Topic 8 - Online Auctions

Question 1

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 implements the Brokerage model, it is successful because:

1. It has plenty revenue available, customers are willing to for transactions and other fees.
2. Advertisement does not cost anything, eBay gained its fame through word-of-mouth.
3. Little or no costs for selling or obtaining goods, goods are owned by the customers themselves, transactions are paperless, etc.
4. Listing payments are made in advance and immediately after the transaction have been completed , so there is no receivables to collect and there is no inventory because as mentioned above the customers owns the goods.

"eBay, one Internet business model that works." VentureNavigator Blog. N.p., n.d. Web. 10 May 2014. <http://www.venturenavigator.co.uk/content/ebay_case_study>.

Question 2

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?

Some of the reasons eBay has remained dominant is the same as the reasons listed above, there is very little spending compared to sites like Amazon. eBay is also very well known so a newcomer would struggle to offer any real competition any attempt to rival eBay would have to plan for the long fight.

Question 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?

eBay does not offer any long term fraud opportunities, sellers are ranked according to their selling history. If a sellers has a bad reputation buyers are aware of the risk they are taking. If a seller has no reputation you are aware of the risk that poses. As for fraud from a buyers point of view, a purchased article is not sent until payment has been received, so there is no opportunity to commit fraud.

A buyer is refunded if he or she does not receive a product or if they are unhappy with the received product. I am not sure if eBay carries the cost of refunding a person or if they have something in place so that the cost is taken from the seller. On one hand I cant see eBay carrying the cost, if that was the case I can see a great fraud opportunity and I cant see myself as the only person to think of this opportunity, for instance a selling something that the seller does not have. Then on the other hand I cant see eBay getting the funds from the seller if it is a matter of fraud. Like other fraudulent activities once you are aware that fraud has been committed the person or persons responsible is long gone.
Another possible fraud could be hijacking the website and posing a fake website, but again the time needed for this to pay of makes the option redundant.

Question 4

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?

I believe the purpose of doing this is to have the 'customers' feel they are part of something, it has a psychological effect, people have an inherit need to belong to something. This will encourage people to dedicate more time to the growth of their eBay business and this in turn helps the growth of eBay overall.

Question 5

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?

Because it is a brand name, even brand named used goods has a big market on eBay. So why not sell on eBay yourself? I believe that eBay also makes it easier, a lot of people would rather just get it from eBay then going to the shop, and for some their is no option. Would you rather buy a used set of headphones from Sennheiser or a brand new set for $10 more?

Question 6

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?

I am not sure I have looked this up and though I can see several changes such as photo listings are required, changes to top seller listings, etc., I cant see what would make it viable for you to sell on eBay again.