Factors Contributing to the Launch of Snappy Auctions
1. What elements factored into Gordon’s initial opportunity assessment (i.e., the launch of Snappy Auctions)?
2. What role has the Internet played in creating new sources of entrepreneurial opportunity?
3. What are the sources of value in e-commerce business models?
4. What was the basis of the Snappy Auctions’ business model?
5. What impact were the changes eBay was making to its online auction venue having on the competitive nature of the retail drop-off business model?
6. How, if at all, were Snappy Auctions and its competitors changing their respective business models?
7. Besides the changing industry landscape, what other issues did Gordon need to address at Snappy Auctions in order to position the venture for sustainable growth?
8. Evaluate the sustainability of Gordon’s business model. Would you recommend Gordon continue with the drop-off store model? To what extent do you think seeking external funding would enhance the prospects of sustainability in the business model? Justify your answer.
1. Debbie Gordon was initially employed with a company and later her entrepreneurial spirits made her search for opportunities online. The era saw the starting of internet sales rising, as eBay gradually forayed into the market and established its base (Willcocks, 2006). The online auctioning opportunities provided by eBay made her inquisitive regarding the immense opportunities that it can hold for a business. While being unemployed she capitalized on the return policy of a shoe company and purchased them, relabeled them, photographed them and then sold them online through auctioning ay eBay. Being able to successfully make a handsome commission by selling third party produced shoes through online auctioning, Gordon was approached by many friends as they wanted their products to be sold through online auctioning. This led Gordon imaging and setting the business model for Snappy Auction for sellers who did not have the time or expertise to sell through online auctioning by assessing initial opportunities.
2. The evolution of eBay as well as Snappy Auction was based on the establishment and development of internet as a medium providing necessary market place. The use and utility of internet had been gradually increasing over the past few years with encompassing more and more complex data as well as connectivity enhancement. Internet offered a broader market within the global market place where a seller based in any part of the world could sell products online to any customer based across the world (Schenkel, 2012). Further with the securing and acceptance of several third party payments through PayPal and Credit Cards, there was further boost to the business of ecommerce. Especially in America with rise in internet users most consumers were purchasing various products from eBay by use of auctioning. Hence, with the help of internet Snappy Auctions devised a platform whereby sellers who could not sell through online auctioning they were assisted. Snappy Auction first business model collected goods from sellers labeled and photographed them and sold them on online auction. They charged eBay auctioning fees as well as their commission, delivered the products upon ordering, collected payment and then gave the proportionate amount to the sellers, post their commission and eBay fees.
The Role of the Internet in Creating Entrepreneurial Opportunities
3. Snappy Auction by use of eBay online auctioning platform established their business and formed a virtual marketplace for many sellers. Snappy Auction entire business model was based on internet and ecommerce modeling, offering sellers options to a wider marketplace to find buyers for their products (Hartley, 2006). There is immense value offered to these sellers by use of e-commerce business model. Some of the values offered is;
Global Marketplace: Small sellers who have limited opportunity and customer base to sell their offering, online and e-commerce provides them immense opportunities. Through effective use of online sales sellers are able to take advantage from a global market place thus broadening the scope of their offering.
Efficiency: E-commerce helps in efficient functioning of business in variable ways. There will be tremendous amount of buyer asymmetries removed by usage of internet and e-commerce portals.
Lock-In: In e-commerce businesses the business model engages user in repeated transactions. Lock-in is enabled by switching costs which customer faces in order to select a different product (Chaffey, 2007).
4. Snappy Auction business model is based on providing opportunities to sellers who are unable to access the same through their physical market place. Snappy Auction helped sellers who had limited idea and concept regarding online transactions to facilitate the same for them such as to broaden the scope of e-commerce retailing (Holden, 2007). Gordon met eBay representatives as well as their marketing heads in order to conceptualize and understand their model of working and then developed a parallel business model for her start-up such as to facilitate auctioning for smaller retailer. This was the business model in the initial period, where by Gordon stocked goods from various sellers. Later the company started on a franchise business model whereby a business could acquire Snappy Auctions franchise and then sell various products through online auctioning.
