eBay's business model is primarily formed around being an auction broker. This means that auctions are conducted for the seller, given that they prescribe a fee. Buyers can then make offers on the seller's products until the time lapse comes to a close. The buyer with the highest bid is then able to purchase that product, just like at a physical auction.
The reason ebay has been so successful, is beacuse it allows an endless range of goods to be sold and bought, that differ in terms of condition, location and price. There is also the theory that many of the specialty items can't be found anywhere else beacuse they are not excessively in demand. It has strong productive features like easy navigation, clear layout and a secure payment method (paypal).
2) 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?
In relation to Amazon, ebay is able to maintain its dominant position by bringing buyers and sellers together. Amazon holds the items being sold on its site which enables the transaction to be completely processed by the buyer and seller, meaning it doesn't have to worry about possilbe holding fees and shipment/delivery costs. Another thing that ebay has working for them is their use and promotion of paypal. Ebay has seen paypal become a massive money making machine, $US1.4 billion last quarter, a 26 per cent jump from the same quarter a year ago (Perlroth).
3) 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?
The only way ebay is able to monitor and act upon fraud is by conducting feedback surveys for its customers that allows ebay to be aware of users that are conducting fake acts and sales. They also employ people specifically to deal with fraud and who are paid to seek out people who are selling false items or who are misleading.
Types of fraud that can occur on ebay include:
- paying for an item, and not receiving the item.
- sending your item away and not receiving payment. People from third world countries often try to buy items on ebay by telling the seller that they have already payed for the item, that it will just take a few days to come through, the seller believes them and sends the item away, and the buyer receives the item for free.
- paying for an item, and not receiving what you were promised.
4) 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 labellising their customers and clients as a community, is because it gives them the idea that they are apart of the company and that they are a part of ebay's success. The biggest gain ebay can make by this formation, is becoming a reputable brand name that envisages its clients and customers needs and wants as their main priorety. Trust can be a big issue with online auctions so having clients and customers that value the company's input and process, allows ebay to be seen as a sort of town mayor.
5) 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?
The price of setting up your own website can be very costly which is why more and more businesses are using ebay as a source to sell their products. Ebay already has millions of customers, which gives businesses maximum opportunity for potential customers to purchase their products. You are able to access a wider target market; not just the business' primary target market. Ebay enables other businesses to use its resources without having to pay out of the bucket for them. It also allows the business to communicate directly to the consumer, whereas with their own site, there would be a barrier due to not having an intermediary such as ebay.
REFERENCES
Perlroth, N. (July 20, 2012). ebay powers on to make itself a dominant force. Retrieved May 18, 2013, from http://www.smh.com.au/business/ebay-powers-on-to-make-itself-a-dominant-force-20120719-22d12.html
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