Page 71 - Introduction to Electronic Commerce and Social Commerce

2.5 Auctions, Bartering, and Negotiating Online 49

Table 2.1 Benefits of e-auctions
Benefits to sellers Benefits to buyers Benefits to E-auctioneers
• Increased revenues from broadening • Opportunities to find unique items and • Higher repeat purchases. marketresearch.com
bidder base and shortening cycle collectibles found that auction sites, such as eBay, tend to
time. Can sell anywhere globally garner higher repeat-purchase rates than the top
B2C sites, such as Amazon.com
• Opportunity to bargain instead of • Entertainment. Participation in • High “stickiness” to the website (the tendency of
selling at a fixed price. Can sell at e-auctions can be entertaining and customers to stay at sites longer and come back
any time and conduct frequent exciting (e.g., virtual live auction site more often). Auction sites are frequently
auctions tophatter.com) “stickier” than fixed-priced sites. Stickier sites
generate more ad revenue for the e-auctioneer
• Optimal price setting determined by • Convenience. Buyers can bid from • Easy expansion of the auction business
the market (more buyers, more anywhere, even using a mobile device;
information) they do not have to travel to a physical
auction place
• Sellers can gain more customer • Anonymity. With the help of a third
dollars by offering items directly party, buyers can remain anonymous
(saves on the commission to
intermediaries; also, physical
auctions are very expensive
compared to e-auctions)
• Can liquidate large quantities quickly • Possibility of finding bargains, for both
• Improved customer relationship and individuals and organizations
loyalty (in the case of specialized
B2B auction sites and electronic
exchanges)

Possibility of Fraud zations. The problem with bartering is that it is difficult to
match trading partners. Businesses and individuals may use
In many cases, auction items are unique, used, or antique. classified ads to advertise what they need and what they offer
Because the buyer cannot see and touch the items, the buyer in exchange, but they still may not be able to find what they
may receive something different than she (or he) had in mind. want. Intermediaries may be helpful, but they are expensive
In addition, products may be defective. Buyers may also (20–30% commissions) and very slow.
commit fraud (e.g., by receiving goods or services without E-bartering (electronic bartering)—bartering con-
paying for them). Thus, the fraud rate in e-auctions is rela- ducted online—can improve the matching process by attract-
tively high. For a discussion of e-auction fraud and fraud ing more partners to the barter. In addition, matching can be
prevention, see scambusters.org/onlineauctions.pdf. For done faster, and as a result, better matches can be found.
general information on Internet fraud in general, see fbi.gov/ Items that are frequently bartered online include office space,
scams-safety/fraud/internet_fraud. Lately, several people storage, and factory space; unused facilities; and labor, prod-
have warned about fraud on penny auctions sites. For examples ucts, and banner ads. (Note that e-bartering may have tax
of scams, see aarp.org/money/scams-fraud/info-10- 2011/ implications that need to be considered.)
online-penny-auctions-real-or-ripoffs.html. E-bartering is usually done in a bartering exchange, a mar-
ketplace where an intermediary arranges the transactions.
Limited Participation These exchanges can be very effective. Representative barter-
ing websites include u-exchange.com—“Trade anything, Pay
Some auctions are by invitation only; others are open only to nothing,” swapace.com—“Swap anything for anything,” and
dealers. Limited participation may be a disadvantage to sell- barterdepot.com. The typical bartering process works like
ers, who usually benefit from as large a pool of buyers as this: First, the company tells the bartering exchange what it
possible. Buyers also may be unhappy if they are excluded wants to offer. The exchange then assesses the value of the
from participation. company’s products or services and offers it certain “points” or
“bartering dollars.” The company can use the “points” to buy
the things it needs from a participating member in the exchange.
Online Bartering Bartering sites must be financially secure; otherwise,
users may not have a chance to use the points they accu-
Bartering, the exchange of goods and services, is the oldest mulate. (For further details, see virtualbarter.net and
method of trade. Today, it is done primarily between organi- barternews.com.)