Case study for C2C Commerce

Group Members
Dhanalaxmi
Asmita Soren
Amit Murmu
Ankit Adarsh Ravi
Anuja
Nishi
Shreya
Kirti
Avinash Swarnkar
Shashi 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 rules
b)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
 eBay - A Great Global Business

Presence in
Americas 39 Markets
USA
Canada
Argentina*
Brazil* Asia Pacific
Chile* Australia
Colombia* China
Costa Rica* Hong Kong
Dominican Republic* Japan
Ecuador* India
Mexico* Korea
Panama* Malaysia
Peru* New Zealand
Uruguay* Philippines
Venezuela* Singapore
Europe Thailand
*MercadoLibre sites Taiwan
Austria Belgium
France Germany
Ireland Italy
Netherlands Poland
eBay site Minority investment
Spain Switzerland
Sweden Turkey
18 UK
 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
Substitute
Suppliers products
MODERATE INTENSE

eBay
Rival
firms Buyers
STRONG WEAK
New
entries
STRONG
SWOT Analysis
 First mover advantage  Decrease
Decreaseiningrowth
growthrate
rate
 Large and impenetrable  Trust
Trustissues
issuesbetween
betweenbuyers
buyers
market share &&sellers
sellers
 the scale of bidders &sellers  Oriented
OrientedininP2P
P2Pmarket
market
 No traditional retailing cost  Community
Communitypower
power
structure

S W

O T
 e-Commerce
e-Commerceisisincreasing
increasing
 Chances
Chancesfor forM-commerce
M-commerce  Simple
Simpleand
andeasy
easytotoimitate
imitate
 Possibility
Possibilityto
toexpand
expandhigh
highcost
cost  Fraud
Fraudtrading
trading(Trust
(TrustIssues)
Issues)
product
product  System
SystemSecurity
Security&&reliability
reliability
 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.
 1st Step : Registration
E-Com Model

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)*0.8
Where
K is the amount of money that can be bid
HP is the highest forecast-price of products
SP is the seller’s suggested starting price.
PABC is the average amount of the previous total bidding prices that the bidder has bid
PEP is the ending price of the product in the previous bidding
PSP is the starting price of the product in the previous bidding
PB is theprice of products in the previous bidding (PB)
 Challenges

• Fraud
1.non-delivery
2.shill bidding
3.multiple bidding
4. feedback extortion
5.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
 Challenges
main 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 bids
2. generate information
3. 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