Case study for C2C CommerceGroup Members

DhanalaxmiAsmita SorenAmit Murmu

Ankit Adarsh RaviAnujaNishi

ShreyaKirti

Avinash SwarnkarShashi Rani

Introduction• What is C2C Commerce?• C2C (Consumer-to-Consumer) There are many

sites offering free classifieds, auctions, and forums where individuals can buy and sell.

• eBay's auction service is a great example of where person-to-person transactions take place everyday since 1995.

Introduction• Internet auctions appeared on the scene in the mid

1990s• eBay set the standard for features and performance in

C2C markets• eBay Inc. is an American Internet company that

manages eBay.com• An online auction and shopping website in which

people and businesses buy and sell a broad variety of goods and services worldwide

• Majority of the sales take place through a set-time auction format

• Established localized websites in thirty other countries• eBay Inc. also owns PayPal,StubHub, Kijiji, and other

businesses

Key Peoples• Pierre Omidyar Founder and Chairman• Chris Agarpao was hired as eBay's first

employee and Jeffrey Skoll was hired as the first president of the company in 1996. In November 1996

• Meg Whitman President and CEO in 1997• Current CEO's John Donahoe's

Vision

• A global trading platform where practically anyone can trade practically anything

• Anything legal, new and old can be bought and sold

• Core business – Used goods• Sale of Obsolescent goods• 50 million items are available for sale at any

given time

C2C History &

• the Web developed in the early 1990s• auctions were conducted via e-mails and

newsgroups .• At first, sellers simply provided a static source

of multimedia information (i.e., text and images) about the products being auctioned and continued to collect bids via e-mail

C2C History &

• EBay, founded in 1995, was among the earliest known auction services available on the Internet.

• But has to face competition with B2B players. E.g. fastparts.com

• within a year eBay had many competitors.

C2C History &

• Internet auction platforms were developed in research laboratories in 1996, including the Michigan Internet AuctionBot (Wurman, Wellman, and Walsh, 1998), the FishMarket system (Rodriguez, Noriega, Sierra, and Padget, 1997), and GEM (Reich and Ben-Shaul, 1998).

C2c History &

• . Among the best known of the auction service providers were OpenSite, Trading Dynamics, Moai, and FreeMarkets. Free Markets was founded in 1995 and Moai formed in 1996.

• OpenSite and Trading Dynamics were acquired in 2000 by, respectively, Siebel Systems and Ariba. Around the same time, IBM was building its own auction engine (Kumar and Feldman, 1998)

C2C History &

• In the early days of e-commerce, it was logical for auction software companies to design flexibility into their products so that they could be employed in many application markets.

• The amount and type of customization depends on the particular details of the target market, and whether the auction engine was slanted more towards B2B, B2C, or C2C applications

Auction Concept• the term auctions tends to bring to mind the

classic situation with a seller offering a single item to the highest bidder, like eBay or the stereotypical face-to-face auction

• the parameterization which affects the choice of an auction system are:

a)Bidding rulesb)Intermediate information c) Clearing

Bidding rules

• Bidding rules define the types of bids that are allowed and which participants are allowed to place them.

Bidding rules are different for :• single seller auction• Open continuous double auction• Multiple trade auction

Intermediate Information

• Auctions that generate no intermediate price information are called sealed-bid auctions.

• However, the vast majority of online auctions generate intermediate information to help guide the bidders.

Clearing• The final collection of rules determines when

and how an auction computes trades. The act of computing trades is called clearing, and is handled by a well-defined policy instantiated as analgorithm in the auction software. An auction may clear whenever a bid is received (i.e.,continuous clearing), when no new bids are received for a specified time (e.g., the typical auction), at a prescribed fixed time (e.g., eBay) or on a prescribed schedule.

Auction Types in

• Auction-style listings • Fixed price format • Fixed price format with best offer

Growth & Expansion Of Ebay

• Founded in September of 1995,

• presence in 39 markets, including the U.S.

• approximately 276 million registered users worldwide.

