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Online Shopping Techniques

E-Commerce Case Study
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Online Shopping Techniques

A Case Study By :
Manish (2707)
Anoop (2708)

Submitted to:
Er. Akshay (lecturer)

Case Study Prepared During – Oct 2010

B.Tech (IT)
University Institute Of Information Technology
Himachal Pradesh University
Shimla
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Table Of Contents:

1. Case Study Context ……………………………………………………4

2. User Requirements……………………………………………………..5

3. Introduction to eBay……………………………………………………7

What is eBay………………………………………………..7

eBay Objectives and Strategy………………………...….....8

4. Shopping techniques on eBay………………………………………....10

Searching/buying process……………………….……..…..11

Payment techniques………………………………………...12

Selling items………………………………………………...13

Security techniques……………………………………..…..14

5. Partnerships & Investment……………………………………………...14

6. Strategic Analysis (SWOT)……………………………………………..17

Strengths……………………………………………………..18

Weaknesses………………………………………………......19

Opportunities………………………………………………...20

Threats………………………………………………………..21

7. Competition (eBay vs. Amazon)………………………………………...23

8. Conclusion………………………………………………………………..26

9. Work Cited…………………………………………………………….....27
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Case Study Context

In this case, we have studied different techniques for selling or buying over

internet provided by online stores from companies to directly buy goods or services in

real-time and online shopping mall like eBay and amazon which provide intermediary

service.

Online Shopping malls had great success over the years; they still face many

challenges- especially the occurrence of fraudulent transactions, control over items,

delivery issues, gaining visibility and popularity, worms and viruses and competitor

analysis. These issues cause much concern for the company and it can harm its image and

future business.

In our case study, we have emphasized on the popular online shopping site – eBay

where one in three shoppers trade and compared it with the Amazon.com.
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User Requirements for Shopping Portal-

Two types of user are there for online shopping, Buyer and Seller.

End user features that facilitate the enjoyment of Internet shopping might include the

following:

 Users should be able to use the e-commerce application from any Web browser

supporting HTML 3.2 (or later) and cookies.

 Visitors new to the site should be able to register by themselves. Users will be

differentiated by unique user identifiers.

 Transactions should be secure. That is, a basic authentication mechanism must be

built into the application to prevent unauthorized persons from making

transactions on a user's behalf. Secure socket layers (SSL) or other encryption

mechanisms are typically used to thwart the access of sensitive information (such

as credit card numbers) sent to the server by Web browsers.

 Site visitors should be able to purchase goods or services via the electronic store.

 Users should be able to view a complete list of specified items available through

the site.

 Large numbers of users should be able to use the application simultaneously.

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 The performance of the application should not degrade with an increase in the

number of goods or services offered.

Buyer Specific Requirements-

 Users should be able to search for items by related attributes. For example, visitors

might search for CDs by artist, album title and/or genre or search for books by

author, title and/or ISBN number.

 Site visitors should be able to search the database using relevant keywords to

identify items of interest.

 Users should be able to select items of interest and add them to their shopping

carts for future purchase.

 Visitors should be able to modify the quantities of items in and/or delete items

from their shopping carts before checkout.

 All selected items should be shipped to the user following purchase.

 Users should be able to view the status of items they have ordered.
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Introduction To eBay

According to eBay's mission statement, “eBay is the world's online marketplace; a

place for buyers and sellers to come together and trade almost anything.”

eBay Inc. is an American Internet company that manages eBay.com, an online auction

and shopping website in which people and businesses buy and sell a broad variety of

goods and services worldwide

Simply put, eBay is:

 A place to buy. Get nearly anything you need or want at prices better than you can

find in traditional or even online stores.

 A place to sell. Nearly anything you list on eBay will sell if you're flexible enough

about the price..

 A place to shop. Because of the immense variety of things that can be found for

sale on eBay, it is one of the best places in the world to window or comparison

shop. Item listings often include photos, detailed descriptions, and owner

experiences.

 A place to collect. eBay is the world's largest marketplace for rare, discontinued,

collectible, or hard-to-find items, no matter what the type or price.

