Chapter 1. Characteristics and traits of internet auctions
1.1. History of Internet auctions
1.2. Auctions as pricing mechanisms
1.3. Internet auctions
1.4. Auction types
1.5. Traits of online auction
Conclusions according to the chapter 1
Chapter 2. The development of eBay auction
Conclusions according to the chapter 2
In this instance, not everyone pay the same amount for the same product. 4. The Vickery auction. In this kind of auction, the products are won by the bidder who raised the highest bid. However, the real price the bidder has to pay is the second highest price.Generally, in online auctions the English auction is the most frequently used. In addition to the above description, rules that online auctions often include are: 1. Current Bid. While there are no bids on an item, sellers can set their own current bid price for the product they wish to sell. If the sellers set a higher price and successfully sells the product he may be more profitable. However, if the buyer bargains or if nobody bids because of the high price, the sellers can choose to lower the price afterward. On the other hand,
Показать всеsellers who set a lower price in the beginning may attract more people’s attention to browse the product. But he has to be aware that the product may be sold for a lower price. 2. Reserve Price. This is a mechanism that if the maximum bid does not achieve a set reserve amount, then the seller has the right not to sell the product to the high bidder. In online auctions, the buyers do not know the seller’s reserve amount. Many experts point out that the combination of low current bid and high reserve price will provide more bidding opportunities for the auctioneers, while reducing the risk of a low-priced sale. 3. Buy-it-now price. There are more and more people using a fixed price on online auction sites nowadays. This kind of pricing allows buyers to quickly get what they want instead of waiting for the bidding to end.In addition to the above mentioned auction characteristics, auction sites are characterized by the type of business they engage in. These include: Consumer to Consumer, Business to Business, Business to Consumer and Consumer to Business. 1. Consumer to Consumer (C2C). In this mode, two individuals make a transaction on the website. The website serves as an intermediary environment or platform. The income of the website mainly comes from the listing fee, transaction fee and advertisement. Yahoo! Auction and eBay originate from this mode. 2. Business to Consumer (B2C). On this type of site, a company or distributor provides products and sells them auction-style. Compared with outdoor selling, using this business model can make the prices more flexible. Also, it can achieve multiple goals such as marketing pre-test, selling outlet products, increasing product exposition, gaining more available channels for product sales etc. 3. Business to Business (B2B). This mode is used less frequently. It mainly used by electronic companies such as General Electronic, Dell and Free Market. Companies use the internet to communicate with each other, including selling, purchasing, managing and marketing etc. 4. Consumer to Business (C2B). In this mode, the consumer is not an individual, but a group of people. Consumers who have the same need will unite together and form a purchasing group in order to increase their bargaining power. The most typical case is Cool Bid’s group bargaining. Online auctions generally follow a step-by-step procedure. First, the consumer will go through the “browsing stage” they search for the product they want through keyword searching or random browsing. Then, if the consumer is interested in a product, he or she can communicate with the seller through the “asking and answer” function on the auction page. Next, if the consumer bids successfully on the product, the seller will ship the product once he receives the buyer’s payment. The last step is selective - giving feedback. Both the buyers and the sellers can give feedback like “positive” “neutral” or “negative”. Every feedback rating is accumulated and counted into percentage. The feedback ratings are then displayed as open information for other users to reference before their own transactions.1.5. Traits of online auctionOnline shopping sends product information - at times electronic products - directly into the buyer’s computer. There are several advantages of online shopping compared to traditional face-to-face transactions. These advantages include: 1. Fewer entry obstacles for the seller, supplier and consumer. Through online auction websites, people can have a platform to easily sell and buy things. Sellers can avoid expenses like shop rental and thus increase the opportunities for more people to join online auction world. 2. More detailed product descriptions and price information. In online auction websites, the consumer can see detailed descriptions of the product and they can compare the prices of certain products. Thus the price information becomes more transparent. It provides buyers with the information and tools necessary to make educated choices and trades. With the World Wide Web, potential buyers are able to shop around for items, sellers, and auction sites that best suit their preferences. Even if an item is not purchased, online markets have increased the level of consumer awareness, providing them with valuable product and price information. The transparency of bid data on auction sites also enhances a buyer’s ability to bid wisely, in an informed manner. 3. Cheaper product price. Some of the virtual shops sell exactly the same product as the traditional shop, but due to lower costs for transportation, shop rent and manpower, the product price can be set lower. Costs like labor, fittings, rent and utilities are not relevant to the operation of an online store. As a result, products and services sold online may be priced lower. This factor may be the major factor which attracts many people to do online shopping. Therefore, many people go to auction sites in order to find lower priced products. 4. Longer business hours and limitless customers. The virtual online shop works 24 hours and without geographic limitations. The customer group is much broader than traditional shops because it will not be limited within a certain local area. Also, buyers can shop at home whenever they have free time. This expands the chances for sales. 5. Larger supply of merchandise. Through the presence of pictures, any product from tiny to huge can be sold on the internet and presented to the customer. By the mechanism of purchase in advance, the auctioneer can make more profit and sell more products. Many big sellers will accept the order first and only then begin to produce the merchandise. Therefore, the sellers can be free from the pressure of stocking up goods. 