• Marketplaces net revenues totaled a record $1.5 billion in Q4-07, representing a year-over-year growth rate of 21 percent.

sources of Revenue

• The U.S. Business• The International Business• Online Payments• returns-based Operations

18

Presence in39 Markets

EuropeAustria BelgiumFrance GermanyIreland Italy Netherlands PolandSpain SwitzerlandSweden TurkeyUK

AmericasUSACanadaArgentina*Brazil*Chile*Colombia*Costa Rica*Dominican Republic* Ecuador*Mexico*Panama*Peru*Uruguay*Venezuela*

*MercadoLibre sites

Asia PacificAustraliaChinaHong KongJapanIndiaKoreaMalaysiaNew ZealandPhilippines SingaporeThailandTaiwan

Minority investment

eBay - A Great Global Business

eBay site

Distribution • As export/import demand grows, eBay has to think

about what key areas can further support users….– Customs: Partnerships or content support to help make

customs easier to be understood by both buyer and seller.

– International Shipping Support: How to be the leader in the international shipping done online.

– Translation: What technologies can help users scan the world easier for global bargains?

– Global Matching: Can eBay get more involved in settling international supply and demand imbalances?

as a global commerce

community• Global Membership: Users get access to all our sites all around the world and carry their track record with them.

• PayPal: Universal payment service unique in its ability to handle multiple currencies and multiple funding options.

• eBay Site Integration: Discovering ways they help “local” sellers get more visibility abroad .

• Global Buying Portals: Shipping support and eBay content translation in order to support buyers from all over the world.

• Courier Partnerships: Teaming with some of the largest couriers in the world including UPS, USPS, Royal Mail, and Deutsche Post.

Five Force Analysis

Substituteproducts

Newentries

Buyers

Suppliers

STRONG

WEAK

MODERATE INTENSE

eBayeBayRivalfirms

STRONG

SWOT Analysis First mover advantageFirst mover advantage Large and impenetrable Large and impenetrable market sharemarket share the scale of bidders &sellersthe scale of bidders &sellers No traditional retailing cost No traditional retailing cost structure structure

e-Commerce is increasinge-Commerce is increasing Chances for M-commerceChances for M-commerce Possibility to expand high costPossibility to expand high cost productproduct

e-Commerce is increasinge-Commerce is increasing Chances for M-commerceChances for M-commerce Possibility to expand high costPossibility to expand high cost productproduct

Simple and easy to imitateSimple and easy to imitate Fraud trading (Trust Issues)Fraud trading (Trust Issues) System Security & reliabilitySystem Security & reliability

Simple and easy to imitateSimple and easy to imitate Fraud trading (Trust Issues)Fraud trading (Trust Issues) System Security & reliabilitySystem Security & reliability

Decrease in growth rateDecrease in growth rate Trust issues between buyers Trust issues between buyers & sellers& sellers Oriented in P2P marketOriented in P2P market Community powerCommunity power

Decrease in growth rateDecrease in growth rate Trust issues between buyers Trust issues between buyers & sellers& sellers Oriented in P2P marketOriented in P2P market Community powerCommunity power

S

TO

W

marketing strategy: Face book Proposal

• Joint venture with Facebook.com• Student-to-student transactions

for used textbooks• Expose college students to eBay auctions• Future options with Facebook.com

StrategicPartnerships

• Yahoo! [May 2006]– Exclusive 3rd party

provider of all graphical advertisements

– Online payments, co-branded toolbar, & “click-to-call” functionality

• Google [Aug. 2006]– Exclusive provider of

text-based advertising outside US

– “Click-to-call” integration

Resources

• Investment in IT- Computer software and hardware valued at $670 million

• Annual IT spending exceeded $2oo million• Team of highly qualified professionals• Category manager – ways in by which sales

can be better presented and merchandised• Detailed scrutiny by specialists• Stays in touch with users- feedback

Market

ebay net revenue by territory

In Japan

• eBay didn’t succeeded in every country there were failure also.

• With a good global track record and with little public fanfare, eBay launched its Japanese site on February 28, 2000.

• Two years later when eBay pulled the plug on its Japanese operations, they reportedly held an insignificant 3% of the Japanese online auction market

In Japan

• eBay had been pulverized by Yahoo! Japan Auctions--launched to immediate and enormous success approximately six months prior to eBay's entry.

• Whereas eBay charged commissions of up to 5% and required acutely risk-averse Japanese users to submit credit card information on signup, Yahoo! Japan Auctions charged no commissions and met the particular needs of Japanese users to a tee.

In Japan• three key mistakes that eBay committed:1. Firstly, they hired the wrong person as country

manager.2. Secondly, they tried to force Japanese consumers to

fit the company's American-centric service model, rather than modifying the company's service model to meet local market needs.

3. Thirdly, they did something that American companies are notorious for-- grandiose announcements about their entry into the Japanese market.

