Introduction

Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown dramatically since the wide introduction of the Internet. A wide variety of commerce is conducted in this way, including things such as electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), automated inventory management systems, and automated data collection systems. Electronic commerce also uses electronic communications technology such as the extranets, email, e-books, databases, and mobile phones. For this project, we have chosen to examine and evaluate on two e-commerce websites which are eBay.com and Amazon.com. We will study their purposes, features, key characteristics, designs, strengths and weaknesses of their websites.

Research Report 1: eBay.com

eBay Inc. is an American Internet company that manages eBay.com, the world's largest online auction site. The online auction web site was founded in San Jose, California on September 3, 1995 by computer programmer Pierre Omidyar. eBay does not actually sell goods that it owns itself. It merely facilitates the process of listing and displaying goods, bidding on items, and paying for them. It acts as a marketplace for individuals and businesses who use the site to auction off goods and services. In addition to its original U.S. website, eBay has established localized websites in several other countries.

Purpose:

Allow people and businesses to buy and sell goods and services through the website

Features:

eBay opened its new eBay Express site, which is designed to work like a standard Internet shopping site to consumers with United States addresses (eBay Express). Selected eBay items are mirrored on eBay Express where buyers shop using a shopping cart to purchase from multiple sellers. The UK version was launched to eBay members in mid October 2006 (eBay Express UK), and differs from the US version by only offering brand new items from pre-vetted business sellers. The German version was also opened in 2006 (eBay Express Germany).Later, eBay added an eBay Community Wiki and eBay Blogs to its Community Content which also includes the Discussion Boards, Groups, Answer Center, Chat Rooms and Reviews & Guides. Ebay has a robust mobile offering, including SMS alerts, a WAP site, and J2ME clients, available in certain markets.

Key Characteristics:

eBay.com uses a C2C business model. It acts as an online marketplace. eBay offers three types of auctions which are Auction-style listings, Fixed Price format and Dutch Auctions. Auction-style listings allow the seller to offer one or more items for sale for a specified number of days. The seller can establish a reserve price. Fixed Price format allows the seller to offer one or more items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid. Dutch Auctions allow the seller to offer two or more identical items in the same auction. Bidders can bid for any number from one item up to the total number offered. eBay uses a paypal system. PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. It serves as an electronic alternative to traditional paper methods such as cheques and money ordes. PayPal performs payment processing for online vendors, auction sites, and other corporate users, for which it charges a fee. PayPal is owned by eBay Inc.

Design:

The background colour of the website is white.The texts are either black or blue or grey. The website also uses light colour like yellow. It matches well with the background colour. It creates a soothing effect on the users.

Strengths:

1. No time constraints. Bids can be placed at any time. 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.
2. 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 (ie.: 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.
3. Intensity of social interactions. The social interactions involved in the bidding process are very similar to gambling. The bidders wait in anticipation hoping they will "win" (eBay calls the successful bidder the "winner"). Much like gambling addiction, some bidders may bid primarily to "play the game" rather than to obtain products or services. This creates a highly loyal customer segment for eBay.
4. 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.
5. 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.
6. Network economies. The large number of bidders will encourage more sellers, which, in turn, will encourage more bidders, which will encourage more sellers, etc., in a virtuous circle. The more the circle operates, the larger the system becomes, and the more valuable the business model becomes for all participants.
7. Captures consumers' surplus. Auctions are a form of first degree price discrimination. As such, they attempt to convert part of the consumers' surplus (defined as the area above the market price line but below the firm's demand curve) into producers' surplus. On-line auctions are efficient enough forms of price discrimination that they are able to do this.

Weaknesses:

eBay acknowledges weaknesses in its feedback system on its own policy pages, noting several of the points which include:

1. Small and large transactions carry the same weight in the feedback summary. It is therefore easy for a dishonest user to initially build up a deceptive positive rating by buying or selling a number of very low value items, such as e-books, recipes, etc., then subsequently switching to fraud.
2. A user may be reluctant to leave honest feedback out of fear of negative retaliatory feedback (including "negative" in retaliation for "neutral").
3. Users and generators of feedback may have different ideas about what it means. eBay offers virtually no guidelines.
4. Feedback and responses to feedback are allotted only 80 characters each. This can prevent users from being able to fully list valid complaints.
5. Although eBay protects sellers from getting a negative feedback from a deadbeat buyer when the deadbeat buyer/bidder did not respond to Unpaid Item dispute, they do not offer the same protection for a buyer who gets a deadbeat seller.

Many complaints have been made about eBay's system of dealing with fraud. The complaints are generally that eBay sometimes fails to respond when a claim is made. And since eBay makes its money on commissions from listings and sales it may not be in eBay's interest to take action against large sellers.