 A website. There is no physical eBay store. Founded in San Jose but now operated

from several cities, eBay's service exists entirely online, and all aspects of
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business other than the delivery of bought and sold items themselves are typically

handled through the eBay website.

 Free for buyers and inexpensive for sellers. It costs nothing to become an eBay

member, to shop for goods, or to purchase goods from eBay sellers. Sellers pay a

minimal amount to list items for sale, and another small percentage of the value

when an item is sold. There are no monthly fees or other hidden costs.

 Green. eBay is has proven to be a boon to the environment. Millions of tons of

goods that would otherwise go into landfills or more resource-intensive recycling

programs instead find new homes every year thanks to eBay.

 Socially responsible. eBay eliminates middlemen and lowers barriers to buying

and selling.

 Like the real world in many ways. eBay's site includes a selection of tools like

the feedback system that are designed to help you to remain safe as an eBay

member.

eBay Objectives and strategy

The overall eBay aims are to increase the gross merchandise volume and net revenues

from the eBay Marketplace. More detailed objectives are defined to achieve these aims,

with strategies focusing on:

1. Acquisition increasing the number of newly registered users on the eBay

Marketplace.
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2. Activation increasing the number of registered users that become active bidders,

buyers or sellers on the eBay Marketplace.

3. Activity increasing the volume and value of transactions that are conducted by

each active user on our eBay Marketplace.

eBay has more than 90 million active users at this time in 2010. An active

user is defined as any user who bid on, bought, or listed an item during the most

recent 12-month period.

The focus on each of these 3 areas will vary according to strategic priorities in

particular local markets. eBay marketplace growth is also driven by defining approaches

to improve performance in these areas.

First, category growth is achieved by increasing the number and size of categories

within the marketplace, for example: Antiques, Art, Books and Business & Industrial.

Second, Formats for interaction- The traditional format is auction listings, but it has

been refined now to include the Buy-It-Now_fixed price format. Another format is the

3Dutch Auction' format, where a seller can sell multiple identical items to the highest

bidders. eBay Stores was developed to enable sellers with a wider range of products to

showcase their products in a more traditional retail format.

Finally marketplace growth is achieved through delivering specific sites localized for

different geographies as follows: You can see there is still potential for greater

localization, for example in parts of Scandinavia, Eastern Europe and Asia.

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Shopping Techniques on eBay:

 Selling - A seller lists an item on eBay, most anything from antiques to cars,

books to sporting goods. The seller chooses to accept only bids for the item (an

auction-type listing) or to offer the Buy It Now option, which allows buyers to

purchase the item right away at a fixed price.

 Bidding -In an online auction, the bidding opens at a price the seller specifies and

remains on eBay for a certain number of days. Buyers then place bids on the item.

When the listing ends, the buyer with the highest bid wins.

 Buying - In a Buy It Now listing, the first buyer willing to pay the seller's price

gets the item.

EBay is, first and foremost, an online auction site. You can browse through categories
like Antiques, Boats, Clothing & Accessories, Computers & Networking, Jewelry &
Watches and Video Games. When you see something you like, you click on the auction
title and view the details, including pictures, descriptions, payment options and shipping
information. If you have a pretty good idea of what you're looking for, you can search for
it using simple keywords, such as "Apple iPod," or using more advanced search criteria
that helps narrow the results, such as keywords to exclude, item location, price range and
accepted payment methods.

Searching for items

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Search results for keyword "Apple iPod"

In this auction, the Starting Price is $8.99,

and the Buy it Now price is $9.99.
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Auction and Fixed Price Items –

If you place a bid on an item, you enter a contractual agreement to buy it if you
win the auction. All auctions have minimum starting bids, and some have a reserve price
-- a secret minimum amount the seller is willing to accept for the item. If the bidding
doesn't reach the reserve price, the seller doesn't have to part with the item. In addition to
auctions, you can find tons of fixed-price items on eBay that make shopping there just
like shopping at any other online marketplace. You see what you like, you buy it, you pay
for it and you wait for it to arrive at your door. There are also auction listings that give
you the option to "Buy it Now" for a price that's typically higher than the auction's start
price. If you choose to buy the item for the "Buy it Now" price instead of bidding on it,
the auction ends instantly and the item is yours.

