Q1: eBay is one of the only major Internet "pure plays" to consistently make a profit from its inception. What is eBay's business model? Why has it been so successful?
Ebay as a broker is more or less a kind of distant third party in what goes on. It plays a very limited role in ensuring that buyer and seller come away satisfied. It simply brings the buyer and seller together and enables the transaction to occur ( Rappa, 2005).
Ebay has been so successful due to the way there business is run. Ebay doesn’t take possession of any goods, it doesn’t get in the middle of the transactions in any significant way beyond facilitating their occurrence, that it collects a fairly nice transaction fee, the current transaction revenue rate on each transaction is about 3.6 percent, it has, relatively speaking, low overcost when you compare it to somebody like an Amazon.com, which has warehouses and huge inventories and large numbers of people packing and shipping items, eBay is a relatively elegant and far less complex from a business logistics point of view business to operate, and their transaction processing expense rate is about 1.3 percent or so (Rappa, 2005).
Q2: 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?
Ebay is perhaps the best known of the early web-based ecommerce sites that was profitable right from the beginning, just as a contrast to, for example, somebody like Amazon.com, which had to invest and invest and invest and took much, much longer to turn profitable. Ebay’s role as a broker is really quite appealing, because it really leverages the Internet in terms of what the Internet does best, that is, bringing large numbers of people together relatively easily and relatively inexpensively by doing it virtually (Rappa, 2005). Ebay is at the forefront of online auction technology, users can trust and rely on eBay from everyday purchases through to running a successful business.
Q3: 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?
Even if only just 1 percent of the community acted in a disinterested way in terms of playing fair, or certainly if they acted in a fraudulent way, this would be seriously debilitating to the success of the eBay marketplace (Rappa, 2005).
The main method which eBay adopts to reduce fraud amongst its community is to allow both sellers and buyers to rate each others transaction process. This is done through a mechanism called ‘feedback’. Feedback gives other users a sense of their overall reliability, a sense of their reputation as a trader, by looking at the number of transactions they’ve entered into over a period of time from the most recent onward and looking at the ratings of whether those transactions met with the satisfaction of the other party or not, including some commenting and the like (Rappa, 2005).
Ebay does everything it can to work with local law enforcement in situations where there is systematic and large-scale fraud. But when we talk about down at the individual level, down at individual transactions in any given day or week or month, even though it’s a relatively small percentage of transactions which may end up going sour, one has to sort of look at the overall impact, the cumulative impact, of fraudulent behavior on people’s desire or willingness to enter into future transactions (Rappa, 2005).
Types of fraud eBay users are susceptible to are:
- Buyers pay for the item, and they never receive the item.
- The highest bidder never pays for the item they have won.
- When the buyer receives the item it may not match what was in the description, whether it be brand, model, a fake item or damaged.
Q4: 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?
Ebay really seeks to promote the notion of community, that people are members of a community and that there are certain values and standards that as a member people buy into and act accordingly in terms of being a fair player in terms of whether they’re a buyer or a seller to a transaction. Ebay tries to make that community function in a healthy way, getting people to abide by a set of rules, to play fairly on a level playing field, these are very critical aspects for eBay to be successful. If people were distrustful of one another, if they fraudulently took advantage of each other, the whole model would break down (Rappa, 2005).
Q5: 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?
Brand name vendors have access to broad markets with relatively efficient marketing and distribution costs. They’re able to maximize their prices, so you have a situation where, at least in an auction format, the seller’s walking way, so long as there are a multitude of buyers, the seller can feel that they’re getting the best price they possibly can for the item that they’re selling. some businesses which were geographically bound in the past, moving to eBay offers up an opportunity to reach a much wider consumer audience and hopefully an opportunity to increase their sales (Rappa, 2005).
Sunday, May 17, 2009
Sunday, May 3, 2009
Week 7 questions - Digital Automata
Q1) Write a one paragraph describing the Turing test and another paragraph describing an argument against the Turing Test, known as the about the Chinese room.
The Turing test is a proposal for a test of a machine's ability to demonstrate intelligence. It was described by Alan Turing in his 1950 paper "Computing Machinery and Intelligence," in which Turing considers the question "can machines think?" It proceeds as follows: a human judge engages in a natural language conversation with one human and one machine, each of which tries to appear human. All participants are placed in isolated locations. If the judge cannot reliably tell the machine from the human, the machine is said to have passed the test. In order to test the machine's intelligence rather than its ability to render words into audio, the conversation is limited to a text-only channel such as a computer keyboard and screen (Wikipedia, 2009).
