Online Auctions (lessons learned from strategic E-business consulting)

Online auctions are among the most influential e-business applications. Their impact on trading in the B2B (business to business), as well as in the B2C (business to consumer) and C2C (consumer to consumer) areas is both remarkable and inevitable. Although there have been considerable efforts in setting up market places, online trading still lays in its early stages. Quite a few companies have started projects of their own, trying to improve their purchasing and sales channels. This article discusses the benefits of the most impressing concept of Internet marketplaces, namely, the conduction of online auctions. We discuss their benefits, the problems occurring, and possible solutions. In addition we sketch actions for suppliers to achieve a better strategic position in the upcoming Internet market places. ONLINE AUCTIONS IN THE CONTEXT OF THE INTERNET MARKETPLACE Electronic commerce will be the enabling technology for the next industrial revolution. Virtual, Internet-based markets allow entirely different forms of trading (Höller et. al., 1998). Local, therefore sometimes monopolistic markets become global and more competitive. Expectations are that in the forthcoming decade the Internet will be a market enabler of unforeseen possibilities. Just in the last few years it became apparent that doing business over the Internet can simplify marketing and purchasing considerably (see e.g. Forrester Research, 1999). Figure 1 shows the worldwide trading volume in the Internet and it can be expected that the part based on online auctions will equally grow. Therefore, an increasing number of online marketplaces have come into existence. Online Marketplaces simplify the establishment of new alternative purchasing and selling partnerships. In the C2C and B2C areas this fact has been widely recognized, and numerous new B2B marketplaces have been coming up in the last two years.