Electronic Commerce
Tenth Edition
Chapter 6
Social Networking, Mobile Commerce,
and Online Auctions
Learning Objectives
In this chapter, you will learn:
• How social networking emerged from virtual
• How social networking tools such as blogs are used
in online business activities
• About mobile technologies that are now used to do
business online
• How online auctions and auction-related businesses
have become a major new commercial activity
introduced as part of electronic commerce
Electronic Commerce, Tenth Edition
From Virtual Communities to Social
• Online Web communities
– Not limited by geography
– Individuals and companies with common interests
• Meet online and discuss issues, share information,
generate ideas, and develop valuable relationships
• Companies make money by serving as relationship
– Combine Internet’s transaction cost-reduction
potential with a communication facilitator role
Electronic Commerce, Tenth Edition
Virtual Communities
• Virtual community (Web community, online
– Gathering place for people and businesses
• No physical existence
• Early virtual communities
– Bulletin board systems (BBSs)
• Revenue source: monthly fees and selling advertising
– Usenet newsgroups
• Message posting areas on usenets
Electronic Commerce, Tenth Edition
Virtual Communities (cont’d.)
• Current forms
– Web chat rooms
– Sites devoted to specific topics or general exchange
of information, photos, videos
– People connect and discuss common issues,
– Considerable social interaction
– Relationship-forming activities
• Similar to physical communities
Electronic Commerce, Tenth Edition
Early Web Communities
• 1985: WELL (“whole earth ‘lectronic link”)
– Monthly fee to participate in forums and conferences
– 1999 bought by Salon.com
• 1995: Beverly Hills Internet virtual community site
– Offered webcams, free Web site space
– Grew into GeoCities
• Revenue source: advertising, pop-up pages
• 1999: purchased by Yahoo! ($5 billion)
• Closed in 2009
Electronic Commerce, Tenth Edition
Early Web Communities (cont’d.)
• 1995: Tripod virtual community
– Offered free Web page space, chat rooms, news,
weather updates, health information pages
– Revenue source: sold advertising
• 1995: Theglobe.com Cornell University class project
– Included bulletin boards, chat rooms, discussion
areas, personal ads
• Added more features
– Revenue source: sold advertising
• Most early Web community businesses closed
Electronic Commerce, Tenth Edition
Social Networking Emerges
• As the Internet and Web grew:
– Experience of sharing new online communication
– New phenomenon in online communication began
• Multiple common bonds joined people with all types of
common interests
• Social networking sites
– Allow individuals to create and publish a profile,
create a list of other users with whom they share a
connection (or connections), control that list, and
monitor similar lists made by other users
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Social networking sites
– Six Degrees (1997)
– Friendster (2002)
• Had features found in today’s social networking sites
LinkedIn: devoted to business connections
YouTube: popularized video inclusion
MySpace: popular with younger Web users
• Users can send short messages to other users who
sign up to follow their messages (tweets)
– Google+
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Basic idea behind social networking
– People invited to join by existing members
– Site provides directory
• New members work through friends established in the
Electronic Commerce, Tenth Edition
© Cengage Learning 2013
FIGURE 6-1 Social networking Web sites
Electronic Commerce, Tenth Edition
© Cengage Learning 2013
FIGURE 6-2 Leading social networking sites around the world
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Web logs (Blogs)
– Web sites containing individual commentary on
current events or specific issues
– Form of social networking site
– Twitter: microblog
• Very informal; tweets limited to 140 characters
• Early blogs focused on technology topics
• 2004: blogs used as political networking tool
• 2008: all major candidates using blogs
– Communicating messages, organizing volunteers,
raising money, meetups
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Retailers embracing blogs
– Way to engage visitors not ready to buy from site
– Marketing and supply managers saw social
networking benefits of enhancing B2B relationships
• Business uses
• Blog information included in television newscasts
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Business uses (cont’d.)
