Introduction
E-Commerce is a very common term used in today business world. It is where companies use the Internet for e-transactions with customers and suppliers, for managing internal business process, and coordination activities.
For this project, we have chosen to examine and evaluate on eBay, which is the world's largest online auction site. We will study its purpose, features, key characteristics, designs, strength and weaknesses of the site.
About eBay
Computer programmer, Pierre Omidyar, founded eBay on 1995. It is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. website, eBay has established localized websites in several other countries. EBay also owns PayPal, Skype and other businesses.
1. Objective
1.1 Purpose of eBay
eBay.Inc pioneers communities built on commerce, sustained by trust, and inspired by opportunity. eBay brings together millions of people every day on a local, national and international basis through an array of websites that focus on commerce, payments and communications.
The eBay Community is made up of more than 100 million people around the world who buy and sell in the eBay marketplace. The users include individual buyers and sellers, small businesses, and even enterprises. From the buyer who shops on eBay for practical needs, to the seller who relies on eBay as a primary source of income.
Their community encourages open and honest communication among all its members. It is guided by five fundamental values:
- We believe that people are basically good.
- We believe everyone has something to contribute.
- We believe that an honest, open environment can bring out the best in people.
- We recognize and respect everyone as a unique individual.
- We encourage you to treat others the way you want to be treated.
There is also an eBay Marketplace, which creates a powerful online platform for the sale of goods and services by a passionate community of individuals and small businesses. On any given day, there are millions of items available through auction-style and fixed-price trading.
1.2 eBay Trust & Safety
To help the community trade safely and build trust with one another, eBay offers the following tools, programs, and resources:
1) eBay Feedback
Feedback is each user's reputation on eBay. Through positive, negative, and neutral ratings and comments, each eBay member has a Feedback score. All sellers display this score in the Seller Information box of the item-listing page. eBay Feedback fosters trust between people by acting as both an incentive to do the right thing and as a mark of distinction for those who conduct transactions with respect, honesty, and fairness.
2) Buyer Protection
Users who see the PayPal Buyer Protection shield buy with confidence knowing that their purchase is covered up to $500 at no additional cost. For users who are not using PayPal as their payment system, there is also the eBay Standard Purchase Protection Program which provides up to $200 coverage for either items that are not received or items that are not as described in the listing.
3) Spoof (Fraudulent) Web Site Protection
The eBay Toolbar with Account Guard enables eBay members to protect their accounts by indicating when they are on an eBay or PayPal site and warning them when they are on a potentially fraudulent, or spoof, Web site. In addition, eBay helps users prevent and combat fraud by conducting online tutorials on spoof email and educating members on how to report issues.
4) eBay Security Center
The eBay Security Center provides guidance on buying safely, selling safely, and paying safely, as well as valuable third-party, government and law-enforcement resources. The Security Center is a valuable resource for all users, from first-time buyers who want information on safeguarding online transactions to high-volume sellers who want to protect their copyrights.
2. Features
2.1 Business Model
eBay uses the online auction business model (Consumer to Consumer) where participants bids for products and services over the internet. Like most auction companies, eBay does not actually sell goods that it owns itself. It merely facilitates the process of listing and displaying goods, bidding on items, and paying for them. It acts as a marketplace for individuals and businesses who use the site to auction off goods and services. Millions of collectables, appliances, computers, furniture, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily.
2.1.1 Auction Types & Bidding
eBay offers several types of auctions which include:
- Auction-style listings allow the seller to offer one or more items for sale for a specified number of days. The seller can establish a reserve price.
- Fixed Price format allows the seller to offer one or more items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid.
- Dutch Auctions allow the seller to offer two or more identical items in the same auction.
Bidders can bid for any number from one item up to the total number offered.
For Auction-style listings, the first bid must be at least the amount of the minimum bid set by the seller. Regardless of the amount the first bidder actually bids, until a second bid is made, eBay will then display the auction's minimum bid as the current high bid. After the first bid is made, each subsequent bid must be equal to at least the current highest bid displayed plus one bidding increment. The bidding increment is established by eBay based on the size of the current highest displayed bid. For example, when the current highest bid is less than or equal to $0.99, the bidding increment is $0.05; when the current highest bid is at least $1.00 but less than or equal to $4.99, the bidding increment is $0.25. Regardless of the amount each subsequent bidder bids, eBay will display the lesser of the bidder's actual bid and the amount equal to the previous highest bidder's actual bid plus one bidding increment.
2.2 Payment Schemes
Customers have quite a number of choices to make their payments via PayPal, Personal check or Money order/Cashiers check, depending on the sellers' preferred mode of payment.
PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. It performs payment processing for online vendors, auction sites, and other corporate users, for which it charges a fee.
Advantages of paying with PayPal:
· Payment is traceable as consumers can track their payment via their eBay or PayPal account.
· It is immediate and convenient. The customers pay directly from the item- listing page and payment is deposited directly into the seller's account.
· It does not require consumers to use their credit card online (they can transfer directly from your bank account). Sellers don't see their credit card number (it is safely encrypted through PayPal's server), which limits the risk of unauthorized use.