One argument put forward against the Turing test came in 1980 from John Searle’s paper Minds, Brains and Programs. The argument was known ‘Chinese room’ thought experiment. Searle argued that software (such as ELIZA) could pass the Turing Test simply by manipulating symbols of which they had no understanding. Without understanding, they could not be described as "thinking" in the same sense people do. Therefore—Searle concludes—the Turing Test cannot prove that a machine can think, contrary to Turing's original proposal (Wikipedia, 2009).
Q3) Can virtual agents succeed in delivering high-quality customer service over the Web? Think of examples which support or disprove the question or just offer an opinion based on your personal experience.
I strongly believe that virtual agents can deliver a high-quality standard of customer service over the web. Although at the same time I also believe that this rarely happens. There is an attitude amongst society, that because you can not physically see and touch the person you are serving, that you do not need to be as efficient in delivering customer service as you would in the physical World. For example, there is a difference between sending out automated emails which are polite, professional and blandly informative but are an automated email that is used to answer every different question asked of an organisation. Sometimes all that changes is the personal details. High-quality customer service would be for the organisation to reply to the email with an individual response, which answers the questions or queries of the consumer without the consumer having to send 20 emails back and forth. This example is what can separate big business and small businesses.
Week 6 questions - Digital Markets
Question 1
a) What experiences have you had with shopping online?
I go through phases when using online shopping. I think it is great when using sites like ebay, where you can buy something that may not be available in your local community or it might be at a cheaper price. I have used online shopping for all types of purchases. Some of these include
- Ebay – concert/football tickets, surround sound system, DVDs, car parts.
- Dell – laptop computer
- Skate
- Ticketek/Ticketmaster - tickets
b) Describe a good experience.
(www.dell.com.au). I purchased a laptop through there online store. The main reason was because I wanted to go through the process of choosing the specifications I wanted in my laptop. It was a quick and easy process. Dell is a very professional online seller who understands what there customers want. There products may not be the best on the market but they are reliable and you know exactly what you will be getting. Dell offers a service which allows you to buy direct, which normally means a cheaper price. Discounts, free upgrades, free post, continued support after purchase, quick delivery and a great product is what would make me use Dell again.
c) What did you like about the online store you used?
It was just so easy to navigate around the site. All the products were displayed with the specifications which made it easy to compare. There were no hidden costs. You can add or cancel almost anything about the product before you commit, this feature is great for pretty choosing how much you want to pay. Discounts, free upgrades, free post, continued support after purchase, quick delivery and a great product is what would make me use Dell again.
d) Describe a bad experience.
(www.skateamerica.com). I used this website about 6 years ago to purchase 3 band t-shirts. The reason for using an international site was because I couldn’t find the product I was after from an
e) What problems did you have with the online store?
The website itself was easy to use, everything displayed with photos and descriptions. The problems I encountered was the total cost was displayed in USD, which at the time because I was a lot younger, I had no idea that the total price would actually end up being almost double in AUS dollars to what was displayed on the receipt. Although this was my mistake, there was no indication anywhere through the checkout process that it was going to be charged in USD. We are just supposed to assume this. The main problem I had with this online seller is that from the date of purchase it took 3 months for the product to arrive. After many emails back and forth with the website helpdesk I finally received my 3 t-shirts. I haven’t used this site since and will probably stick with local sellers in the future.
f) What features make an online store more appealing?
Having the ability to look at and compare endless amounts of products all at the click of a mouse. It allows you to research what you are purchasing. Compare price, brands, models, features and reviews all without leaving your computer and without going anywhere near a retail store.
g) What features make an online store less appealing?
The features that make an online store less appealing are that you are unable to touch or see the product for what it really is. I think the biggest example of this is clothing. You will never know exactly what you are buying from an online seller even if you tried the same piece of clothing on in a retail store.
h) Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
We should expect the prices of goods and services fall due to the online migration of consumers. Although no one can make an accurate prediction at this stage, it can be said that due to the cheaper costs of running an online store compared with physical retail stores the prices should drop with more and more consumer online spending.
Question 2
a) The dispersion of prices (that is, the spread between the lowest and highest price for a particular product) will narrow.
I think that there will always be dispersion of prices for products in the digital market. It is hard to predict to what extent this will be, but when there are different companies producing, distributing and selling all types of brands and qualities of each individual product then there will always be competition. There is substantial price dispersion in the online market averaging up to 20% (Clemons, Hann and Hitt, 1998).
b) The importance of brand names will decrease.
