals
1. Contrast eBay's original business model with its current business model.
In the beginning stages, eBay had an auction-based business model where people could buy and sell almost everything through online auction. Years later, people wanted to see items with fixed prices, rather that an auction and it forced eBay to change their old business model to current fixed-price model. They also changed their search tool so that sellers with better reputation and rating would appear higher in the product listing.
2. What are the problems that eBay is currently facing? How is eBay trying to solve these problems?
One of the biggest problems that eBay is facing is fraud. When purchasing off eBay, people a concerned about being defrauded. To eliminated seller fraud, sellers can pay eBay to authenticate their items to increase their appeal to buyers. Also, buyers can pay extra for “insurance” if an item appears to be counterfeited and get the refund.
3. Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there any other solutions that eBay should consider?
Yes, eBay’s solutions are good – they constantly modernize their platform with analytical tools and add different features to it. eBay continuously makes improvements to their mobile app to make it easier and more convenient for the customers because almost half of eBay’s business comes from mobile devices. Also, eBay created the Interest feature, where customers take a quick survey about their interests and hobbies, then products associated with the answers appear on user’s home page.
4. Who are eBay's top competitors online, and how will eBay's strategy help it compete?
eBay’s top competitor is Amazon. Amazon owns almost 50% of e-commerce in the U.S. to eBay’s 6.6%. eBay is forced to create and offer services like Amazon’s to stay in the competition, for example eBay Plus program in Germany is like Amazon Prime. Also, eBay has a Guaranteed Delivery program where they promise that 20 million of their top products will be delivered within 3 days or the customer will receive refund or coupon. Another service that eBay has is a weeklong sale in July, a price match guarantee program for 100,000 products, where a customer can receive a refund equal to the difference between eBay’s price and its competitors.
Projects p. 772
Question 2: 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.