Week 8

Online Auctions
Q1: eBay is one of the only major Internet "pure plays" to consistently make a profit from its inception. What is eBay's business model? Why has it been so successful?
eBay's primary business model is a brokerage model. It has been so succesful because:
eBay allows consumers to purchase things that aren't in normal stores
consumers can buy items without leaving their house
consumers can purchase goods that are almost new for a lower cost
Items can be purchased easily interstate
eBay is a very trusted site

Q2: Other major web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
eBay has kept its dominant position by continuing to provide an efficient service and a trusted service. eBay provides a way of coomunicating with potential buyers and sellers throughout the world and I think this makes people think that they can trust each other.

Q3: What method does eBay use to reduce the potential for fraud among traders on its site? What kinds of fraud, if any, are eBay users most susceptible?
eBay use a range of methods to stop potential fraud among the traders on their site. These include:
only using safe payment methods such as PayPal. With PayPal your account information is hidden from sellers.
Never trade outside the eBay site. Items purchased outside the site may not be eligible for PayPal Buyer Protection.
Never use Western Union, MoneyGram or other instant wire transfer services which are prohibited on eBay.
Remember: If an offer sounds too good to be true – it probably is. Don’t believe a seller who says that eBay is holding goods at its warehouse. eBay is a marketplace that brings together sellers and buyers. They never take possession of items from sellers or hold money from buyers.

Q4: eBay makes every effort to conceptualize its users as a community (as opposed to, say "customers" or "clients"). What is the purpose of this conceptual twist and does eBay gain something by doing it?
The purpose of this twist is so that everyone feels equal and doesn't feel they have more pressure on themselves because they're either buying or selling. By doing this eBay gains respect and trust from the people in its "community" and they will continue to utilise the services that eBay has to offer.

Q5: eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?
They would set up shop on eBay because so many people use and browise eBay that they would get sales from this. Where as, consumers are less likely to go to a certain companies website and specifically look for a product but if it shows up on eBay then a consumer might buy it because they can. Also it gives brand names good exposure without having to fork out a lot of money.