Frauds that can be committed by sellers include:

• Receiving payment and not shipping merchandise
• Shipping items other than those described
• Giving a deliberately misleading description
• Knowingly and deliberately shipping faulty merchandise
• Counterfeit or bootleg merchandise
• Knowingly selling stolen goods
• Inflating total bid amounts by bidding on their own auction with "shill" account(s), either the seller under an alternate account or another person in collusion with the seller. Shill bidding is prohibited by eBay and, in at least one high-profile case involving Kenneth Walton (and his accomplices Kenneth Fetterman and Scott Beach) has been prosecuted by the federal government as criminal fraud

Frauds committed by buyers include:

• PayPal fraud: Filing false shipping damage claim with the shipping company and with PayPal.
• Credit card fraud, in the form of both stolen credit cards and fraudulent chargebacks.
• Receiving merchandise and claiming otherwise
• Returning items other than received
• The buyer sends a forged payment-service e-mail which states that the buyer has made a payment to the seller's account. An unsuspecting seller may ship the item before realizing the e-mail was forged

Research Report 2: Amazon.com

Amazon.com, Inc. is an American e-commerce company based in Seattle, Washington. It was one of the first major companies to sell goods over the Internet. Founded by Jeff Bezos in 1994, and launched in 1995. Amazon.com began as an online bookstore, though it soon diversified its product lines, adding VHSs, DVDs, music CDs, MP3s, computer software, video games, electronics, apparel, furniture, food, toys, and more. Amazon has established separate websites in Canada, the United Kingdom, Germany, Austria, France, China, and Japan.

Purpose:

Amazon.com is a virtual storefront which sells goods over the internet

Features:

A popular feature of Amazon is the ability for users to submit reviews to the web page of each product. As part of their review, users must rate the product on a rating scale from one to five stars. Such rating scales provide a basic idea of the popularity and dependability of a product. The review feature is an important and highly influential function for customers and was certainly one of the main reasons for amazon.com’s success at selling books. Also, Search Inside the Book is a feature which makes it possible for customers to search for keywords in the full text of many books in the catalog. The feature started out with 120,000 titles (or 33 million pages of text) on October 23, 2003. There are currently about 250,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches.

Key Characteristics:

Amazon.com uses both B2B and B2C business model. It uses a B2B business model because The Web sites of Borders (borders.com, borders.co.uk), Waldenbooks (waldenbooks.com), Virgin Megastores (virginmega.com), CDNOW (cdnow.com), and HMV (hmv.com) are powered and hosted by Amazon. Amazon.com powers and operates retail web sites for Target, the NBA, Sears Canada, Sears UK, Benefit Cosmetics, Bebe Stores, Timex Corporation, Marks & Spencer, Mothercare, and Bombay Company.For a number of these companies, specifically the UK ones like Marks & Spencer and Mothercare, Amazon provides the multi-channel solutions not just the web site. That means that it also powers the in store terminals, customer-service applications and phone-sales terminals. Amazon.com also uses a B2C business model as it act as a virtual storefront which sell goods to individuals. Amazon accepts a wide range of payment mode (American Express, Diners Club, Discover, JCB, MasterCard, Eurocard, Visa, Visa Check Cards, Amazon.com gift certificates, Amazon Credit Account, Webcertificates, and checks, money orders, traveler's checks, or cashier's checks denominated in U.S. dollars and drawn on a U.S. bank.)

Design:

The background colour of the website is white.The texts are either black or blue or orange. It creates a soothing effect on the users.

Strengths:

1. You may return most new, unopened items sold and fulfilled by Amazon.com within 30 days of delivery for a full refund. They'll also pay the return shipping costs if the return is a result of our error (you received an incorrect or defective item, etc.).
2. You can safely enter your entire credit card number via their secure server, which encrypts all submitted information. If you prefer, they also have a way for you to use your credit card without ever having to enter the complete number on the Internet.
   When filling out the order form, simply enter the last five digits and the expiration date of your credit card on the order form. This gives them a way to track your order but guarantees your security. Once you have fully submitted your order, you will be provided with a phone number so that you may provide them with the rest of your credit card number.
3. You will find a wide range of promotional offers at Amazon.com--some from the manufacturer of an item, some from Amazon.com, and some from third-party sellers on our site. There are three types of promotional offers available: a monetary rebate, a gift that comes with the purchase of a certain item, and an offer to buy multiple items and receive an extra for free.
4. Amazon has worked to protect the security of customers’ information during transmission by using a system called, Secure Sockets Layer (SSL) software, which encrypts information after being entered.

Weaknesses:

1. In 2006 Amazon.co.uk severely limited products that it (or its Marketplace sellers) will ship to the Republic of Ireland, though it will still ship to Northern Ireland. Irish shoppers are now limited to books, CDs, and DVDs only. This is due to WEEE regulations, which Ireland has implemented extremely strictly, while the UK has not.
2. Amazon.com does not publish its toll-free customer service number (+1-800-201-7575) on its own web site. Customers are instead asked to submit written service requests (which are answered by e-mail) or to use a click-to-call service to be connected by phone to an available service representative.