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Questions from Class 106

Hi there,

There were two interesting questions raised in 106:

Where do we place ebay.com within the classification of industries. Seeu Kun went to do some research and here are her findings.

There's still a question on arts goods being giffen goods..

eBay Inc. is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. Web site, eBay has established localized Web sites in thirty other countries. eBay Inc. also owns PayPal, Skype, StubHub, and other businesses.

Type of industry: Auctioning
Products: Online auction hosting, Electronic Commerce, Shopping Mall, Paypal, Skype, Gumtree, Kijiji

An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the winning bidder. On eBay, items are put on auction and whoever is the highest bidder for that particular item will buy the item. On eBay, people are actually able to make money from selling their stuff.

Based on my point of view, eBay should be in the tertiary industry. In the tertiary industry, a more monetary based industry; it involves the selling of goods and provision of services and allows the people involved to make money. IT services are also part of the tertiary industry, as it facilitates communication between people, internet services, connects businesses etc. As eBay is an online auction and shopping website, it provides the service online, thus, we can conclude that eBay is in the tertiary industry.

She went on with more information and this is definitely some plus point information. :)

There are certain strategic advantages of an online auction business model:

No time constraints. Bids can be placed at any time (24/7). Items are listed for a number of days (usually between 1 and 10, at the discretion of the seller), giving purchasers time to search, decide, and bid. This convenience increases the number of bidders.

  • No geographical constraints. Sellers and bidders can participate from anywhere that has internet access. This makes them more accessible and reduces the cost of "attending" an auction. This increases the number of listed items (i.e.: number of sellers) and the number of bids for each item (ie.: number of bidders). The items do not need to be shipped to a central location, reducing costs, and reducing the seller's minimum acceptable price.
  • Large number of bidders. Because of the potential for a relatively low price, the broad scope of products and services available, the ease of access, and the social benefits of the auction process, there are a large numbers of bidders.
  • Large number of sellers. Because of the large number of bidders, the potential for a relatively high price, reduced selling costs, and ease of access, there are a large number of sellers.

As highlighted through her research here, ebay actually springs from the tertiary industries, as a type of financial and service based business. However, now that ebay is a virtual meeting place for sellers and buyers to meet, it does take on a quinary profile. As mentioned in class, one company need not sit neatly in one type of industries only.

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