This research is carried out in conjunction with the recommendations of the UOL-ISORG study guide. This is a group research to investigate into the nature and operations of one e-commerce TRANSACTION BROKER website. A transaction broker is an intermediary who acts as a middleman, merely providing the business link between a buyer and a host of sellers, and earning a commission for each successful transaction. Transaction broker do NOT own the end products or services transacted. They are NOT wholesaler or retailers (e.g. NTUC, Amazon.com, Vehicle Resellers).
Our research looks into a website thats deal in TRANSACTION HANDLING (earning a commission for each successful auction transaction) called Ebay.com. Many people often confused it as a transaction broker site but NO, it is NOT. We are studying EBAY site just to show the differences of Online auction sites (which merely provides a business platform for end consumers to deal directly) versus Transaction broker sites (which provides intermediary coordinations and follow up in many stages of the transaction, e.g. search, contract, regulation stages, so as to earn their commissions for the successful transactions )
The following research was conducted on http://www.ebay.com/
eBay Inc. is an American Internet company that manages eBay.com, an online auction shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide. A majority of the sales take place through a set-time auction format, but subsequent methods include a substantial segment of listings in the "Buy It Now" category. In addition to its original U.S. website, eBay has established localized websites in thirty other countries. eBay Inc. also owns Paypal, Skype (to be sold soon), StarbHub, Kijiji, and other businesses.
Acting as an agent to online consumers
eBay, "The World’s Online Marketplace,” and Kaboodle, a start-up e-commerce oriented Web 2.0 bookmarking service, are partnering to launch “MyCollectibles," available at both eBay and Kaboodle, billed as a social sharing destination for collectable enthusiasts, but presently a new marketing platform for eBay sellers in a variety of categories. The “MyCollectibles” destination is described as a free way for individuals to:
- Organize and keep track of your entire collection
- Share your collection with friends, family, and other collectors
- Explore collections from around the world
- Rate other collections and collectors
- Find collectors that share your passion
Purpose/ Business Activity
Millions of collectibles, decor, appliances, computers, furnishings, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily.
In 2005, eBay launched its Business & Industrial category, breaking into the industrial surplus business. Some items are rare and valuable, while many others are dusty gizmos that would have been discarded if not for the thousands of eager bidders worldwide. Anything may be offered for sale as long as it is not illegal and does not violate the eBay Prohibited and Restricted Items policy. Services and intangibles can be sold, too. Large international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts.
Separate eBay sites such as eBay US and eBay UK allow the users to trade using the local currency. Software developers can create applications that integrate with eBay through the eBay API by joining the eBay Developers Program. In June 2005, there were more than 15,000 members in the eBay Developers Program, comprising a broad range of companies creating software applications to support eBay buyers and sellers as well as eBay Affiliates.
Design
- Easy to search for items that consumer is looking for
- Products are categorised according to their groups
Strengths
The strategic advantages of this business model include:
- No time constraints.
Bids can be placed at any time (24/7). Items are listed for a number of days (usually between 1 and 10, at the discretion of the seller), giving purchasers time to search, decide, and bid. This convenience increases the number of bidders. - No geographical constraints.
Sellers and bidders can participate from anywhere that has internet access. This makes them more accessible and reduces the cost of "attending" an auction. This increases the number of listed items (ie.: number of sellers) and the number of bids for each item (e.g.: number of bidders). The items do not need to be shipped to a central location, reducing costs, and reducing the seller's minimum acceptable price. - Intensity of social interactions.
The social interactions involved in the bidding process are very similar to gambling. The bidders wait in anticipation hoping they will "win." Much like gambling addiction, some bidders may bid primarily to "play the game" rather than to obtain products or services. This creates a highly loyal customer segment. This can also skew the prices of items/services/goods in the auction. - Large number of bidders.
Because of the potential for a relatively low price, the broad scope of products and services available, the ease of access, and the social benefits of the auction process, there are a large numbers of bidders. - Large number of sellers.
Because of the large number of bidders, the potential for a relatively high price, reduced selling costs, and ease of access, there are a large number of sellers. - Network economies.
The large number of bidders will encourage more sellers, which, in turn, will encourage more bidders, which will encourage more sellers, etc., in a virtuous circle. The more the circle operates, the larger the system becomes, and the more valuable the business model becomes for all participants. - Captures consumers' surplus.
Auctions are a form of first degree price discrimination. As such, they attempt to convert part of the consumers' surplus (defined as the area above the market price line but below the firm's demand curve) into producers' surplus.
Weakness
Auction sites, like garage sales, flea markets, classified advertisements and other independent sales venues, sometimes draw criminals wishing to sell stolen products, but for law enforcement organizations, finding stolen goods offered online is sometimes easier than more traditional detection methods.
Some criticism is leveled at online auction websites for uneven representation of items offered for sale. Descriptions may omit important information, and photos may not be adequate. Potential bidders can typically protect themselves by reading the text, studying photographs and asking questions of the seller before bidding. Studies show that a large proportion of unsatisfactory online purchase experiences are the result of careless consumerism.
In the U.S., large retailers have lobbied Congress to require online auction sites to share private sales information about sellers, citing potential illegalities. Within the online auction community this is commonly viewed as an attempt at unfair market protection and trade restraint. Reduced overhead sometimes enables independent online sellers to offer goods at lower prices than large retailers.
Online auction selling has attracted millions of laid-off workers, as well as the disabled, parents of young children, retirees, pensioners and others that are unable to find employment in the mainstream workforce. Online auction venue corporations are accused of engaging in discriminatory trade practices that unfairly impact such customers. Presently, the trading practices of online auction venue corporations is not regulated by state or federal agencies.
Case Study
Security
http://pages.ebay.com/securitycenter/
ebay offers tips to users on how to protect your account, computer, buy and sell safety.
Privacy
http://pages.ebay.com/help/policies/privacy-policy.html
Summary of ebay's Privacy Policy:
This policy tells you about how we use and protect your personal information. To see a summary of this policy, and for more information to answer your privacy concerns, please go to our Privacy Central page. We are a TRUSTe licensee. If we do not respond to your question, please contact TRUSTe. The TRUSTe program covers only information that is collected through the websites covered by this policy. It does not cover information that may be collected through software downloaded from these sites.