Payments:

You can pay for an item on eBay using a variety of methods, including money
order, cashier's check, cash, personal check and electronic payment services like PayPal
and BidPay. It's up to each seller to decide which payment methods he'll accept. PayPal is
the easiest way to buy something on eBay, because eBay owns PayPal. The PayPal
payment process is already built into any auction listing on eBay.

PayPal –With more than 87 million active registered accounts worldwide, PayPal
has made it possible for people to pay and get paid online across different locations,
currencies, and languages. Responding to the eBay community, which had quickly
adopted PayPal as its preferred payment method, eBay Inc. acquired the company in
2002. Since then, PayPal's customer base has grown both on eBay and across e-
commerce.

BillMeLater – A leader in digital payments and flexible financing programs

Selling Items on eBay:

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Just as you can buy almost anything on eBay, you can sell almost anything, too. Using
a simple listing process, you can put all of the junk in your basement up for sale to the highest
bidder. Lots of people sell their old laptop once they've upgraded, the clothing their kids have
grown out of or the brand new couch they bought on final sale without realizing it wouldn't
fit in their den. Some people even make a business of eBay by opening their own "eBay
store." When you sell an item on eBay, you pay listing fees and turn over a percentage of the
final sale price to eBay.

Once you register (for free) with eBay, you can access all of your eBay buying and selling
activities in a single location called "My eBay."

You can view all of your eBay activities in My eBay.

EBay is a massive operation with something like 4.8 million new listings per day.

Using eBay: Security

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Money Back- In order to make buyers feel safer when making purchases on eBay, all

tangible items are automatically insured for $200. you can get your money back up to $200.

As an incentive to use eBay's PayPal payment system, most items purchased through PayPal

are covered up to $1,000.

Buyer fraud is typically less damaging than seller fraud. The most common type of

fraud a buyer can commit is simply not paying for an item. Sellers can deal with non-paying

bidders by filing an Unpaid Item dispute. eBay will then attempt to contact the buyer and get

her to pay. If she does not respond to eBay's attempts after eight days, the seller is reimbursed

for eBay's cut of the final sale price and can relist the item for free. If the buyer does respond,

the dispute can end in one of three ways:

* The buyer decides to pay, and everybody's happy.

* The buyer and the seller decide together to abandon the transaction, the seller gets

reimbursed for the final-value fee and relists the item for free, and everybody's happy.

* The seller decides not to deal with the buyer, the buyer gets an unpaid-item strike against

her, and the seller gets reimbursed for the final-value fee and relists the item for free.

In the end, the damage to the seller is relatively small. Another type of buyer fraud occurs

when a buyer sends false payment. In most cases, this is in the form of a bounced check, and

the seller finds out about it before shipping the item.

Seller fraud- is what most people think about when they worry about using eBay. There

are two main ways in which a buyer can be defrauded by a seller: The item the buyer

purchased is dramatically different from how it was described in the listing; or the item

simply never arrives.

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One thing to keep in mind when you think you've been defrauded is that

miscommunication is common on eBay.

Tips to avoid buyer fraud:

 Always check the feedback of your bidders. If a user has excessive negative

feedback, you may be able to cancel the bid.

 If you accept a personal check as payment, never ship the merchandise until the

check clears.

 If your buyer doesn't pay, always leave negative feedback so the non-paying

bidder has a harder time striking again.

Tips to avoid seller fraud:

* Always check seller feedback before placing a bid.

* Ask all relevant questions before bidding on an auction. Some sellers think that if

they don't say what condition the item is in, it's the buyer's fault if he bids on the item

assuming it's in good condition and it turns out to be a piece of junk.

* Always leave negative feedback for unscrupulous sellers -- this makes it harder for

them to continue committing fraud.

Partnerships & Investments:

Since its founding in 1995, eBay Inc. has consistently expanded its ability to

connect people through e-commerce partnerships and investments around the world.

