Electronic Retailing Mechanisms: Store-fronts and Malls
For generations home shopping from catalogs has flourished, and television
shopping channels have been attracting millions of shoppers for more than two
decades. Shopping online offers an alternative to catalog and television shopping.
Electronic retailing (e-tailing) is the direct sale of products and services
through electronic storefronts or electronic malls, usually designed around
an electronic catalog format and/or auctions. For the difference between retailing
and e-tailing, see Online File W4.4 and also Lee and Brandberry (2003).
Like any mail-order shopping experience, e-commerce enables you to buy
from home, and to do so 24 hours a day, 7 days a week. However, EC offers a
wider variety of products and services, including the most unique items, often
at lower prices. Furthermore, within seconds, shoppers can get very detailed
supplementary information on products and can easily search for and compare
competitors’ products and prices. Finally, using the Internet, buyers can find
hundreds of thousands of sellers. EBay (ebay.com) is the world’s largest auction site, and
one of the most profitable e-businesses. The successful
online auction house has its roots in a 50-year-old novelty
item—Pez candy dispensers. Pamela Kerr, an avid collector
of Pez dispensers, came up with the idea of trading them
over the Internet. When she shared this idea with her
boyfriend (now her husband), Pierre Omidyar, he was instantly
struck with the soon-to-be-famous e-business auction
concept.
In 1995, the Omidyars started the company, later renamed
eBay, that has since become the premier online
auction house. The business model of eBay was to provide
an electronic infrastructure for conducting mostly C2C
auctions, although it caters to small businesses as well.
Technology replaces the traditional auctioneer as the intermediary
between buyers and sellers.
On eBay, people can buy and sell just about anything.
It has millions of unique auctions in progress and over
500,000 new items are added each day. The company collects
a submission fee upfront, plus a commission as a percentage
of the sale amount. The submission fee is based on
the amount of exposure you want your item to receive.
For example, a higher fee is required if you would like to
be among the “featured auctions” in your specific product
category, and an even higher fee if you want your item to
be listed on the eBay home page under Featured Items.
The seller must specify a minimum opening bid. Sellers
might set the opening bid lower than the reserve price, a
minimum acceptable bid price, in order to generate bidding
activity. If a successful bid is made, the seller and the buyer
negotiate the payment method, shipping details, warranty,
and other particulars. eBay serves as a liaison between the parties; it is the interface through which sellers and buyers
can conduct business.
After a few years of successful operations and tens of
millions of loyal users, eBay started to do B2C (e-tailing),
mostly in fixed prices. By 2003, eBay operated several specialty
sites, such as eBay Motors. eBay also operates a
business exchange in which small- and medium-sized enterprises
can buy and sell new and used merchandise, in B2B
or B2C modes. In addition, half.com, the famous discount
e-tailer, is now part of eBay and so is PayPal.com, the person-
to-person payment company. eBay has become so
popular that it has led to academic recognition with the
creation of a new course at the University of Birmingham
(UK). The course, “Buying and Selling on eBay.co.uk,” offers
a step-by-step guide to trading online (Lyons, 2004).
eBay operates globally, permitting international trades
to take place. Country-specific sites are located in over 25
countries. Buyers from more than 160 other countries also
participate. Finally, eBay operates locally: It has over 60
local sites in the United States that enable users to easily
find items located near them, to browse through items of
local interest, and to meet face-to-face to conclude transactions.
As of spring 2004, eBay had over 95 million registered
users. According to company financial statements,
eBay reported $24 billion in sales in 2003, and it expects
net revenue of $3 billion in 2004.
Sources: Compiled from press releases at eBay.com (2002–2003)
and from Deitel et al. (2001).
For generations home shopping from catalogs has flourished, and television
shopping channels have been attracting millions of shoppers for more than two
decades. Shopping online offers an alternative to catalog and television shopping.
Electronic retailing (e-tailing) is the direct sale of products and services
through electronic storefronts or electronic malls, usually designed around
an electronic catalog format and/or auctions. For the difference between retailing
and e-tailing, see Online File W4.4 and also Lee and Brandberry (2003).
Like any mail-order shopping experience, e-commerce enables you to buy
from home, and to do so 24 hours a day, 7 days a week. However, EC offers a
wider variety of products and services, including the most unique items, often
at lower prices. Furthermore, within seconds, shoppers can get very detailed
supplementary information on products and can easily search for and compare
competitors’ products and prices. Finally, using the Internet, buyers can find
hundreds of thousands of sellers. EBay (ebay.com) is the world’s largest auction site, and
one of the most profitable e-businesses. The successful
online auction house has its roots in a 50-year-old novelty
item—Pez candy dispensers. Pamela Kerr, an avid collector
of Pez dispensers, came up with the idea of trading them
over the Internet. When she shared this idea with her
boyfriend (now her husband), Pierre Omidyar, he was instantly
struck with the soon-to-be-famous e-business auction
concept.
In 1995, the Omidyars started the company, later renamed
eBay, that has since become the premier online
auction house. The business model of eBay was to provide
an electronic infrastructure for conducting mostly C2C
auctions, although it caters to small businesses as well.
Technology replaces the traditional auctioneer as the intermediary
between buyers and sellers.
On eBay, people can buy and sell just about anything.
It has millions of unique auctions in progress and over
500,000 new items are added each day. The company collects
a submission fee upfront, plus a commission as a percentage
of the sale amount. The submission fee is based on
the amount of exposure you want your item to receive.
For example, a higher fee is required if you would like to
be among the “featured auctions” in your specific product
category, and an even higher fee if you want your item to
be listed on the eBay home page under Featured Items.
The seller must specify a minimum opening bid. Sellers
might set the opening bid lower than the reserve price, a
minimum acceptable bid price, in order to generate bidding
activity. If a successful bid is made, the seller and the buyer
negotiate the payment method, shipping details, warranty,
and other particulars. eBay serves as a liaison between the parties; it is the interface through which sellers and buyers
can conduct business.
After a few years of successful operations and tens of
millions of loyal users, eBay started to do B2C (e-tailing),
mostly in fixed prices. By 2003, eBay operated several specialty
sites, such as eBay Motors. eBay also operates a
business exchange in which small- and medium-sized enterprises
can buy and sell new and used merchandise, in B2B
or B2C modes. In addition, half.com, the famous discount
e-tailer, is now part of eBay and so is PayPal.com, the person-
to-person payment company. eBay has become so
popular that it has led to academic recognition with the
creation of a new course at the University of Birmingham
(UK). The course, “Buying and Selling on eBay.co.uk,” offers
a step-by-step guide to trading online (Lyons, 2004).
eBay operates globally, permitting international trades
to take place. Country-specific sites are located in over 25
countries. Buyers from more than 160 other countries also
participate. Finally, eBay operates locally: It has over 60
local sites in the United States that enable users to easily
find items located near them, to browse through items of
local interest, and to meet face-to-face to conclude transactions.
As of spring 2004, eBay had over 95 million registered
users. According to company financial statements,
eBay reported $24 billion in sales in 2003, and it expects
net revenue of $3 billion in 2004.
Sources: Compiled from press releases at eBay.com (2002–2003)
and from Deitel et al. (2001).
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