– Newspapers
• Inviting information and opinion contributions
• Targeting 18- to 35-year-old generation
– Participatory journalism
• Trend toward having readers help write the online
• Blogs can become businesses in themselves
– Must generate financial support (fees, advertising)
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Social networking Web sites for shoppers
– Social shopping
• Practice of bringing buyers and sellers together in a
social network to facilitate retail sales
– Example: craigslist
• Operated by not-for-profit foundation
• All postings free (except help wanted ads)
– Example: Etsy Web site
• Marketplace for selling handmade items
• We Love Etsy: Etsy buyers, sellers share information
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Idea-based social networking
– Social networking sites form communities based on
connections among people
– Idea-based virtual communities
• Communities based on connections between ideas
– Idea-based networking
• Participating in idea-based virtual communities
• Examples: del.icio.us site, 43 Things site
Electronic Commerce, Tenth Edition
Social Networking Emerges (cont’d.)
• Virtual learning networks
– Distance learning platforms for student-instructor
interaction (Blackboard)
– Tools include:
• Bulletin boards, chat rooms, drawing boards
– Moodle and uPortal
• Open-source software projects devoted to virtual
learning community development
– Open source software
• Developed by a programmer community
• Software available for download at no cost
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites
• Late 1990s
– Revenue created by selling advertising
• Used by virtual communities, search engine sites, Web
• 1998
– Purchases and mergers occurred
– New sites still used advertising-only revenuegeneration model
• Included features offered by virtual community sites,
search engine sites, Web directories, other informationproviding and entertainment sites
– Web portal goal: every Web surfer’s doorway to Web
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites (cont’d.)
• Advertising-supported social networking sites
– Smaller sites with specialized appeal
• Can draw enough visitors to generate significant
advertising revenue
• Example: I Can Has Cheezburger site
– Recall from Chapter 3
• Sites with higher number of visitors can charge more
• Stickiness: important element in site’s attractiveness
– Rough measure of stickiness
• Time user spends at the site
Electronic Commerce, Tenth Edition
FIGURE 6-3 Popularity and stickiness of leading Web sites
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites (cont’d.)
• Advertising-supported social networking sites (cont’d.)
– Social networking sites
• Members provide demographic information
• Potential for targeted marketing: very high
– High visitor counts
• Can yield high advertising rates
– Second-wave advertising fees
• Based less on up-front site sponsorship payments
• Based more on revenue generation from continuing
relationships with people who use the social networking
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites (cont’d.)
• Mixed-revenue and fee-for-service social networking
– Most social networking sites use advertising
– Some charge a fee for some services
• Examples: Yahoo! All-Star Games package, Yahoo!
premium e-mail service
– Monetizing
• Converting site visitors into fee-paying subscribers or
purchasers of services
• Concern: visitor backlash
– More examples: The Motley Fool and TheStreet.com
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites (cont’d.)
• Fee-based social networking
– Google Answers site
• Early attempt to monetize social networking
• Questions answered for a fee
• Google operated service from 2002 to 2006
– Similar free services
• Yahoo! Answers, Amazon (Askville)
– Uclue (paid researchers earn 75 percent of total fee)
• Advocates claim better quality
– Fee-based Web sites can generate revenue by
providing virtual community interaction
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites (cont’d.)
• Microlending sites
– Function as clearinghouses for microlending activity
– Microlending
• Practice of lending very small amounts of money
• Lend to people starting or operating small businesses
(especially in developing countries)
– Microlending key element
• Working within social network of borrowers
• Provide support, element of pressure to repay
– Examples: Kiva and MicroPlace
Electronic Commerce, Tenth Edition
Revenue Models for
Social Networking Sites (cont’d.)
• Internal social networking
– Provide social interaction among organization’s
– Run on organization’s intranet
– Save money (less paper)
– Provide easy access to employee information
– Good for geographically dispersed employees
– Adding wireless connectivity
– Combine second-wave technology with first-wave
business strategy
• Wireless communications with internal Web portals
Electronic Commerce, Tenth Edition
Mobile Commerce
• Short messaging service (SMS)
– Allows mobile phone users to send short text
messages to each other
• 2008: United States developments allowing phones
as Web browsers
– High-speed mobile telephone networks grew
– Manufacturers offered range of smart phones with
Web browser, operating system, applications
• Potential for mobile commerce (m-commerce)
Electronic Commerce, Tenth Edition
Mobile Operating Systems
• Japan and Southeast Asia mobile commerce
– Much larger online business activity
• Had high-capacity networks before U.S.