These include Skype, a leading online communications service that enables people
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everywhere to communicate through voice or video online for free. eBay Inc. acquired

Skype in 2005 and significantly expanded its customer base to more than 480 million

registered users in nearly every country on earth. To focus on its core e-commerce and

payments businesses, eBay Inc. sold a majority stake in Skype in November 2009,

retaining a minority investment in the company.

Others are :

MercadoLibre China (EachNet)

Taiwan (Ruten) Turkey (Gittigidiyor)

Craigslist ChannelAdvisor

mFoundry Union Mobile Pay

Localized eBay marketplaces:

eBay’s marketplace growth is achieved through delivering specific sites localized for
different geographies, currently 30 sites. You can see there is still potential for greater
localization, for example in parts of Scandinavia, Eastern Europe and Asia

Strategic Analysis:

Success factors eBay believes are important to enable it to compete in its market
include:

ability to attract buyers and sellers;

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volume of transactions and price and selection of goods;

customer service; and

brand recognition.

It also notes that for its competitors, other factors it believes are important are:

community cohesion, interaction and size;

system reliability;

reliability of delivery and payment;

website convenience and accessibility;

SWOT Analysis

In order to better asses eBay , a SWOT analysis was conducted to identify the variables

that can affect them and their positioning within the online market.
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1. Strengths

Trusted- bBrand recognition with eBay is significant as it has a strong trusted

brand image as the largest online auction. Their product line is expansive as it offers

products such as toys, stamps, memorabilia, collectibles, antiques, and coins. This appeals

to multiple demographic groups and can allow for multiple revenue streams. The

company established a clear vision; "to be the world's largest online person-to-person

trading community." This vision is well known throughout the company and accepted by

the employees.

Community- eBay has a strong sense of a community between its online users as

well as between its own employees. The three most important keys to eBay's success is"

community, community, community". A strong sense of culture exists as eBay hires

employees that share the same culture of the company. They encourage teamwork and

expect its employees to be open, honest, and respectful among each other. The employees

welcome feedback and comments from others and are always open to modify their

opinion. Their management team described the culture at eBay as being "open" and "low

risk," where employees were encouraged to voice opposing opinions. eBay is

characterized as "nonhierarchical" and "democratic" organization where even the CEO

works in a cubicle.

EBay is 2009 Mobile Retailer of the Year

Feedback - eBay is not just limited to selling and buying goods, it is also a place

where people can interact with similar interests, engage in discussion, exchange

information through chat rooms, bulletin boards, and e-mail services put into place by the

company. The "Feedback Forum" created a self-regulating mechanism that encouraged

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honest behavior and developed a strong sense of community for eBay. Their business

model requires very little overhead and this is a service based medium with the onslaught

of internet growth as a substantial strength.

2. Weaknesses

Counterfeit issues- One of eBay's weaknesses, as previously mentioned in the

problem statement, is the limited control on fraud and other issues that could arise from

the daily transactions performed on eBay. It is extremely difficult to monitor every single

item that is sold through eBay and one could imagine it is not easy to determine if certain

products are counterfeit. Counterfeit issues, fake sales, and stolen products through the

eBay website can severely weaken the company's reputation, trust, and sincerity towards

their users.

Technological Difficulties- Another weakness of eBay is their technological

difficulties and service interruptions. Two weeks after Meg Whitman joined eBay, the

system went down for eight hours, which created frustration and anger with eBay users.

Even with increased spending on technology, eBay continues to experience periodic

system outages and technical challenges. According to the case, as of April 1999, there

were 50 million page views per day, as well as over 7 million searches, more than 1

million bids, and $6 million in merchandise sales. With this Internet volume, interruptions

can damage eBay's reputation, brand, productivity, and reliability. Also their business

model is easily replicable and that can lead to fierce competition.

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3. Opportunities

The growth of the internet and international market access is a huge opportunity

for eBay. They can try to expand their international demographic, expanding its market to

countries overseas, especially those whose economies are rapidly growing.

