Online Auction Case Analysis

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Industry and Competitive Situation Analysis 1. Dominant Economic Characteristics of the Online Auction Industry Market Size: § 14.5% of an estimated 320 million users will be registered to an online auction site.

§ Revenues from online business-to-business are a $145 billion market. Business-to-consumer is 31.2 billion.

§ The national market for auctions, garage sales, flea markets and classified purchases was greater than $100 billion in 1999 § In 1999 an estimated 8.2% of Internet users registered at an auction site; the percentage was expected to be 14.5% by 2002.

Scope of Competitive Rivalry: § Dominant players are competing internationally in parts of North America, Europe, Asia and Latin America as well as local and regional competitors going after niche markets.

Market Growth Rate: § Estimated growth of business-to-business sales is 665% by 2004.

§ E-commerce in the U.S. accounted for over 65% of all Internet transactions in 1999 but estimated only 38% in 2003.

This indicates the growth in other parts of the world.

Stage in Life Cycle: § Rapid growth and takeoff ? the market is in a boom, as markets open up around the world, and more households are connecting to the Internet.

Number of Competitors in Industry: § There are a small number of market leaders, including eBay, Amazon, and Yahoo as well as a group of smaller competitors such as eHammer, edeal, and Haggle online.

Customers: § Bargain hunters ? view online auctions primarily as a form of entertainment; their objective usually was to find a great deal.

§ Hobbyist/collectors ? used auctions to search for specific goods that had a high value to them personally.

§ Sellers ? There are three types, casual sellers, hobbyists/collectors, and power sellers.

Ease of Entry/Exit: § High entry barriers due to the strong market leaders. New entrants...