|
...least one purchase from the Internet, up from only six million in 1994 (American City & Country, 004; Hof, 2003). On-line marketing has become, and will continue to become, a full and complete business model for some companies. Internet firms such as Amazon.com, eBay, Yahoo!, and Netscape have proven that this type of business model can succeed. Research suggests that online sellers are making successful efforts to increase consumer usage of their Web sites (Saeed, Hwang, and Yi, 2003).
EBay began as a trading post for collectibles, such as Pez dispensers and Beanie Babies, and through 2000, those collectibles still accounted for up to 60% of its auctions. However, by 2002, collectibles accounted for only 30%. In 2001 alone, around 423 million items in about 18,000 categories were put up for auction on eBay (Bajari and Hortacsu, 2003). Buyers and sellers of many diverse products are finding eBay to be a viable marketplace. At least 30 million people bought and sold more than $20 billion in merchandise on eBay in 2003 (Hof, 2003; Lucking-Reiley, 2002). This is more than the gross domestic product (GDP) of all but 70 of the world's countries (Aldridge, 2004). Somewhere between 150,000 and 200,000 entrepreneurs will earn a full-time living selling everything from new and used underwear to diet pills to BMWs on eBay (Adler, 2002; Bradley and Porter, 2000; Hof, 2003). In fact, more automobiles are sold on eBay than are sold by Auto Nation, the volume leading car dealer in the United States (Aldridge, 2004; Bold, 2004; Hof, 2003; Strategic Direction, 2004). In addition, diverse businesses, such as pawnshop dealers, are now selling more merchandise on eBay than in their brick-and-mortar stores (Bold, 2004).
When the CEO of eBay, Margaret C. Whitman, described eBay as a "dynamic self-regulating economy," no one even blinked (Bradley and Porter, 2000; Hof, 2003). Several aspects of eBay have been specifically designed to support the principles of an almost free-standing economy. First, eBay set up a free market. Founder Pierre Omidyar let people decide what they wanted to sell, thus encouraging organic growth that continues today (Bradley and Porter, 2000; Hof, 2003). Second, eBay lets the users or "citizens" of the site dictate its direction. For example, as users plunged into consumer electronics, cars, and industrial gear, eBay followed. Today, eBay has 27,000 categories, including eight with gross sales of more than $1 billion each. Every couple of months, eBay meets with as many as a dozen sellers and buyers to ask them how they work and what else eBay needs to do. At least twice a week, it holds hour-long teleconferences to poll both buyers and sellers on almost every new feature or policy, no matter how small (Bold, 2004; Hof, 2003; Weiss, Capozzi, and Prusak, 2004).
Third, eBay has set up a "legal" system for policing itself. Promoting self-governance, eBay devised a feedback forum to let users rate one another to discourage fraud. Now, eBay is taking on a more overt governing role, writing software to catch crooks early and limiting or banning sales of certain merchandise, such as guns and Nazi memorabilia. Fourth, eBay educates its "citizens," holding constant classes (eBay University) in cities around the country to teach people how to use the site. Participants generally double their selling activity on eBay after taking one of these classes (Freedman, 2004; Hof, 2003; Mathews, 2004). Fifth, eBay has created its own banking system. Last year, eBay bought the on-line payment processing company PayPal for $1.5 billion to speed up the velocity of trade. PayPal is now offered on 84% of eBay listings, up from 69% a year ago (Aldridge, 2004; Hof, 2003). Sixth, eBay promotes free trade. Since 2000, eBay has been expanding internationally, buying sites in Germany, Great Britain, South Korea, and China. Its overseas sales now contribute 30% of revenues (Brand Strategy, 2004; Hof, 2003). Many other online auctions concentrate only on the U.S. market and currently show no interest in expanding overseas (Aitken, 2004).
EBay itself is doing what it can to increase its revenues, but it also seems to be buying into a basic business philosophy of sustaining a business--relationship marketing. EBay wants to design itself in such a way that both buyers and sellers can benefit as much as possible. Recent studies of eBay auctions identified more than 25 eBay options or tools that buyers can use to help attract bidders (Bland, and Barrett, 2004; Gilkerson and Reynolds, 2003). Though it is up to the individual sellers to determine the best combination of options, it is clear that eBay is doing its part. However, external factors may also influence eBay buyer behavior. Current eBay research has neglected external variables and has concentrated on specific elements of the auctions themselves (Aldridge, 2004). These factors may include consumer demographics, such as the size of community in which customers reside, the crime rate in their communities, the average income of their communities, the education level of the consumers, and the weather during the time of the auction.
Further, most current research on eBay examines relatively small sample sizes, concentrating on auctions for one product class over a short period of time, thus limiting the sample size. There are some exceptions: A study with a larger-than-average sample size examined 661 auctions for calculators (Bland and Barrett, 2004), while another recent study with a relatively large sample size examined 516 eBay auctions for coins (Bajari and Hortacsu, 2003). The current research examines 753 different auctions.
This study examines a large sample of eBay transactions to determine if certain external variables serve as predictors of eBay outcomes. The predictor or independent variables examined include gender of the consumer, whether the bidder lives in a rural or urban area, and in which of the six U.S. regions the bidder resides. The outcomes or dependent variables examined include the total value of the transaction and the number of purchases. Gender (Freedman, 2004;...
NOTE: All illustrations and photos
have been removed from this article.
Looking for additional articles?
Search our database of over 3 million articles.
Looking for more in-depth information on this industry?
Search our complete database of Industry & Market reports by text, subject, publication
name or publication date.
About Goliath
Whether you're looking for sales prospects, competitive information, company
analysis or best practices in managing your organization,
Goliath can help you meet your business needs.
Our extensive business information databases empower business
professionals with both the breadth and depth of credible,
authoritative information they need to support their business
goals. Whether it be strategic planning, sales prospecting,
company research or defining management best practices -
Goliath is your leading source for accurate information.
|