· It offers PayPal Buyer Protection on eligible transactions up to $200 at no additional cost.
Advantages of paying with Credit card:
· Payment is traceable.
· It is immediate and convenient.
· It provides limited liability coverage. Credit card companies typically provide some level of identity and purchase protection whether consumers are paying with their credit card through PayPal, or directly to the seller.
Advantages of paying with personal check, cashiers check or money orders:
· Payment is traceable to a particular mailing address and provides proof of payment.
· Most banks offer one-stop payment service if problems arise before the check is cashed. Some money order services may have the option to stop payment if problems arise before the payment is cashed.
Disadvantages:
· Sellers must wait for funds to clear.
· Payment is extremely difficult to recover in cases of fraud.
3. Characteristics
3.1 Design Scheme & Graphics
The eBay homepage is filled with graphics that will easily catch the consumers’ attention. It is design in a way that customers search for their products according to categories thus reducing the time. eBay offers a wide range of categories from electronic products, video games, antiques etc.
eBay also helps consumers to narrow their search results. For example, under the camera category it is then sub divided into studio equipments, lenses, film and many more. “eBay Express” allows the consumers to get what they want without bidding and waiting. Another feature, which is the “eBay sneak peek”, enables the consumers to update themselves on what is changing on eBay such as the new generation of “My eBay”.
4. Analysis
4.1 Strengths
The strategic advantages of an online auction business model include:
No time constraints - Bids can be placed at any time (24/7). Items are listed for a number of days, giving purchasers time to search, decide, and bid. This convenience increases the number of bidders.
No geographical constraints - Sellers and bidders can participate from anywhere that has Internet access. This makes them more accessible and reduces the cost of "attending" an auction. This increases the number of listed items (ie. number of sellers) and the number of bids for each item (ie. number of bidders). The items do not need to be shipped to a central location thus reducing costs and reducing the seller's minimum acceptable price.
Intensity of social interactions - The social interactions involved in the bidding process are very similar to gambling. The bidders wait in anticipation hoping they will "win" and some bidders may bid primarily to "play the game" rather than to obtain products or services. This creates a highly loyal customer segment for eBay.
Large number of bidders - Due to the potential for a relatively low price, the broad range of products and services available, the ease of access, and the social benefits of the auction process, there are a large numbers of bidders.
Large number of sellers - Because of the large number of bidders, the potential for a relatively high price, reduced selling costs, and ease of access, there are a large number of sellers.
Network economies - The large number of bidders will encourage more sellers, which, in turn, will encourage more bidders, which will encourage more sellers, etc., in a virtuous circle. The more the circle operates, the larger the system becomes, and the more valuable the business model becomes for all participants.
Captures consumers' surplus - Auctions are a form of first-degree price discrimination. As such, they attempt to convert part of the consumers’ surplus into producers’ surplus. Online auctions are efficient enough forms of price discrimination that they are able to do this.
4.2 Weaknesses
eBay has its share of controversy, ranging from its privacy policy to well-publicized seller fraud. One mechanism eBay uses to combat fraud is its feedback system.
Weaknesses of the feedback system include:
A user may be reluctant to leave honest feedback out of fear of negative retaliatory feedback.
Users and generators of feedback may have different ideas about what it means. eBay offers virtually no guidelines. Feedback and responses to feedback are allotted only 80 characters each. This can prevent users from being able to fully list valid complaints.
Although eBay protects sellers from getting a negative feedback from a deadbeat buyer when the deadbeat buyer/bidder did not respond to Unpaid Item dispute, they do not offer the same protection for a buyer who gets a deadbeat seller.
Frauds that can be committed by sellers include:
Receiving payment and not shipping merchandise
Shipping items other than those described
Giving a deliberately misleading description
Knowingly and deliberately shipping faulty merchandise
Counterfeit or bootleg merchandise
Knowingly selling stolen goods
Inflating total bid amounts by bidding on their own auction with “shill” account(s), either the seller under an alternate account or another person in collusion with the seller.
Frauds committed by buyers include:
PayPal fraud: Filing false shipping damage claim with the shipping company and with PayPal.
Credit card fraud, in the form of both stolen credit cards and fraudulent charge backs.
Receiving merchandise and claiming otherwise
Returning items other than received
The buyer sends a forged payment-service e-mail, which states that the buyer has made a payment to the seller's account. An unsuspecting seller may ship the item before realizing the e-mail was forged.
Combating Fraud:
Third party businesses, such as CheckMEND, are compiling lists of stolen goods from local authorities and businesses so eBay consumers can check to see whether the goods they are buying are stolen.
5. Conclusion
eBay is a popular online auction website that everyone knows and until today there is still millions of consumers visiting the site. Therefore, we can see that the image that eBay has portray itself to the consumers is trust and safety. They give the consumers a sense of security to sell and buy items from the web.
Therefore to maximise customer relationship and compete with many other e-commerce websites, it is essential to receive feedback from customers and improve on the service to achieve greater customer satisfaction.
