Chapter Six
Ecommerce and online auctions
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Learning objectives
What is online auction
Importance of online auction in the industry
Role of ecommerce in online auction
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Introduction
Marketing options for new age firms
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Online auctions,
buying and selling articles through social network sites,
business-to-business exchanges
penetration of internet
day-to-day customer interactions through online marketplaces
Balance of power from the seller to the buyer
Transparency in price
Transparency in volume
Reach more markets
Match the way customers want to buy
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Introduction..contd..
creates knowledge repository
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Volume
Price
Knowledge about new and value added services
Why online marketing
impact of online marketing
shift in consumer preferences
shopping and buying simpler
cost-effective
comparing different features of available products, pricing and
buyers and sellers into one place and help exchange information
technology supports more flexible and efficient pricing
Allows to set the limits for products and to define price for buy and sell
activities
translate into fairer prices,
reduced transaction costs,
shortened cycle times, and
improved information flow
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Types of online marketing and ecommerce
A strategic management tool
commodities secondary markets
functional specialties
five different types of services
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Buying Services: support during the awareness and demand
generation phases of the selling process
Auctions: aggregating demand and matching buyers and sellers
B2B Exchanges: commerce with vertical market and productspecific expertise
Industry-sponsored Exchanges: approved vendors can work
with the purchase department of the buyer
Private Exchanges: "private" or "captive" online marketplaces
Ecommerce Services
1. The service consists of
 prospective buyer
 contacting a seller
 demand generation
 sales and fulfillment
 service and support
2. For ecommerce service to be successful
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Price and features of products should be transparent
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suppliers who can supply
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Provide a wide range of value-added services
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Ecommerce services..contd..
To create USP in ecommerce services
 Provide comparative online information for ecommerce
transactions
 Provide Internet auctions facilities
 Give Business to Business (B2B) services
 Industry specific ecommerce sites (in some cases)
 Secured transactions
 Private exchanges
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Ecommerce and customer satisfaction
Customer satisfaction comes because of:
 shifts information power from seller to buyer
 transparency provided in sharing information
 encourage repeat purchase from returning customers
 increase the number of competitors,
 expose price differences,
 allow buyers to pool their buying power against sellers
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Risk associated with ecommerce
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Security issues with portal
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Private portal
Buy services from existing portals
exclusion from existing markets
loss of margins due to product and price transparency
channel conflicts as online marketplaces overlap with and
edge out traditional channels and distributors
ecommerce readiness for target customers
ecommerce readiness of potential market
Margins versus Volume
Market share versus market control
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Risk associated with ecommerce..contd..
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Risk of arbitrage
Liquidity
Redefine Value Boundaries
Speed of delivery
Induce purchase
Positioning
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Summary
E-commerce and online auctions can be successful if
following points are considered while designing business
model:
 Pricing
 Channel management
 Readiness of the product and market
 Risk management
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