I do not believe that the importance of brand names will decrease. It may mean that because there are more brands to choose from that people will just buy the first brand they come across and not necessarily look for the brand they would normally see in a retail shop. Meaning the sales would decrease for the more major brands. But across the board most people tend to stick with the brands they know and trust. More competition will always affect competing brands.
c) Price competition will make all products cheaper.
I think that this could go either way. It makes sense that the more brands and competition there is in the market, it will help in driving the price down as sellers compete for consumer business. But competition can sometimes have no effect on some products, like we have seen with apple ipod. Every year there is more and more competition on the market and this has had no effect on the ipods dominance, so there is no need to lower the price.
d) Digital markets will become dominated by a handful of mega-sites, like Amazon.com.
I think that people like to stick with the ‘mega-sites’ because they know what they are getting every time they use the service. But in saying that I think that there is plenty of room in the market for smaller sites who offer products to a niche market. Sometimes you can’t find that one particular product you are looking for through sites like Amazon.
In saying all that, I think that the digital market is already being dominated by the ‘mega-sites’ and this will only get worse as competition gets tighter for those untouched consumers.
e) How do you think the balance of power between buyer’s and seller’s will change?
Today with the economic climate the way it is, we are being told all the time that it is currently a buyers market. With more and more people using the digital market, consumers are given the power to pick and choose which seller they will use. With more and more sellers joining the digital market every day the power of the buyer will only get stronger.
f) Prices are clustered online.
I do not think that prices are clustered online.
g) Online prices are elastic. (I.e. immune to change up and down with demand)
In the short term I think online prices are definitely elastic, this is due to the massive market size of online trading. But in the long term eventually things have to change if there is a shift in demand.
h) Online prices are generally transparent (the extent to which prices for a given product or service are known by buyers in the marketplace.).
I agree that online prices are generally transparent. Most people when they are shopping for a product (whether online or in the physical market) have some understanding of what the price should be. This comes from shopping around with different sellers. Having said that I think that many buyers are very venerable and gullible when it comes to purchasing certain products they do not understand, the greatest example of this would be with advances in technology (i.e. computers).
Question 3
a) What types of m-commerce services does your cell phone provider offer?
At the moment my phone only gives me the option of using the internet. As Motorola used to sponsor the Aria charts, there used to be an application to download music straight to my phone. This sponsorship has now expired although I am still able to download music from what is called the ‘moto lounge’ to my phone. The charges will then be added onto my bill at the end of the month.
b) Which of these services do you use?
I do not use any of these services. As I have no free internet time or downloads available in my plan, I stay clear of these features, as they can get expensive.
c) What types of transactions do you perform through your cell phone or other wireless device?
I do not perform any transactions through my mobile phone or wireless device.
d) What types of transactions would you like to perform, but are currently unable to?
I would like to be able to use internet banking on my mobile phone. It would be really convenient in those times when you need to transfer money between accounts and there is no bank and computer in sight. Although I think I would be a little bit hesitant in using internet banking through my mobile phone, as it is still a very new feature and security is still yet to be fully tested.
e) What is your opinion of wireless advertising/mobile marketing?
I think that mobile advertising is something that everyone will be outraged with at first, but like all methods of advertising before it (T.V, radio, email) we will gets used to it as time goes by and it will become apart of our lives as much as the other forms of advertising have become. Personally I find it annoying when advertising messages come through, because in the past when you get a message you know it is either going to be friends or family. Now it can be a sale at a clothing store.
Week 5 questions - Business Models
Now look at the list of business models below and describe the features of each of these business models, on your blog page, giving an example of each. The basic categories of business models discussed in the table below include:
Brokerage
Brokers can be described as market-makers. “They bring buyers and sellers together and facilitate transactions” (Rappa, 2005). The World economy is made up of brokering. Certain industries have brokers such as, insurance brokers and stock brokers. “The web is inherently suited for brokerage. That is large numbers of buyers can be connected up with potentially large numbers of sellers, taking advantage of what is most powerful about the web, its network structure that enables people to connect up with each other relatively cheaply” (Rappa, 2005). Ebay is an example of an online broker. In that it connects buyers and sellers.
