Chap. 6 Online Auctions, Virtual- Communities, and Web Portals

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Chap. 6 Online Auctions, Virtual- Communities, and Web Portals by Mind Map: Chap. 6 Online Auctions, Virtual- Communities, and Web Portals

1. Auction Overview

1.1. Online auctions provide a business opportunity that is great for the web. An auction site can charge both buyers and sellers and can also sell advertising. This is a revenue generating characteristic that makes it easy to develop auctions that yield profits.

1.2. English Auctions (Ascend- ing price auctions)

1.2.1. Bidders publicly announce their successive higher bids until no higher bids are forthcoming. When this happens, the auctioneer pronounces the item sold.

1.3. Dutch Auctions (Descend- ing price auctions

1.3.1. Open auction, in which bidding starts at a high price and drops until a bidder accepts the price. Dutch auctions usually use a clock that has price on it. Every time the clock ticks, the price goes down. The item gets sold to the first person to yell stop.

1.4. First-Price Sealed-Bid Auction

1.4.1. Bidders submit their bids independently and are usually prohibited from info. sharing with one another. The highest bidder wins.

1.5. Second-Price Sealed-Bid Auction

1.5.1. Same as the first-price sealed-bid auction except that the highest bidder is awarded the item at the price bid by the second highest bidder. Essentially, it gives the item to the winning bidder at a lower price.

1.6. Open-Outcry Double Auction

1.6.1. Buyers and sellers declare combined price quantity bids. The auctioneer matches the seller offers with buyer offers. Buyers and sellers cannot modify bids. These auctions work well with for items of known quality (Ex: graded agricultural products).

1.7. Sealed-Bid Double Auction

1.7.1. Buyers and sellers each subit combined price-quatity bids to an auctioneer. Auctioneer will then match the sellers' offers to the buyers' offers until all quantities offered for sale are sold to buyers (Ex: NY stock exchange).

1.8. Reverse Auction

1.8.1. Multiple sellers submit price bids to an auctioneer who represents a single buyer. Bids are for a given amount of a certain amount of a specific itemthat the buyer wants to buy. Prices go down as the bidding continues until to seller is willing to bid lower.

2. Important Definitions

2.1. Bid

2.1.1. price someone is willing to pay for an item.

2.2. Shill Bidders

2.2.1. people employeed by the seller or auctioneer that can make bids on behalf of seller.

2.3. Reserve Price

2.3.1. A minimum bid is not announced, but sellers can establish a minimum acceptable price.

2.4. 3rd party assurance provider

2.4.1. An independent org. that assures privacy policies of web sites.

2.5. Proxy Bid

2.5.1. bidder specifies a max. bid

2.6. Escrow Service

2.6.1. Independent 3rd party who holds an auction buyer's payment until the buyer receives the purchased item and is satisfied that it is what the seller represented it to be.

2.7. Lock-in Effect

2.7.1. The inherent greater value to customers of exiting companies than new sites.

2.8. Reverse Bid

2.8.1. when an auction customer seeks products by describing an item/service in which they are interested, and then entertains responses from merchants who will offer to supply item at a particular price.

2.9. Snipe

2.9.1. Act of placing a winning bid in the last couple seconds of the auction.

2.10. Participatory Journalism

2.10.1. Practice of inviting readers to help write an online newspaper.

2.11. Monetizing

2.11.1. conversationof existing regular site visitors seeking free info. or services into fee-paying subscribers or purchasers of services.

3. Online Auctions and Related Businesses

3.1. General Consumer Auctions

3.1.1. Can be thought of as B2C, C2C, or C2B. The largest number of transactions occurss on general consumer auction sites. A prime example is eBay. In order to use eBay, sellers and buyers must sign up and agree to the web site's business terms. Sellers pay a listing fee and a small percentage of final selling price. Buyers can submit ratings on sellers in this online english auction style. Other bidding sites include: Yahoo shopping.

3.2. Specialty Consumer Auctions

3.2.1. In order to avoid competing with eBay, some firms have decided to identify special interest market targets and have created specialized web auction sites that meet needs of those market segments. Segment examples: computers, photographic equip, wine, golf clubs, consumer electronics. Auction sites:, StubHub, Glof Club Exchange, Winebud.

3.3. Consumer Revenue Auctions

3.3.1. A visitor or indended purchaser will fill out a form regarding the item/service which they want. The site will then route the visitor's request to a participating merchants group who reply to the visitor by email with offers (Ex:,,

3.4. B2B Auctions

3.4.1. Happens when a manufacturing company needs to dispose of unused inventory, possible because of change in demand. Thus, these companies have a decision to make, they can auction to other businesses or sell through liquidation brokers. Smaller companies may choose to use a third party to sell excess inventory.

4. Auction-Related Services

4.1. Auction Escrow Services

4.1.1. Escrow service is a 3rd party who will hold the buyer's payment until the buyer receives the purchased item and is satisfied. Some escrow services will take del- ivery of the item from the seller and perform the inspection for the buyer. Escrow services do charge fees for their services (Ex:, eDeposit,

4.2. Auction Directory and info Services

4.2.1. These sites offer guidance for new auction participants and helpful hints and tips for more experienced buyers and sellers. These sites can also pass on up to date info. on the latest auction sites as well as offer info about fair market value for a wide variety of products (Ex:, AuctionBytes)

4.3. Auction Software

4.3.1. Software and services are offered to help with or automate tasks such as image hosting, advertising, page design, listings, etc. For buyers, some companies sell sniping software, which is software that enables you to observe auction progress until the last second (Ex: Andale, Auctionhawk, Cricket sniping).

4.4. Auction Consignment Services

4.4.1. These copmanies take an item and create an online auction for that item, handle the transaction, and remit the balance of the proceeds after deducting a fee (Ex: auction drop, quickdrop).

5. Virtual Communities and Web Protals

5.1. Virtual Community (Web community)

5.1.1. A gathering place for people and businesses that does not have physical existence. Exist on the internet today in forms such as chat rooms, web sites, Usenet newsgroups. These communities offer people a way to connect with one another to discuss common issues and interests.

5.1.2. A form of virtual community is "Virtual learning community" which is used for distance learning.

5.2. Web communities in the second wave of E-com

5.2.1. Web Logs (Blogs) - many blogs invite visitors to add comments, which the blog owner may or may not edit. The result is a continuing discussion of the topic.

5.2.2. Social Networking web sites - Virtual community that exists for its own sake and is not focused on some separate group, org., or set of interests (Ex: craigslist, Linkedln,

5.2.3. Idea-Based virtual communities - A web community based on the connection ideas.