– NTT DoCoMo, Japan’s largest phone company
• Pioneered mobile commerce in 2000
• U.S. mobile commerce beginning in 2008
– Introduction of smart phones and high-capacity
– Smart phone examples: Apple iPhone, Palm Pre,
several BlackBerry models
• Android operating system
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FIGURE 6-4 Smart phones come in a range of different styles
Electronic Commerce, Tenth Edition
Mobile Operating Systems (cont’d.)
• Mobile commerce browser display options
– Wireless Application Protocol (WAP)
• Allows Web pages formatted in HTML to be displayed
on small-screen devices
– Display a normal Web page on the device
• Made possible by increased screen resolution
• Example: Apple iPhone
– Design Web sites to match specific smart phones
• Much more difficult to accomplish
Electronic Commerce, Tenth Edition
Mobile Operating Systems (cont’d.)
• Mobile commerce browser display options (cont’d.)
– Apple, BlackBerry, Palm
• Use proprietary operating systems
– HTC, Motorola, Nokia
• At one time created their own operating systems and
software applications
• Now use a standard operating system provided by a
third party
– Most common third-party operating systems
• Android, Windows Mobile, Symbian
Electronic Commerce, Tenth Edition
Mobile Operating Systems (cont’d.)
• Android operating system
– Most popular and fastest growing third-party
operating system
– Developed by Google
– Open source
• Smart phone operating system
– Cannot be deleted/switched by user
• Operating system modifications
– Jailbreaking (Apple iphone’s operating system)
– Rooting (Android operating system)
Electronic Commerce, Tenth Edition
FIGURE 6-5 Smart phones operating systems: U.S. market shares
Electronic Commerce, Tenth Edition
Mobile Apps
• Common operating systems emergence
– Occurred due to a change in the way software
applications developed and sold
• Old U.S. mobile phone company revenue strategy
– Control application software (apps)
• Apple turned old revenue strategy on its head
– AT&T agreed to be sole carrier for iPhone
– Apple Apps for iPhone online store
• Independent developers create apps and sell them
• BlackBerry and Palm followed Apple’s lead
Electronic Commerce, Tenth Edition
Mobile Apps (cont’d.)
• Recap from Chapter 4
– Some mobile app sellers include advertising element
• Messages displayed from advertisers
• Part of the app screen or in a separate screen
• Mobile apps’ advertising space marketed in same way
as Web sites’ banner advertising
• Companies moving to mobile commerce
– Determine suitability of Web site to mobile devices
– May be pertinent to develop separate Web site
optimized for mobile users
Electronic Commerce, Tenth Edition
Mobile Apps (cont’d.)