In Japan

• Japan was critical to eBay’s success because it was the world’s second-largest Internet market. The gap had to be closed soon otherwise Yahoo Inc. could easily beat it in the rest of Asia. Yahoo Japan was the No. 1 or No. 2 portal everywhere except China. In December 2007, Yahoo Japan and eBay made a deal to link their auction sites and make it easier for their respective users to bid on and buy goods available on each other’s sites.

In India

• Indian e-commerce biggest success stories is eBay India.

• After the dotcom bust, several e-commerce players left the sector because they either thought it was too early for India, or it was not meant for India.

• Bazee.com was acquired by eBay Inc in 2004.

Success in India

The things that made eBay India do better are• eBay India emerged more as a fixed-price

market than an auction platform.• Auction is the second highest, followed by

classifieds.• cash on delivery option and seller ratings.• eBay came up with an enhanced version of

Paisa Pay in 2007

Success in India

• Transactions are done domain specific.• Each domain has a category manager.• eBay India’s Buyer Protection community .• eBay presents a great entrepreneurial

opportunity for Indian sellers to sell products internationally to millions of eBay buyers worldwide.

Trends in India

• I ) eBay India provides great entrepreneurship opportunities

• 2) English speaking countries are a large market for global trade .

• 3) Indian sellers are seeing tremendous success with products such as Jewellery, Apparel, Collectibles, Furnishings and Musical Instruments.

India goes mobile

• Ebay India is in the news for apparently looking to launch its services on mobiles in India in the yr end 2010.

• 1800 number which were started in year 2009 for users to dial in and transact on eBay India.

• Reason to go mobile : Indian market size is 9500 crores. E-commerce which is e-tailing is 1200 crores and overall market is growing at about 30%.

CORE OF AUCTION SYSTEM

• Scheduling Actions• Notification:1.Emailbased notification is a push technology.2.Web-based dissemination is a pull technology.• Scaling: An auction site manager should be

concerned with at least three types of loads: page views, bidding actions, and internal actions like clears and quotes.

E-Com Model1st Step : Registration

2nd Step : Interaction

3rd Step : Transaction

Designing with UML notations

• The auction system in ebay was designed using the

1)Use Case,2)Sequence,3) Class &4) Component Diagrams offered by UML and the Rational Rose Tool.

Use case Diagram

Purchase Use case Diagram

Class Diagram

Sequence Diagram

Component diagram

Calculating bidding price• K = (HP – SP) • PABC = (PEP – PSP) / (PEP – PB) • Speed = (K/PABC)*1.2 • Medium = (K/PABC)*1• Leisure = (K/PABC)*0.8WhereK is the amount of money that can be bidHP is the highest forecast-price of productsSP is the seller’s suggested starting price.PABC is the average amount of the previous total bidding prices that the bidder has bidPEP is the ending price of the product in the previous bidding PSP is the starting price of the product in the previous biddingPB is theprice of products in the previous bidding (PB)

Challenges

• Fraud1.non-delivery 2.shill bidding3.multiple bidding4. feedback extortion5.and false reports of fraud

Challenges

• Censorship:1.The global reach, relative openness, and

anonymity afforded by C2C auctions permits the posting of politically incorrect material or product.

2.content submitted to the site to be sure it is appropriate for minors, or create a gateway for minors.

Challenges

• Abuses in auctioning• Maintain trust• Worms and Viruses: Continuous up

gradation of hardware and software not only keeps pace with demand

Challengesmain competitors

Combating Frauds

• Reputation Management: Reputation mechanisms are another common method of combating the fraud that often comes with the freedom afforded by anonymity

• Payment and Escrow: C2C auction sites increasingly offer extra services to improve the security and efficiency of the marketplace

Integration issue on

• The integration issues on a C2C auction site are different since all auctions sites share the same core functionality which are:

1. admit bids2. generate information3. and clear.• A public C2C market like eBay has different

requirements than a one-time procurement auction with certified participants

Conclusion

• Sustainable in short term by buyers & sellers• Complacency due to its position• Facing increased competition from Goggle

and Microsoft• Competitors are providing free services to

capture market share• Technology – can be easily replicated

Recommendations• Make new acquisitions• Continue to go global• More on-site advertising and make eBay item

positioning free• Proactive approach – to compete with new

products developed by Microsoft and Goggle • Need to continuously improve it services and

technology to maintain differentiation