Chapter 6: Key Concept

Chapter 6: Online Auctions, Virtual Communities, and Web Portals

Key Concept:
This chapter focuses on how companies use different technologies including auctions, virtual communities, serving as web portals. We learn about the main auction types and the characteristics of each.

Supporting Points:
Auction Overview
English Auctions
- bidders publicly announce their successive higher bids until no higher bid is forthcoming (ascending auction, open auction, open-outcry auction)
- minimum bid: price at which an auction begins (reserve bid)
- yankee auctions: offer multiple units for sale and allow bidders to specify quantity they want to buy
Dutch Auctions
- bidding starts at high price and drops until a bidder accepts the price (descending-price auctions)
First-Price Sealed-Bid Auctions
- bidders submit their bids independently and usually prohibited from sharing info with each other – highest bidder wins
Second-Price Sealed-Bid Auctions
- highest bidder awarded the item at the price bid by the second-highest bidder
Open-Outcry Double Auctions
- buy and sell offers shouted by traders standing in small area on exchange floor called a trading pit
Sealed-Bid Double Auctions
- buyers and sellers each submit combined price-quantity bids to an auctioneer
Reverse (seller-bid) auctions
- multiple sellers submit price bids to an auctioneer who represents a single buyer
Online Auctions and Related Businesses
General Consumer Auctions
- eBay – with third-party assurance provider
Specialty Consumer Auctions
- justbeads.com – cater to buyers and sellers who are geographically dispersed but share highly focused interests
Consumer Reverse Auctions and Group Purchasing Sites
- priceline.com – reverse bid: visitors state a price they are willing to pay
- group purchasing site: seller posts an item with a price, buyers enter bids on an item, the site negotiates better price
Business-to-Business Auctions
- liquidation brokers: firms that find buyers for items they get from smaller businesses
Auction-Related Services
- Auction escrow services
- Auction directory and information services
- Auction software

Virtual Communities and Web Portals
Mobile Communications Technology
- wireless application protocol: allows web pages formatted in html to be displayed on devices with small screens
Intelligent Software Agents
- programs that search the web and find items for sale that meet buyer’s specifications
Virtual Communities
- gathering place for people and businesses that does not have a physical existence
- virtual learning community: webCT
Web Communities in the Second Wave of Electronic Commerce
- web logs (BLOGS)
- social networking web sites: craigslist
Revenue Models for Web portals and virtual communities
- advertising-supported web portals and virtual communities
- mixed-revenue web portals and virtual communities