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CHP11 Is194
CHP11 Is194
Describe the major types of auctions, their benefits and costs, and how they
operate
Understand when to use auctions in a business
Recognize the potential for auction abuse and fraud
Describe the major types of Internet portals and their business models
Describe the different types of social networks and online communities and
their business models
ONLINE AUCTIONS
The most widely known auctions are C2C auctions in which the auction house
is simply an intermediary connecting buyers and sellers
The market leader in C2C auctions is eBay, which has around 157 million active
users in the US and over 550 million items listed on any given day within
thousands of different categories
In the US alone, there are several hundred auction sites, some specializing in
unique collectible products, and others adopting a more generalist approach
Less well know n are B2C auctions where a business owns or controls assets
and uses dynamic pricing to establish the price
Auctions also constitute a significant part of B2B e-commerce and more than a
third of procurement officers use auctions to procure goods
AUCTIONS
Auctions are markets in which prices are variable and based on the competition
among participants who are buying and selling products (dynamic pricing)
Auctions are useful in situations where the price of an item is not known
because it is rare, unique, or subject to wide fluctuations in demand or supply
The purpose of an auction is to identify reservation prices:
the lowest price a seller is willing to accept, or
the highest price a buying is willing to pay
There are several auction types that each attempt to efficiently identify the
participant’s reservation prices
AUCTION TYPES
Double auction
NEWER FORMS OF DYNAMIC PRICING
Trigger pricing
Used in m-commerce, adjusts prices based on the location of the consumer
Utilization pricing
Adjusts prices based on utilization of the product
What is an example where trigger or utilization pricing could be used to identify
an appropriate price for a product or service?
BENEFITS OF AUCTIONS
Liquidity
Convert unique items to cash
Price discovery and market efficiency
Efficiently match supply and demand to find a market value for an item
Price transparency
Participants can monitor auctions as they occur
Lower transaction costs
Consumer aggregation and network effects
Large auction markets are more valuable to participants
RISKS AND COSTS OF AUCTIONS
Portals are the most frequently visited sites on the Web if only because they
typically are the first page to which many users point their browser on startup
The top portals such as Yahoo, MSN, and AOL have hundreds of millions of
unique visitors worldwide each month
Web portals are gateways to the billions of Web pages available on the Internet
Millions of users have set Facebook a their home page, choosing to start their
sessions with news from friends
Perhaps the most important service provided by portals is that of helping people
find the information they are looking for on the Web
E-COMMERCE PORTALS (CONT.)
Early portals were primarily search engines, but portals have evolved into much
more complex websites that provide news, entertainment, maps, images, social
networks, in-depth information, and education
Portals today seek to be a sticky destination site, not merely a gateway through
which visitors pass
Portals also serve important functions for businesses and other organizations
Enterprise portals help employees or members navigate to important content,
such as HR information, corporate news, or organizational announcements
Drake’s blueView is an enterprise portal
THE TOP 5 PORTAL/SEARCH ENGINE SITES IN
THE UNITED STATES (FIGURE 11.3)
PORTAL TYPES (FIGURE 11.4)
PORTAL VALUE
While the early social networks had a difficult time raising capital and revenues,
today’s social networks are now monetizing their audiences
Early social networks relied on subscriptions
Today, most social networks rely on advertising or venture capital investment
Facebook has the largest US advertising revenue
Its annual advertising revenue is now well over $7 billion
TURNING SOCIAL NETWORKS INTO BUSINESSES
(CONT.)
Some social networks have become very successful, but social networks do not
always succeed as businesses
For example, Twitter’s growth has slowed in recent years and it has never shown a
profit
Social networks have had an important impact on how businesses operate,
communicate and serve their customers
A survey of Fortune 500 firms found that 93% used LinkedIn, 78% used Twitter, and
74% used Facebook
These sites can also be a powerful listening tool that has strengthened the role of
customers and customer feedback systems
Social networks are where corporate brands and reputations are formed, and firms
today take very seriously the topic of “online reputation”
THE FUTURE OF SOCIAL NETWORKS