5. E-commerce businesses especially eBay was incorporating various changes to its business model whereby the competitive nature of the drop-off business model was gradually transforming. With enhancing payment options, securing of transactions and enabling easy sales, with reducing fraudulent services, it was emerging as the most sought after service in the internet sales market place (Podobnik, 2006). Retail drop-off business model had to have physical market presence which was gradually getting transformed with eBay’s initiatives. It had also developed rating for various sellers such that buyers could easily recognize and purchase their products from reliable sources.
6. Business models encompassing physical stores were gradually getting transformed into online existence with the development of Snappy Auctions and their competitors. Snappy auctions were furthering the scope of small retailers who were not accustomed to selling their products online. Snappy Auction developed a model whereby sellers provided goods to Snappy Auction, who labeled, photographed and put the products for auctioning along with a substantial amount of commission and eBay fees (Turban, 2009). Thus, physical stores had limited presence and smaller retailers who worked with Snappy Auction were able to offer their products to a wider market place, generating a higher volume of sales.
Sources of Value in E-commerce Business Models
7. Gordon by establishing and enhancing Snappy Auction business model changed the industry landscape and provided ventures position for sustainable growth. While Snappy Auctions business model of providing online platform to several retail businesses was performing well, the option with franchise model had not been established (Lin, 2008). Snappy Auction needed to provide opportunities to retailers for their continued existence against larger potential market players, who possessed capabilities to dump immense amounts of goods that can significantly drive prices down. There were immense untapped opportunities existing in various product segment of the market that existed across geographical boundaries. Such opportunities once explored could provide buyers access to various resources and products online. The way forward for online auctioning was to establish business-service partnership, estate auctioning and business liquidation. There needs to be exploration for opportunities in order that they can differentiate themselves in the marketplace (Hennig-Thurau, 2010).
8. Gordon’s business viability ha a limited existence as it extends usage of sellers who possessed limited capabilities as well as opportunities. Gordon’s business model is an extension to the existing business model of eBay, to facilitate its use (Kashkooli, n.d.). The drop-off store model adopted by Snappy Auction has a short-term existence as it is not a business idea in itself. Seeking external sources of funding will only extend the current business scope but not incorporate in newer ideas into the venture. Thus, new sources of funding will not enhance business sustainability. It will only extend the scope of present business to encompass newer retailers.
References
Chaffey, D., 2007. E-business and E-commerce Management: Strategy, Implementation and Practice. Pearson Education.
Hartley, J.L., Lane, M.D. and Duplaga, E.A., 2006. Exploring the barriers to the adoption of e-auctions for sourcing. International Journal of operations & production management, 26(2), pp.202-221
Hennig-Thurau, T., Malthouse, E.C., Friege, C., Gensler, S., Lobschat, L., Rangaswamy, A. and Skiera, B., 2010. The impact of new media on customer relationships. Journal of service research, 13(3), pp.311-330.
Holden, G., 2007. Starting an online business for dummies. John Wiley & Sons.
Kashkooli, K., The Building of the Quintessential American Market: A Brief History of eBay.
Lin, K.J., 2008. E-commerce technology: back to a prominent future. IEEE Internet Computing, 12(1), pp.60-65.
Podobnik, V., Trzec, K. and Jezic, G., 2006, October. An auction-based semantic service discovery model for e-commerce applications. In OTM Confederated International Conferences” On the Move to Meaningful Internet Systems” (pp. 97-106). Springer Berlin Heidelberg.
Schenkel, M.T., Cornwall, J.R. and Finley, J., 2012. Snappy Auctions. Entrepreneurship Theory and Practice, 36(3), pp.589-606.
Turban, E., King, D., Lang, J., Lai, L., McKay, J., Marshall, P., Pollard, C., Seballos, D., Viehland, D. and Volonino, L., 2009. Introduction to Electronic Commerce 2/e. Person Education International.
Willcocks, L. and Lacity, M., 2006. Global sourcing of business and IT services. Springer.
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