E-Commerce Application Web Auctions

Auction Basics

Earliest known auctions were in Babylon around 500 B.C.

Entire Roman Empire was auctioned in 193 A.D. after the death of Emporer Pertinax

Buddhist temples held auctions to sell the possessions of deceased monks

Auction firms Sotheby’s and Christie’s began in the 17th century

Auction Basics

English Auctions Bidders publicly announce their

successively higher bids until no higher bid is offered

Minimum price can be used to set the price at which the auction will begin

Reserve price is the minimum price the seller will accept

Yankee auctions allow the bidder to choose the quantity of multiple items offered at the auction

Auction Basics

Dutch Auctions Form of open auction in which

bidding starts at a high price and drops until a bidder accepts the price

Usually the seller offers a number of similar items for sale

Good for moving large numbers of commodity items quickly

Auction Basics

Sealed-Bid Auctions Bidders submit their bids independently

and are usually prohibited from sharing information with each other

First-price sealed-bid Highest bidder wins

Second-price sealed bid Highest bidder wins, but at the second-

highest bidder’s price Encourages all bidders to bid their private

valuations, reducing collusion

Auction Basics

Double Auctions Buyers and sellers each submit

combined price-quantity bids to an auctioneer

The auctioneer matches the seller’s offer (lowest price, then up) to the buyer’s offers (highest price, then down)

New York Stock Exchange conducts sealed-bid double auctions of stocks and bonds

Six Major Auction TypesFigure 10-1

General Consumer Auctions

eBay Search for specific items Browse by categories of items Seller options include bold-face type and

featured listings Rating system to provide feedback to

alleviate fears concerning seller reliability

eBay Home Page

Additional General Consumer Auctions

Auction Universe, owned by Classified Ventures, a partnership of eight major newspapers Apartments.com Cars.com NewHomeNetwork.com

Yahoo! and Excite have created auctions based on the eBay model

Excite Auctions Home Page

Additional General Consumer Auctions

Amazon.com Offers “Auctions Guarantee” to

reimburse any buyer for merchandise purchased that was not delivered, or “materially different” than represented

Provides escrow service for items over $250

Klik-Klok Dutch Auction Short time-period auctions for quantity

offerings

Klik-Klok Dutch Auction in ProgressFigure 10-4

Specialty Consumer Auctions

Technology-related items auction sites Haggle Online CNET.com ZDNet Onsale uBid, and Bid.com

Numerous specialty auction sites Golf Club Exchange Cigar-Bid.com

Golf Club Exchange Web AuctionFigure 10-5

Business-to-Business Auctions

Typically used to dispose of excess inventory

Large companies use liquidation specialists to find buyers for unusable inventory, create their own auction sites

Smaller companies often sell their excess inventory to liquidation brokers, who, in turn, create auction sites

CompuUSA Auctions Home PageFigure 10-6

Examples of Third-Party Auction Sites

Auction IT Computer equipment

Going, Going...Sold! Laboratory equipment

FastParts.Com Electronic components

J.R. Metals Quick Bid Auction Steel

Auction-Related Services

Escrow service Independent party holds buyer’s

payment until the item is received and the buyer is satisfied with the purchase

Directory of available auctions Auction Guide

Guidance for new auction participants AuctionInsider

Links to auctions sorted by category

AuctionInsider DirectoryFigure 10-7

Seller-Bid Auctions andGroup Purchasing Sites

Reverse auctions Sellers of goods and services bid the

prices at which they are willing to sell Group purchasing sites

Items are posted with a price, as the number of bids increase, the seller negotiates a better price with the item’s provider

Virtual Community Strategies

Gathering places for people and businesses that does not have a physical existence Usenet newsgroups Chat rooms Web sites

Helps companies, customers, and suppliers plan, collaborate, transact business, and interact in a mutually beneficial way

Milpro Business-to-Business Virtual Community SiteFigure 10-8

Web Communities

WELL Whole Earth ‘lectronic Link Predates the web, began as a series of

dialogs among San Francisco authors and readers

Purchased by Salon.com GeoCities

Free web space for members Sells advertising to generate revenue Owned by Yahoo!

Web Communities

Tripod Similar to GeoCities Owned by Lycos

Theglobe.com Created by Cornell University

students News feeds, art gallery

Web Portal Strategies

Combinations of virtual communities, search engines, and Web directories

Provide a high degree of “stickiness” that is extremely attractive to advertisers

Examples include AOL, Excite, Infoseek, Lycos, MSN, Netscape Netcenter, Snap, and Yahoo!

Web Portal Strategies

Typically ask members to provide demographic information about themselves

Very high potential for targeted marketing

High visitor counts yield high advertising rates

10-9

homebid.com Home PageFigure 10-9