Tuesday, May 28, 2013

Week 8 - Online Auction

Hey everyone this week we are talking about online auctions, looking at how they operate, and how they can be profitable


Q1: eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay’s business model? Why has it been so successful?


Ebay is the pioneer in person-to-person online trading business model. 

Founded in 1995 by Pierre Omidyar, the company now provides millions of auctions, and hundreds of thousands of new items every day from which bidders may choose.

Ebay as a 'pure-play' business, means that the market sets the price (above some minimum). Auction-based pricing is sometimes referred to as "dynamic" or "fluid" pricing, where on the other end of the spectrum there is 'set' or 'static' pricing mechanisms.


 Finding the right balance can take time, and indeed, one can continue to miss the mark as the market shifts and competition evolves. 

With an auction, there is no guess work, this is why eBay is successful they don't have to  set prices, that's up to the sellers to do, therefore they never miss the market because of price.



Q2: Other major web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?


Being the first to start a new category of business helps, but what has really set eBay apart is two things...


1. Ease of use - eBay's customer interface makes it easy to make several transactions at once with their shopping cart function.

 On top of this the customer interface has stayed fairly consistent over the years, meaning that customers know what to expect and don't have to re-learn how to move through the website.

2. Security - Paypal is a fantastic payment scheme clearly endorsed by eBay as a safe means of paying for purchases, and is widely recognised.


So if you pay for your item with PayPal and it's significantly different to its description or you don’t receive it at all, you may be eligible for up to $20,000 in free PayPal Buyer Protection. http://pages.ebay.com.au/securitycentre/buyer-protection.html


eBay also uses widely recognized credit card institutions adding a level of security and familiarity.

3. What method does eBay use to reduce the potential for fraud among traders on its site? What kinds of fraud, if any, are eBay users most susceptible?


One of eBay's main method of reducing the potential for fraud is their Guide to prevent fraud.

see link http://www.ebay.com/gds/All-Ebay-Members-READ-THIS-Guide-to-prevent-FRAUD/10000000002375941/g.html

Everything you need to know about protecting yourself while buying and/or selling on ebay

One of the largest frauds that customers are susceptible to on eBay, are private auctions.

Sellers who make private auctions under anonymous names tend to be scams, and therefore should be avoided.


Q4: eBay makes every effort to conceptualize its users as a community (as opposed to, say “customers” or “clients”). What is the purpose of this conceptual twist and does eBay gain something by doing it?


Karp (2009) states that eBay is a community of buyers and sellers, a complex social system of which users are active members.

In order to be successful on eBay , you need not only the technical skills of buying and selling, but also be effective in communicating to other ebay members, and contribute to the eBay community in a positive way.

What do eBay gain? A network of empowered buyers and sellers, its a community where if 'you scratch my back I will scratch yours'.



Feedback comments on eBay is a system that shows customer responses to a seller that they made a transaction with.


These comments can be positive, negative or neutral and add to the status and credibility of a seller.


If you network with other sellers and leave positive feedback on transactions you have made with them, then they will be encouraged to give you positive feedback and recommend you to others.


Q5: eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?


In the book "the ebay billionaires club" (pg.47) Yaskulka a business owner, explains in an interview why ebay was his preffered option, its a "combination of having access to a large audience of customers without needing to scale any of your operations."



This next question is the lecturer of this subject talking, not myself


Q6. "I have a few businesses, and I have used eBay for about 12 years on and off. Currently I have about 600 books listed on eBay (seller name ozrural). I stopped selling on eBay for a few years but they changed the rules this July and it is viable again (for me)". "What do you think changed?"


Honestly how is anyone suppose to know why it is now feasible for him, perhaps they no longer have usage fees like they did, some websites make you pay if you want to add more photos, or maybe they made keeping track of your transactions easier than before, with their updated account interface.

Thanks for looking if you would like to donate to Allstar's blog Click the Paypal donate button.

No comments:

Post a Comment