Strategies for Online Auction Portal Success: Tackling eBay Challenges in the Network Economy

1. Taking oneBayIssues in a Network Economy Chris Goodwin Sam Graber Matt Grace Michael Nelson

2. Overview • Introduction • eBay • Online Auction Portal Concept • Establish Positive Feedback • Build Trust • Revenue Model • Discussion

3. Introduction • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Can ANYONE compete with eBay? • No! • Why not? • Yes! • How do you build a large enough online community in the relatively short amount of time before eBay tries to sink you? • Prey upon eBay’s weaknesses!

4. Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Largest, most recognized online auction facility in the world • Monopolistic characteristics • Enormous brand equity • No substantial competition • Essentially unregulated market • Significant economies of scale

5. (and others) • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Chinks in the armor • Reluctance to partner with other auction sites • Cumbersome search engines • Lack of standardized categories • Un-user friendly • Not intuitive • Multiple registration processes across different auction sites

6. Online Auction Portal - Concept • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Build upon eBay’s existing formula for success (extensive online community) • Consolidate so-called “second tier” auction houses under one common “portal” • Pool individual strengths & resources • Together we stand, divided we fall

7. Online Auction Portal - Concept • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Each auction house remains own, independent entity • Become partners, or members, of our online portal service • Include traditional online brick and mortar retailers • Symbiotic relationship • Struggling retailers get online presence and move hard to sell inventory • Users gain additional much desired purchasing options

8. Online Auction Portal - Concept • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Further differentiate by adding ‘Proxy’ service • Search engine scours every online auction site and retailer looking for specified merchandise • Places bid on product • Purchases within specified time period • Add small service charge for service

9. Establish Positive Feedback • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • In order to compete with eBay, it is essential to develop positive feedback • Establish positive feedback by: • Improving buying & selling experience • Examples: • Standardize search for products – include detailed search form • One-time registration process across all member auction sites

10. Build Trust • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • It is imperative for portal service to build trust among buyers & sellers • Allow sellers to carryover existing reputation ratings from other auction sites (including eBay) • Brick and mortar retailers would automatically get highest ratings • Partner with reputable e-commerce purchasing service (ie. Paypal)

11. Revenue Model • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • As most dot.coms have realized, it IS important to produce revenues! • Charge sliding scale commissions • 1%-3% for any items sold through our service • Proxy service: 5% added surcharge to purchases made through proxy service • Banner Advertisements (Playboy.com charges 10K for advertising space) • Substantial portion of initial VC money used on media advertising • Must generate site awareness in order to compete

12. Discussion • Introduction • eBay • Concept • Positive Feedback • Build Trust • Revenue Model • Discussion • Why wouldn’t this work? • Win/Win for everyone (except eBay) • Is media blitz enough to generate site awareness? (ie. WingspanBank.com) • Can consolidated online auction services actually compete with eBay?