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  1. 1. Going, Going, Gone! – Consumer Auctions<br />Prof. Lattemann<br />Organizational Design for Networks - Fall 2010<br />MariyaArnaudova<br />
  2. 2. Consumer-To-Consumer Transactions: Long ago…<br />C2C<br />
  3. 3. Consumer-To-Consumer Transactions: Online Auctions<br />C2C<br />Internet Newsgroups: search listings (burdensome)<br />Web-based auctions: <br />  listing and transaction fees <br /> independent arrangement of shipment and payment <br />  special-interest sites <br />Seller 1<br />Buyer 1<br />Transactions platform<br />Intermediaries<br />Seller 2<br />Buyer 2<br />Seller 3<br />Buyer 3<br />
  4. 4. How it all started: Fair and efficient internet market<br />Overview<br /><ul><li>Pierre Omidyar 1995 – changed the world indeed
  5. 5. Initially traded collectibles (e.g. PEZ)
  6. 6. 1996: Gross Margin 80%-96%
  7. 7. January 1997 hosted 200 000 auctions
  8. 8. Need of better IT architecture </li></li></ul><li>Currently: Overview <br />Overview<br /><ul><li>90 million active users globally
  9. 9. Mission: World's largest online marketplace where practically anyone can buy and sell practically anything
  10. 10. 2009:the total worth of goods sold on eBay was $60 billion -- $2,000 every second.
  11. 11. Revenue: advertising, listing and value fees, merchant fees, revenue sharing agreements, contractual service fees and classified and lead referral fees. 
  12. 12. Current CEO: John Donahoe</li></ul> since 2008 <br />eBay Annual Report 2009<br />
  13. 13. Trading Community:How does it work?<br />Services<br />Proxy bidding: winning bidder pays the price of the second-highest bid plus a defined increment<br />  price paid is determined only by competitors' bids and not by the amount of the new bid<br />Auction-style listings: offer items for sale for a specified number of days<br />Buy-It-Now Option<br />Last bid displayed<br />
  14. 14. Trading Community: Ensuring Trust <br />Services<br />Seller Rating: Transaction-related feedback <br />Buy-It-Now Option<br />Payment: PayPal<br />Buyer Protection Policy<br />Detailed Item Description<br />
  15. 15. Trading Community:Diverse Possibilities <br />Services<br />eBay Stores: sellers’ showcase <br /> establish their own brand (auction or fixed price) <br />ProStores: subscribers design own online stores <br />  hesitant about real business?<br />  easy connection with eBay <br />Shopping.com: price comparison service <br />  eBay sellers got access to buyers search of fixed price<br />  fixed price listings increased <br />eBay Motors:  Buy and sell all types of vehicles<br />  Autos, Used Cars, Motorcycles, Boats, Trucks, Parts<br />
  16. 16. Paying Strangers: How to make it safe<br /> Payment<br /><ul><li>Easy C2C payments
  17. 17. Free service for buyer, tax for seller
  18. 18. 2002 acquired by eBay
  19. 19.  PayPal Buyer Protection Policy states that the customer may file a buyer complaint within 45 days if he did not receive an item  get a refund via chargeback from his credit-card company</li></li></ul><li>Competitors: Dethroning the King?<br />Competition<br />“Even the best products don’t always sell out in stores, so when our trusted selling partners have excess inventory they sell it with us at prices far below retail.”<br />World’s leading B2B e-commerce company: 32 million users, 240 countries<br />Unique user interface features that make for an enjoyable experience <br />Works best employing sellers currently established ecommerce sites and then utilizing Google Product Search as a information organizer and checkout tool<br />B2C: Sell consumer products around the world – sustaining healthy growth <br />Next generation shopping destination:  link advertisers and help them reach the right consumers at the right time<br />Powerhouse in e-commerce <br /> Utilize network capabilities of pre-established communities (e.g. Facebook)?<br />
  20. 20. Competitors: Why the King stays?<br />Competition<br />Competitor threats<br />Power <br />Source of revenue<br />Centrality<br /> Mobile platforms<br />Consumer Security<br />
  21. 21. European Strategy: Pan-European Dominance <br />Go Global<br />2. Leverages <br />Ireland<br />Own inventories<br /><ul><li>B2C
  22. 22. C2C</li></ul>Austria<br />Switzerland<br />Alando.de<br />1999/2000 <br />France <br />Sweden = failure <br />3. Own Websites<br />1. Acquisitions<br /> eBay has the administrative strength to cope with so many national rules<br />
  23. 23. Asian Strategy: Not a success story <br />Go Global<br />= first mover advantage + free of charge + favored payment method <br />= first mover advantage on the national market <br />  eBay acquired it, but did not integrate it <br />South Korea<br />VS <br /><ul><li>Listing and transaction fees
  24. 24. Aggressive ad campaigns
  25. 25. 40% auctions
  26. 26. Product oriented
  27. 27. Failed to recognize the Chinese market
  28. 28. Top management: no Chinese
  29. 29. Global platform ≠ local tastes
  30. 30. Free of charge
  31. 31. TV ads
  32. 32. User friendly: 10% auctions
  33. 33. Customer-oriented</li></li></ul><li>Conclusion: Successful Business Model? Next?<br />Conclusion<br />TRUST<br />Seller 1<br />Buyer 1<br />Transactions platform<br />Intermediaries<br />Seller 2<br />Buyer 2<br />Seller 3<br />Buyer 3<br />No inventory <br />No stock <br />No distribution <br />Low operation costs <br />Low business risks <br />High profits <br />Do you think that the Business Model of eBay is really successful? <br />What do you think should be the next steps for improvement?<br />
  34. 34. Conclusion: Growth Sustained? <br />Conclusion<br />Share price change since the beginning of eBay – source: NASDAQ <br />Highest peak<br />Now what?<br />Paper written<br />According to the graph of the American Stock Exchange, do you think the growth is sustainable? Doesn’t it remind you of something we studied? <br />
  35. 35. Theoretical debate: Perfect Market = e-commerce?<br />Conclusion<br />Perfect Market <br />Participants without power to set prices<br />Perfect Market <br />Information <br />Perfect Competition<br />No barriers of entry/exit<br />+<br />+<br />=<br /> Price regulation according to the number of sellers/buyers <br />
  36. 36. THANK YOU!<br />and now don’t you wanna go buy something from eBay :D <br />