• Mobile phones for online banking
– In early stages in the United States
• Physicians using smart phones
– Read EKGs, managing diabetic patients
– Medical students: Epocrates (drug information
• Phones’ global positioning satellite (GPS) service
– Allow mobile business opportunities
• Apps tools/resources
– Swebapps, App Inventor, TaskCity
Electronic Commerce, Tenth Edition
Tablet Devices
• Tablet devices
– 2010: Apple’s iPad introduced
• Smaller than laptop computer; larger than smart phone
– Wireless phone carrier’s service or local wireless
network Internet connection
– Larger screen size better suited for online consumer
products purchases
Electronic Commerce, Tenth Edition
Mobile Payment Apps
• Mobile wallets
– Mobile phones functioning as credit cards
– Japan’s NTT DoCoMo phones combined capabilities
• Generate significant business
• Widespread credit card use in U.S. has limited use
of mobile phone payments
– 2011: Phone readers offered by American Express,
Visa, MasterCard
– Google Wallet for Android phones introduced
Electronic Commerce, Tenth Edition
Online Auctions
• Business opportunity perfect for the Web
• Auction site revenue sources
– Charging both buyers and sellers to participate
– Selling advertising
• Targeted advertising opportunities available
• Online auctions capitalize on Internet’s strength
– Bring together geographically dispersed people
sharing narrow interests
Electronic Commerce, Tenth Edition
Auction Basics
• From Babylon to the Roman Empire to Buddhists
• Common activity of 17th century England
– Sotheby’s (1744), Christie’s (1766), colonial auctions
• Auction: seller offering item for sale
Bids: price potential buyer willing to pay
Bidders: potential buyers
Private valuations: amounts buyer willing to pay
Auctioneer: manages auction process
Shill bidders: work for seller or auctioneer
• May artificially inflate price
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• English auctions
– Bidders publicly announce successively higher bids
• Item sold to highest bidder (at bidder’s price)
– Also called ascending-price auction
– Open auction (open-outcry auction)
• Bids publicly announced
– Minimum bid
• Beginning price
• If not met, item removed (not sold)
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• English auctions (cont’d.)
– Reserve price (reserve)
• Seller’s minimum acceptable price
• Not announced
• If not exceeded, item withdrawn (not sold)
– Yankee auction
• Multiple item units offered for sale (bidders specify
• Highest bidder allotted bid quantity
• Remaining items allocated to next highest bidders until
all items distributed
• Bidders pay lowest successful bidder price
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• English auctions (cont’d.)
– Seller drawback
• May not obtain maximum possible price
– Buyer drawback
• Winner’s curse psychological phenomenon
– Bidder gets caught up in competitive bidding excitement
– Bids more than their private valuation
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• Dutch auctions
– Open auction
• Bidding starts at a high price
• Drops until bidder accepts price
– Also called descending-price auctions
– Seller offers number of similar items for sale
– Common implementation
• Use a clock (price drops with each tick)
• Bidders stop clock and take items at the given price
• If items remain, clock restarted
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• Dutch auctions (cont’d.)
– Often better for the seller
– Quickly move large numbers of commodity items
– Successful examples:
• Google initial public offering stock sale (2004)
• LookSmart stock repurchase
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• First-price sealed-bid auctions
– Sealed-bid auctions
• Bidders submit bids independently
• Prohibited from sharing information
– First-price sealed-bid auction
• Highest bidder wins
• If multiple items auctioned, next highest bidders
awarded remaining items at their bid price
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• Second-price sealed-bid auction
– Same as first-price sealed-bid auction
– Except highest bidder awarded item at secondhighest bidder price
– Commonly called Vickrey auctions
• William Vickrey: 1996 Nobel Prize in Economics
– Findings:
• Yields higher seller returns
• Encourages all bidders to bid private valuation amounts
• Reduces tendency for bidder collusion
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• Open-outcry double auctions
– Example: Chicago Board of Trade auctions of
commodity futures and stock options
– Buy and sell offers shouted by traders in trading pit
• Each commodity, stock option traded in own pit
• Quite frenzied
• Double auctions (either sealed bid or open outcry)
– Good for items of known quality traded in large
– No item inspection before bidding
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• Double auctions
– Buyers, sellers submit combined price-quantity bids
– Auctioneer
• Matches sellers’ offers
– Starts with lowest price and then goes up
• To buyers’ offers
– Starts with highest price and then goes down until all
quantities offered are sold
– Operation format: Sealed bid or open-outcry
– Example: New York Stock Exchange
Electronic Commerce, Tenth Edition
Auction Basics (cont’d.)
