eBusinessLecture 7 - Online Auctions
V1.0Online Auctions Lecture 7 - 7.*
Introduction to Lecture 7Topics covered:Different types of
auctionsGeneral consumer auctionsSpecialist consumer
auctionsBusiness to business auctionsAuction related services
V1.0Online Auctions Lecture 7 - 7.*
Online AuctionsBusiness model that is perfectly suited for the
web Variety of revenue generating opportunitiesProcess involves
buyers and sellers who can be geographically dispersed
V1.0Online Auctions Lecture 7 - 7.*
Types of AuctionsEnglish auctionDutch auctionFirst-price
sealed-bid auctionSecond-price sealed-bid auctionOpen outcry double
auctionDouble auction (sealed bid)Reverse auction (seller-bid)
V1.0Online Auctions Lecture 7 - 7.*
English AuctionKey characteristics:Starts at a low priceBidding
increases until no higher bid is madeItem sold to the highest
bidderSometimes called an ascending price auctionSeller can put a
reserve price on an item
V1.0Online Auctions Lecture 7 - 7.*
Dutch AuctionKey characteristics:Form of open auction where
bidding starts at a high pricePrice drops until it is accepted by a
bidderSometimes called descending price auctionWell suited to
selling large numbers of commodity items quickly
V1.0Online Auctions Lecture 7 - 7.*
First-Price Sealed-Bid AuctionKey characteristics:Secret bidding
processBidders submit their bids independentlyThe highest bidder
winsIf multiple items are auctioned, the next highest bidders get
the items at the prices they bid
V1.0Online Auctions Lecture 7 - 7.*
Second-Price Sealed-Bid AuctionKey characteristics:Secret
bidding processHighest bidder wins the item BUT pays the price bid
by the second highest bidderSometimes known as a Vickrey
auctionOften yields higher returns for the seller, as all bidders
tend to bid higher than in a first-price sealed-auction bid
V1.0Online Auctions Lecture 7 - 7.*
Open-Outcry Double AuctionKey characteristics:Buyers and sellers
declare combined price quantity bidsAuctioneer matches seller
offers (lowest to highest) with buyer offers (highest to
lowest)Buyers and sellers can modify bids based on other bids
V1.0Online Auctions Lecture 7 - 7.*
Sealed-Bid Double AuctionKey characteristics:Buyers and sellers
declare combined price quantity bidsAuctioneer matches seller
offers (lowest to highest) with buyer offers (highest to
lowest)Buyers and sellers cannot modify their bids
V1.0Online Auctions Lecture 7 - 7.*
Reverse AuctionsKey characteristics:Multiple sellers submit
price bids to auctioneer who represents a single buyerBids are for
a specific amount of an item that the buyer wishes to
purchasePrices go down until no seller is willing to bid
lowerTypically involve businesses, with sellers screened before
they can participate
V1.0Online Auctions Lecture 7 - 7.*
General Consumer AuctionsMost successful in this category is
eBayBoth sellers and buyers must register with eBaySellers pay a
fee, buyers pay nothingThreat to sellers from stolen credit
cardsThreat to buyers from non-deliveryUses an online version of
the English auction
V1.0Online Auctions Lecture 7 - 7.*
Specialist Consumer AuctionsSpecialist auction sites meeting
needs of market segmentsBuyers and sellers geographically
dispersedShare highly focused interests Can become profitable
niches
V1.0Online Auctions Lecture 7 - 7.*
Business-to-Business AuctionsThree emerging business-to-business
models:Large company model creates own auction site and sells
excess inventorySmall company model sells obsolete stock through
independent third party auction siteNew entrant model new entity
creates an auction site that links niche buyers and sellers
V1.0Online Auctions Lecture 7 - 7.*
Business-to-Business Reverse AuctionsCharacteristics that
support reverse auctionsSuppliers are highly competitiveProduct
features can be clearly specifiedSuppliers are willing to reduce
their marginsCharacteristics that discourage reverse
auctionsProduct is highly complexProduct has customised
featuresLong term strategic relationships are important to buyers
and sellers
V1.0Online Auctions Lecture 7 - 7.*
Auction-Related ServicesAuction escrow servicesAuction directory
and information servicesAuction softwareAuction consignment
services
V1.0Online Auctions Lecture 7 - 7.*
Auction Escrow ServicesIndependent party that protects interests
of buyers of high value itemsHolds buyers payment until they
confirm they are happy with purchased itemPayment then passed
through to sellerEscrow service charges fee
V1.0Online Auctions Lecture 7 - 7.*
Auction Directory and Information ServicesDirectory of auction
sitesGuidance for new auction participantsHelpful hints and tips
for experienced buyersPrice monitoring services
V1.0Online Auctions Lecture 7 - 7.*
Auction SoftwareFor buyers - software and services to manage and
automate the auction processesFor sellers sniping software to
automate last second bidding
V1.0Online Auctions Lecture 7 - 7.*
Auction Consignment ServicesTake an item on behalf of a
sellerCreate an online auction for that itemHandle the
transactionTake a fee (10% to 40%)Remit the balance
V1.0Online Auctions Lecture 7 - 7.*
SummaryOnline auction business models are ideally suited to the
webMany different types of auctionsGeneral consumer auctions
dominated by eBayEmerging business-to-business modelsNumber of
auction-related services have emerged
V1.0Online Auctions Lecture 7 - 7.*
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