6. Online auctions can be faster and more convenient for consumers to search for what they want. There is a reduction of time spent shopping. Consumers can buy what they want by just clicking on the product instead of walking on the street for hours. Online auction sites bring buyers and sellers together in a virtual, asynchronous environment. Unlike face to face communication where it is difficult to match buyers to sellers, in the virtual environment the possibility of finding the most suitable or desirable items for the buyers becomes much higher. Online auctions offer buyers great opportunities to find the precise product they want due to the massive number of users who list their merchandise on the websites. 7. Psychological effect. For many people, bidding is considered an exciting and interesting activity. Trying hard to get what you really want can help achieve the sense of satisfaction. Just like many people consider shopping their favorite leisure activity, online shopping also gives people the feeling of real shopping thus people can enjoy it without getting exhausted legs. For sellers, the profits of auctions consist of access to an international customer base to sell commodities quickly, easily, at low cost and at sometimes bonus prices. Even ramshackle, damaged, returned, and refurbished goods can be unloaded. Moreover, new sales are established and a company’s client base can be enlarged. The prevalent presence of outsourcing various internet auction services has certainly contributed to this increase. The whole from software applications to implementation services to establishing fore- and backward-end activities can be bought from corporations like AuctionWatch.com, Bidland.com and SellXS.com for a small fee or percentage of sales. Another association, Andale, will found a seller’s auction listing, progress credit card payments, and further users with listing and accounting as well. Even dealers such as Microsoft and IBM are appending to auction modules to subsisting electronic commerce software programs. Neither Amazon.com nor Yahoo! charges sellers for auction listings in attempts to retire business away from eBay.Internet sellers who do work in online auctions, either straightly or via third party public sale houses, are very divergent, and big variations in company kind, product range, aspirations, and strategies seem to subsist in. from time to time a singular personal functioning out of a home - with no registering, high-level, or business perspicacity - can originate online selling occasions simply by using third party auctions or setting up their own auctions using available services. Even small businesses with online sales capabilities could be threatened by the low cost and rapid response of microbusinesses if they do not adequately differentiate themselves. The corporate sellers have been drawn to eBay because of the explosive growth in the online marketplace. Although eBay charges its corporate the same listing fees as other sellers, some promotional perks are provided to them. For example, Sun, Xerox, and IBM are all given top billing in eBay’s computer area, and Disney has a special area on the eBay site to merchandise Disney products. The reasons that both microbusinesses and corporate sellers have cited for using online auctions are listed below. Some of these reasons seem to indicate objectives related to cost/price issues, whilst others appear to be more differentiation-oriented, some could be related to either strategy:1. to unload discontinued, returned, damaged, or overstocked goods; 2. to test prices in order to see what the market will bear; 3. to keep customer acquisition costs low;4. to sell quality, designer goods at a discount, appealing to the ‘price-only’ shoppers;5. to generate excitement about an online site and to involve customers in an interactive sense; 6. to connect with buyers in real time; 7. to acquire new customers; 8. to enhance the value of a store – to use auctions as a complement to traditional brick and mortar business; 9. to give seasonal products a broader year-round appeal.On the contrary, there are also some disadvantages of online auctions, such as: 1. The barriers to access. Internet auctions require that buyers and sellers have access to the internet, know how to use it, and be sufficiently comfortable with buying and selling online. People who don’t have a computer or do not have internet cannot access auction websites. Therefore, it will be impossible for them to shop online. Also, people who are not familiar with auction operations may feel uncomfortable learning new things. 2. Higher risky shopping environment. Risks can include bad quality of the product or online fraud. Many people are hesitant to join the world of online auctions because they fear getting abysmal products or being cheated. Fraud is considered a great barrier for people engaging in auction online use. Many people worry that transactions using asynchronous transfer mode or credit cards may be considered unsafe. Also, some people may be afraid of not receiving the goods after they have paid for them. 3. Personal data security. Beyond the risk of losing money, during the transaction, personal data may also be exposed online. Therefore, privacy may be invaded and data may be misused by others. 4. Delays in receiving the product. When buying things on the internet, the buyers have to wait for the bid to end and for the auctioneers to send the product. Therefore, the time spend waiting the product is usually longer than buying it directly from an actual shop. 5. Hidden costs of mailing and packaging. Many people may consider online shopping a lower cost alternative. However, the cost of sending the products, packaging, and data arranging may exceed the cost of selling things directly from an actual shop. Internet auctions have opened opportunities for increasing consumer democracy. It has become much easier than before for someone to buy and sell things through auction online. However, beside the above mentioned problems, issues like international differences in the level of internet use and cross-cultural differences in the willingness to engage in computer-mediated versus face-to-face interactions also should be taken into consideration.Conclusions according to the chapter 1Theoretical analysis of the main features of internet auctions allows to make a number of conclusions related to the objectives of the chapter:In the modern world, with the development of technology, auction mechanisms have become more and more complex and efficient. With the invention of the internet, auctions have become virtualized. Online auction haves gradually replaced off-line auctions as more and more people become able to visit their websites.In an auction a seller offers an item for sale, but does not establish a price. The bidders are potential buyers, and bids - prices are willing to pay for an item. Online auctions provide a business opportunity that is perfect for the Web.There are four basic auction types: the English auction, the Dutch auction, the First-price auction, the Vickery auction. In English auctions bidders publicly announce their successive higher bids until no higher bid is forthcoming. Dutch auctions are also called descending-price auctions. In the First-price auctions bidders submit their bids independently. Скрыть
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