Advertising
The features of advertising on the web is that for the first time “people recognized that you had an opportunity to understand a whole lot more about what effect the advertising was having on the viewer, on the potential consumer” (Rappa, 2005). Online advertising has developed over the years from in the early days using ‘banner’ advertising which we learnt was not very effective. To today’s “so-called paid placement approach of advertising within search, and also the placement of search links, or advertising links, within various kinds of websites” (Rappa, 2005). Google and Yahoo have had great success offering this type of advertising on there search engines.
Infomediary
“Data about consumers and their consumption habits are valuable, especially when that information is carefully analyzed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers when considering a purchase” (Rappa, 2009).
- Advertising Networks, feed banner ads to a network of member sites, thereby enabling advertisers to deploy large marketing campaigns. Ad networks collect data about web users that can be used to analyze marketing effectiveness.
- Audience Measurement Services, online audience market research agencies (e.g. Nielsen//Netratings).
- Incentive Marketing, customer loyalty program that provides incentives to customers such as redeemable points or coupons for making purchases from associated retailers. Data collected about users is sold for targeted advertising (e.g. Coolsaving).
- Metamediary, facilitates transactions between buyer and sellers by providing comprehensive information and ancillary services, without being involved in the actual exchange of goods or services between the parties (e.g. Edmunds).
Merchant
“A merchant is simply a wholesaler or retailer of a good or service” (Rappa, 2005). Merchants are buying an inventory, such as books or apparel and then attempting to sell that inventory at some markup. “The key here is that the merchant is taking a risk” (Rappa, 2005). A merchant business model can be high cost and laden with complexity (Rappa, 2005). An example of a merchant business model would be online trading company Amazon.
Manufacturer (Direct)
“The manufacturer or "direct model", it is predicated on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel. The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences” (Rappa, 2009). An example of the manufacturer model would be Dell computers.
- Purchase, the sale of a product in which the right of ownership is transferred to the buyer.
- Lease, in exchange for a rental fee, the buyer receives the right to use the product under a “terms of use” agreement. The product is returned to the seller upon expiration or default of the lease agreement. One type of agreement may include a right of purchase upon expiration of the lease.
- License, the sale of a product that involves only the transfer of usage rights to the buyer, in accordance with a “terms of use” agreement. Ownership rights remain with the manufacturer (e.g., with software licensing).
- Brand Integrated Content, in contrast to the sponsored-content approach (i.e., the advertising model), brand-integrated content is created by the manufacturer itself for the sole basis of product placement.
Affiliate
“In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites” (Rappa, 2009).
- Banner Exchange, trades banner placement among a network of affiliated sites.
- Pay-per-click, site that pays affiliates for a user click-through.
- Revenue Sharing, offers a percent-of-sale commission based on a user click-through in
which the user subsequently purchases a product.
Community
“The viability of the community is based on user loyalty. Users have a high investment in both time and emotion” (Rappa, 2009). Examples of the community model are;
- Open source, software developed collaboratively by a global community of programmers who share code openly (e.g. Red Hat).
- Open Content, openly accessible content developed collaboratively by a global community of contributors who work voluntarily (e.g. Wikipedia).
- Public broadcasting, user-supported model used by not-for-profit radio and television broadcasting extended to the web. A community of users supports the site through voluntary donations (e.g. WCPE.org).
- Social networking services, sites that provide individuals with the ability to connect to other individuals along a defined common interest (e.g. Flickr).
Subscription
A subscription is where the customer “is charged a periodic fee, whether it’s daily, or monthly, or annual to subscribe to a particular service. Subscription is a very important facet of the internet, because we’re seeing more and more things which were formerly products, things that were sold to the customer as a product – and in particular in the area of software, like various applications sold as products installed on your computer – are now starting to transition quite rapidly to services” Rappa, 2005). Businesses and industries that have in the past only operated through offline business models are now turning to online subscription models. A great example of this is the DVD industry. Netflix is an online rental subscription company.
Utility
The utility model is based on metering usage, or pay as you go approach. Metered services like what are used in the utility model are based on actual usage rates (Rappa, 2009). The two types of usage are;
- Metered usage, measures and bills users based on actual usage of a service.
- Metered subscriptions, allows subscribers to purchase access to content in metered portions.
An example of these would be Slashdot.
What is the business model for Twitter?
The business model for Twitter would be the community model. It is a Social networking service.
1) What is the Mobile phone use /100 population - compare
2) Internet use / 100 population - compare
Rank Country Score
8 United States 71.94
25 Australia 54.19
78 China 15.81
99 India 6.93
3) Compare main strengths and weaknesses of
4) What does the survey suggest to you about the Information Technology readiness of Australian business compared to Australian consumers?
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