Another area of opportunity for eBay is in their member sales department. eBay's

profits are generated by receiving a percentage of the sale price of products, which gives

an opportunity to produce more revenue through the sale of higher priced products. To

accomplish this, the company could provide an incentive that will attract eBay users to

list expensive goods. Currently, eBay charges a $0.25 fee for listing products. Free

product listing incentive may help attract users to list more and possibly expensive goods.

eBay should take advantage of the increase of internet usage by expanding its

marketplace around the world. There are still opportunities in current markets potential

consumers that have not discovered the benefits of online auctions.

4. Threats

Competition - eBay must continually monitor its external environment to protect

themselves from competition such as Amazon.com and Yahoo.com. The success of eBay

over the years could attract others to enter the online trading market. Amazon offers many

of the same services that eBay offers that allow people to purchase an array of goods from
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one site. Amazon is able to offer similar products to eBay, also at low prices. Although

Amazon.com isn't comprised entirely of third-party sellers, this segment has grown in

2009. "Sales of products by third party sellers on our websites represented 30% of unit

sales in 2009. Active seller accounts increased 24% to 1.9 million for the

year"(Amazon.com). Amazon has been doing extremely well, despite that the economy

hasn't. In 2009, they reported that "net sales increased 28% year-over-year to $24.51

billion in 2009. This is 15 times higher than net sales 10 years ago when they were $1.64

billion in 1999" (Amazon.com). Compared to eBay, who reported $8.7 billion in revenue

(eBay.com), you see that there is quite a difference. Part of the reason for this success has

been because of the 21 new product categories that Amazon introduced last year. These

new product categories include "Automotive in Japan, Baby in France, and Shoes and

Apparel in China" (Amazon.com). Because Amazon doesn't solely bring third-party

sellers together, it has been able to bring in more revenue from its. Because of this threat,

eBay has to differentiate itself from the competition.

Laws - A second threat is the new laws and regulations that may affect eBay's

operations. For example, the government can ban the sale of certain items on eBay, which

can result in upset and dissatisfied eBay users. In addition, the government may decide to

begin taxing certain items on eBay. If something like this was to take place, it could

decrease eBay's profitability.

Fraud - Lastly, counterfeit items, fraud, identity theft, and hackers can all be

serious threats to eBay. Because of the confidential information handled on eBay, it

attracts hackers and identity thieves, who see the opportunity to steal credit cards and

other personal information from eBay buyers. If an eBay user experiences this, he/she
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will stop buying and selling products on eBay site. eBay runs the risk of losing loyal users

or potential new users by ignoring the growing threat of identity theft.

Sustainability of Differentiation

 Sustainable in short term

 Technological – can be easily replicated

 Complacency due to its position

 Facing increased competition from Goggle and Microsoft

 Competitors can provide free services to capture market share

 Need to continuously improve it services and technology to maintain

differentiation

Amazon vs. eBay:

Recent changes by eBay have caused many online sellers to re-examine their single-
platform sales models. One of the easiest ways a small e-tailer can minimize the impact of
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changes by a single e-commerce platform is by selling on multiple platforms. It's the old
cliché: Don't put all your eggs in one basket. Or in this case: Don't rely on a single
marketplace for your entire livelihood.

Neither eBay nor Amazon can claim to be the premiere online marketplace these days. But
they're certainly the largest, and both have pros and cons.

To help sellers understand the specific advantages each platform offers, we've chosen seven
areas of comparison to cover with e-commerce consultant Steve Lindhorst, former national
eBay University instructor and author of the bestselling e-book Selling on ‘The River' - The
eBay Seller's Guide to Amazon.com.

Fees
Unlike Amazon, eBay charges a listing fee whether or not an item sells, as well as any
applicable PayPal fees. But its commission is also much lower than Amazon's (8 percent on
items under $25, compared with 15 percent).

Explains Lindhorst: "While Amazon remains higher in hard fees, their listings last longer and
require substantially less interaction between sellers and buyers."
 
Format
eBay popularized the auction format listing. Amazon concentrates solely on fixed-price
listings. Which is best?For antiques and collectibles, auctions are easily the best way to get
top dollar. On the other hand, businesses dealing in practical, commodity items (the sort that
people use in daily life) tend to do better in fixed-price format.