• Reverse (seller-bid) auction
– Multiple sellers submit price bids
• Auctioneer represents single buyer
– Bids for given amount of specific item to purchase
– Prices go down as bidding continues
• Until no seller willing to bid lower
– Occasionally operated for consumers
– Most involve businesses as buyers and sellers
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FIGURE 6-6 Key characteristics of seven major auction types
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses
• Online auction business: rapidly changing
• Three auction Web site categories
– General consumer auctions
– Specialty consumer auctions
– Business-to-business auctions
• Varying opinions on categorizing consumer auctions
– Business-to-consumer
– Consumer-to-consumer
– Consumer-to-business
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• General consumer auctions
• eBay: registration required, seller fees, rating
– Seller’s risk: buyer uses stolen credit card; buyer fails
to conclude transaction
– Buyer’s risk: no item delivery; misrepresented item
– Most common auction format: English auction
Seller may set reserve price
Bidders listed: bids not disclosed (until auction end)
Continually updated high bid amount displayed
Private auction option available
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• General consumer auctions (cont’d.)
– Another eBay auction format: Dutch auction
– Both formats require minimum bid increment
• Amount by which one bid must exceed previous bid
– Proxy bid
• Bidder specifies maximum bid
• May cause bidding to rise rapidly
– eBay stores
• Integrated into auction site
• Sellers generate additional profits
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Competition in general consumer auctions
– eBay’s success due to unspecified audience
• Also spends $1 billion per year to market and promote
Web site
– Major determinants of Web auction site success
• Attracting enough buyers and sellers
– Yahoo! Auction operation closed in 2007
– Amazon.com with “Auctions Guarantee”
• Offered buyer protection through escrow service
• Closed in 2006
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Future challengers to eBay
– Must overcome lock-in effect
• New auction participants inclined to patronize
established marketplaces
– Example: Japanese general consumer auction
• Yahoo! first to enter market
– Now dominates (more than 90% market share)
• eBay maintains low market share (less than 3%)
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Specialty consumer auctions
– Identify special-interest market targets
– Create specialized Web auction sites
• No need to compete with eBay
– Examples:
• JustBeads.com, Cigarbid.com, Winebid
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Consumer reverse auctions
• Reverse bid
– Visitor describes desired items or services
– Site routes visitor to participating merchants
• Reply to visitor by e-mail
• Offer item at particular price
– Buyer accepts
• Lowest offer
• Offer best matching buyer’s criteria
• All these types of sites now closed
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Consumer reverse auctions (cont’d.)
• Priceline.com
– Considered a seller-bid auction site
– Visitor states desired airline ticket, car rental, hotel
room price
• If sufficiently high price: transaction completed
– Many transactions come from inventory
• Priceline operates more as a liquidation broker
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Group shopping sites
– Also known as group purchasing site
– Seller posts item with tentative price
– Individual buyers enter bids
• Agreement to buy one unit (no price provided)
• Site negotiates with seller for lower price
– Posted price decreases
• As number of bids increases (only if number of bids
– Result: buyers force seller to reduce price
• Similar to consumer reverse auction
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Group shopping sites (cont’d.)
• Well-suited product types
– Branded products, well-established reputations
• Produces buyer confidence of good bargain
– High value-to-size ratio, non-perishable
• Disadvantages
– Difficulty attracting sellers’ interest
– Well-suited companies
• Find no advantage, fear sites cannibalize product
sales, reluctant to offend current distributors
• Mercata and LetsBuyIt sites closed
• Successful sites: Groupon, LivingSocial, Gilt
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Business-to-business auctions
– Evolved to meet specific existing need
• Excess inventory disposal (manufacturing)
– Two methods
• Liquidation specialists: find buyers for unusable items
• Liquidation brokers: firms that finds buyers for items
– Online auctions
• Logical extension of these inventory liquidation
activities to a new and more efficient channel (Internet)
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Business-to-business auctions (cont’d.)
– Emerging business-to-business Web auction models
• Large-company model: creates own auction site
• Small-company model: uses third-party Web auction
site instead of liquidation broker
• Both are direct descendants of traditional methods
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Business-to-business auctions (cont’d.)
