Forbes: ebay auction Culture changes business model

Lead: The ebay core auction culture has had a profound impact on the global business model by changing people's understanding of contract deadlines, content and pricing, as well as the company's operations, according to an analysis published online today by Forbes magazine. The following is the full text of the article:

Internet auction giant ebay has been facing a growing competition, deteriorating customer relations and saturated markets for several years. However, ebay may not have noticed that their core auction business culture has had a huge impact on the business model, radically changing the way people view the contract content, pricing and deadlines.

Change the term of a contract

Over the past few months, I have conducted a survey of companies from a variety of industries, asking them what they see as a long term contract. The answers I get ranged from "6 months" (from PR companies) to "5 years" (from telecoms companies). I then asked the companies how long the term of a long-term agreement was 5 or 10 years ago. The answer is at least twice times the size of the present. The chief executive of the telecoms company told me sadly that the previous long term contract meant forever. Of the companies I surveyed, only one medical-related company said their contracts had a slightly longer term.

No matter how long the term of the new "long term" contract is, one thing is certain: both parties agree that the prices and terms of products and services may be reviewed and revised frequently. In other words, the so-called long-term contract is only to maintain a business relationship, the specific content of the contract may be changed.

What would happen? You can, of course, blame the credit crunch and the recession. If a company loses its loan or customer needs, it obviously has to be readjusted. Many companies are taking advantage of this and pressuring them to lower their prices, not because their business is weak, but because they are capable of doing so. But some executives say prices will not continue to slide and may also turn higher. In general, everything in the contract can change.

Thanks to booming internet and communications, suppliers, customers and consumers can now learn about real-time market conditions in a variety of ways. While there have been previous contracts, it is under the influence of ebay's auction rules that it has become a common occurrence for both parties to deal with the contract.

In many cases, the parties want to establish a stable relationship, but they also understand that the market situation will change constantly. After a few years, Apple could become the music powerhouse, and Amazon could become a supercomputing service provider, which no one can say. Who knows which company will offer the lowest price in a global market with a fast-changing product?

affect the operation of the company

ebay's auction culture has also had an impact on the company's operations: for example, job definitions may often be redefined. A few years ago, Intel believed that most of its executives had at least three completely different jobs at the company. Cisco executives are often responsible for a variety of tasks, such as marketing, product design and supply chain work. The auction is no stranger to Google, where most of its revenue comes from AD auctions. When Google hires new recruits, it hopes that they will be able to work completely differently after a year.

In this new business model, the company's operating problems become how to maintain price stability or strength, or even extend the contract period. The usual approach is to improve the quality of service, or redefine the products and services sold, thereby gaining the upper hand in the competition. In many new Web sites, content providers have been avoiding large-scale auctions to display ads, instead of designing information pages with special themes, such as replacing the general "sport" with the "tour of the Cycle". If you're lucky, you can get a loyal sponsor or a lot of enthusiastic bidders by positioning your new product as a different supplier.

Another strategy is to sell the rarest commodity in the ever-changing world: calm. The medical company was able to extend the contract because of the increasing regulation and impact on the company's customers. The company gave customers a stable outlook by extending the term of the contract.

In this case, a brand enterprise that offers better customer service and less potential problems becomes another beneficiary. The premise, of course, is that they can withstand the onslaught of competitors ' perceptions of their customers.