Fundamentals of Dynamic pricing and E-auctions One Buyer, One Seller Popular in B2B Each party can use negotiation, bargaining, or bartering The resulting price will be determined by Bargaining power Supply and demand in the item's market Business-environment factors Electronic Commerc Prentice Hall 2006 6
Electronic Commerce Prentice Hall © 2006 6 Fundamentals of Dynamic Pricing and E-Auctions • One Buyer, One Seller • Popular in B2B – Each party can use negotiation, bargaining, or bartering – The resulting price will be determined by: • Bargaining power • Supply and demand in the item’s market • Business-environment factors
Fundamentals of Dynamic Pricing and E-Auctions One Seller, Many Potential Buyers forward auction An auction in which a seller offers a product to many potential buyers sealed-bid auction Auction in which each bidder bids only once; a silent auction, in which bidders do not know who is placing bids or what the prices are Vickrey auction An auction in which the highest bidder wins but pays only the second-highest bid Electronic Commerce Prentice Hall 2006
Electronic Commerce Prentice Hall © 2006 7 Fundamentals of Dynamic Pricing and E-Auctions • One Seller, Many Potential Buyers forward auction An auction in which a seller offers a product to many potential buyers sealed-bid auction Auction in which each bidder bids only once; a silent auction, in which bidders do not know who is placing bids or what the prices are Vickrey auction An auction in which the highest bidder wins but pays only the second-highest bid
Exhibit 10.2 Types of forward auctions Liquidation Auctions Seek first t maximIze exIsting Seek lowest price channels and Auction on widely reduce inventory Supplies Customers available goods before using and services auction Disincentives to use auction shrink pply over ti Market Efficiency Auctions Prefer market Seek access to ormat that maximizes Supplies Auction CustomersI unique/rare products or visibility with services potential buyers Incentives to use auction increase supply over time Electronic Commerc Prentice Hall 2006
Electronic Commerce Prentice Hall © 2006 8 Exhibit 10.2 Types of Forward Auctions
Fundamentals of Dynamic pricing and E-auctions One Buyer, Many Potential Sellers reverse auction Auction in which the buyer places an item for bid (tender) on a request for quote(RFQ)system, potential suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins; used mainly in B2B and G2B e-commerce Electronic Commerc Prentice Hall 2006
Electronic Commerce Prentice Hall © 2006 9 Fundamentals of Dynamic Pricing and E-Auctions • One Buyer, Many Potential Sellers reverse auction Auction in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins; used mainly in B2B and G2B e-commerce
Fundamentals of Dynamic Pricing and E-Auctions One Buyer, Many Potential Sellers B2B Reverse Auctions C2C Reverse Auctions “ Name-Your-Own- Price” Model “ name-your-own- price” model Auction model in which would-be buyers specify the price (and other terms) they are willing to pay to any willing seller, a C2B model, pioneered by priceline. com Electronic Commerc Prentice Hall 2006
Electronic Commerce Prentice Hall © 2006 10 Fundamentals of Dynamic Pricing and E-Auctions • One Buyer, Many Potential Sellers – B2B Reverse Auctions – C2C Reverse Auctions – “Name-Your-Own-Price” Model “name-your-own-price” model Auction model in which would-be buyers specify the price (and other terms) they are willing to pay to any willing seller; a C2B model, pioneered by Priceline.com