– Third emerging business-to-business Web auction
• New business entity enters market lacking efficiency
and creates a site at which buyers and sellers who
have not historically done business with each other can
participate in auctions
• Resembles consumer online auctions
• Example: hospitals using online auctions to fill
temporary employment openings
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Business-to-business reverse auctions
– Example: Owens Corning purchases
– Examples: Agilent, Bechtel, Boeing, Raytheon, Sony
– Potential disadvantage
• Suppliers compete on price alone
• Cut corners on quality or miss scheduled delivery dates
– Potential advantage
• Useful for nonstrategic commodity items with
established quality standards
Electronic Commerce, Tenth Edition
Online Auctions and
Related Businesses (cont’d.)
• Business-to-business reverse auctions (cont’d.)
– Companies opting out
• Cisco, Cubic, IBM, Solar Turbines
– If suppliers do not participate:
• Impossible to conduct reverse auctions
– If competition high among suppliers:
• Reverse auctions provide efficient way to conduct,
manage price bidding
Electronic Commerce, Tenth Edition
FIGURE 6-7 Supply chain characteristics and reverse auctions
Electronic Commerce, Tenth Edition
Auction-Related Services
• Entrepreneurs encouraged by eBay and other
auction site growth
• Provide various kinds of auction-related services
Escrow services
Auction directory and information services
Auction software (for sellers and buyers)
Auction consignment services
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction escrow services
– Buyers’ common concern: seller reliability
• Buyers protect interests in high-value items
– Independent party holds payment until:
• Buyer receives item
• Buyer satisfied item is as expected
– May take delivery of item from seller
• Perform buyer inspection (qualified to do so)
– Charge fees
• Percent of item’s cost, subject to minimum fee
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction escrow services (cont’d.)
– Examples: Escrow.com, eDeposit
– May sell auction buyer’s insurance
• Protect buyers from nondelivery and quality risks
– Avoid escrow fraud
• Determine if licensed, bonded (licensing agency)
• Avoid offshore escrow companies entirely
– Other buyer protections
• Check seller’s rating
• Use Web site listings of unreliable sellers
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction directory and information services
– Example: AuctionBytes
• Publishes e-mail newsletter
• Online auction industry articles
– Example: Price Watch
• Advertiser-supported site
• Advertisers post current selling prices
• Computer hardware, software, electronics
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction software
– Target: sellers
• Helps manage online auctions
– Example: AuctionHawk and Vendio
Seller management software and services
Automate tasks
Create attractive page layouts
Manage hundreds of auctions
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction software (cont’d.)
– Target: buyers
• Helps manage online auctions
– Sniping software
• Observes auction progress until last second
• As auction expires: places bid high enough to win
(unless bid exceeds sniping software owner’s limit)
• Snipe: act of placing winning bid at the last second
• Almost always wins out over human bidder
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction software (cont’d.)
– Example: Cricket Sniping Software site
• Created in 1997 by David Eccles
– Companies offer sniping service
Sniping software runs on company Web site
Customer enters instructions on site
Company may offer subscriptions
Company may offer mixed-revenue model
Electronic Commerce, Tenth Edition
Auction-Related Services (cont’d.)
• Auction consignment services
– Target: people and small businesses
• Want to use online auction
• Do not have skills, time to become a seller
– Auction consignment services
• Take item and create online auction for that item
• Handle transaction
• Remit proceeds balance (after deducting fee)
– Main auction consignment businesses
• ePowerSellers, iSold It
Electronic Commerce, Tenth Edition
• Companies using the Web for entirely new things
– Creating social networks
– Using mobile technologies to make sales and
increase operational efficiency
– Operating auction sites
– Conducting related businesses
• Businesses creating online communities to connect
with customers and suppliers
• Individuals using social networking sites
– Personal and business-related interactions
• Mobile commerce opportunities emerging
Electronic Commerce, Tenth Edition
Summary (cont’d.)
• Companies’ internal social networking sites
– Facilitate employee communication
• Online auctions used to sell goods to customers and
buy from suppliers
– Seven major auction types
– Consumer online auction business dominated by
eBay (United States)
– Ancillary service businesses support auctions
• B2B auctions and reverse auctions
– New methods of inventory disposal, procurement
Electronic Commerce, Tenth Edition

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