Through Amazon is the fixed-price king, eBay is moving in that direction by downplaying
auctions and encouraging fixed-price listings. So who has the fixed-price advantage? In this
case, the advantage lies in the buyer: Amazon's buyers are typically more affluent than eBay's
and pay higher average prices for products.
 

Taxes
Marketplace sellers are responsible for the sales tax on any items sold on Amazon. They can
add this cost into their product prices, but doing so is a hassle.

In its Sell-Your-Item form, eBay provides a mechanism enabling sellers to collect applicable
taxes in addition to the sale price. This is a major advantage because it ensures that
miscalculated taxes don't eat into a seller's profits.
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Average_Sale_Price
eBay, by its nature, is competitive and draws buyers looking for the lowest possible prices.
Amazon buyers tend to focus more on product condition than price, which may explain why
Amazon sellers report higher average selling prices than eBay sellers for the same items.

For sellers, the clear advantage is with the buyers who are willing to spend more.
 
Payment_Methods
To accept payment, Amazon sellers must use Amazon Payments. Amazon collects the
payment and deposits it into the seller's bank account twice per month, with no fees added.

The benefit is that sellers don't have to send invoices or payment reminders, or track unpaid
items. If Amazon can't collect the payment, the seller doesn't have a sale, and the item
remains listed.

The downside is although Amazon buyers have multiple payment options, they're unable to
use PayPal, which many buyers prefer for security and convenience.

eBay sellers can accept PayPal, money orders, cashier's checks or cash (in person). However,
they're responsible for managing collections, which means investing more time and labor into
each transaction.
 
Return_Policy
eBay sellers are often leery of Amazon's obligatory return policy. Its A-to-Z Guarantee
allows buyers to receive a full refund if an item is “materially different” from that described,
for up to 90 days. In a dispute, Amazon typically sides with the buyer.

The eBay seller, on the other hand, is free to negotiate with buyers through eBay's dispute
resolution and is generally not required to offer a refund. While the dispute resolution process
can be effective, it can also become messy and time-consuming and can result in negative
feedback.
 
Shipping
Some eBay sellers began using inflated shipping charges to cover their eBay fees. To
counteract this buyer-unfriendly behavior, eBay now penalizes sellers charging above-
average shipping prices and provides breaks to sellers offering free shipping. The downside is
this hurts sellers who can't afford to eliminate shipping charges altogether.
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Amazon fixes the shipping credit (the amount that sellers can charge for shipping), based on
an item's category. The drawback is that this may not always cover the full shipping cost. A
seller can't charge more than the set amount and must ship the item even if the credit doesn't
cover the expense. However, because the shipping credit is fixed, sellers can factor it in when
setting a product's retail price.

Conclusion

The Seller's Perspective:-

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eBay is an auction website. Amazon is not. Amazon is a better place to sell stuff

like books, new items with fixed price but you may sell everything you want on

eBay. For selling electronics and some special stuff you should get a sort of

permission from Amazon to be able to sell your item.

The Buyer’s Perspective:-

Amazon sides with the buyer (A-to-Z Guarantee). So Amazon more concerned

with quality. eBay provides mechanism for communication between buyer and

seller but sometime it may be time consuming and irritating. Obsolescent and

Antique goods are easily available at eBay.

There are many other sites providing better service for some specific items and
providing better offers. A customer should take full advantage of e-commerce and should
not remain with only one site for everything.

Works Cited

 ebay.com – http://investor.ebayinc.com/

http://www.ebayinc.com/who
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http://www.ebayinc.com/history

http://pages.ebay.in/help/

 about.com - ebay.about.com/cs/a.htm

 http://computer.howstuffworks.com/ebay.htm

 http://www.ewebarchitecture.com/end_users.php

 Amazon.com. <http://phx.corporate-ir.net/External.File?

item=UGFyZW50SUQ9Mzc2NjQ0fENoaWxkSUQ9Mzc1Mjc5fFR5cGU9MQ==&t=1>

 http://smallbusiness.yahoo.com/r-article-a-113551-m-1-sc-12-

amazon_vs._ebay_a_7point_comparison-i