TaxationSlide 2Taxation - forTaxation - againstTaxation - MichiganTaxation - futurePricingSlide 8AuctionsAuctions - problemsAuctions - benefitsName your own priceDemand aggregationAutomatic price declinePowerPoint PresentationNegotiated buyBarter sitesInternet Levels playing fieldSynonymous pricingSlide 20Slide 21HED 460Taxation3-year moratorium imposed in 1998 ended Oct. 21Congress plans to pass an extension by year’s endHED 460TaxationWhy should Internet commerce be taxed?Why should Internet commerce NOT be taxed?HED 460Taxation - forRequired to collect from customers who live in states of e-tailer presenceState/local govts argue loss of sales tax revenue harmsBricks and mortar retailLocal schoolsLocal governmentsHED 460Taxation - againstRetailers argue state/local tax codes are complexLost tax revenue is a drop in the bucket since e-commerce is a small percentage of total retail salesHED 460Taxation - MichiganState says it is no different than catalogPuts Internet and stores on level playing fieldCost to collect is $2 millionAdditional revenue is $240 millionHED 460Taxation - futureMoratorium will probably be extendedTax codes need to be simplifiedSales tax calculation and remittance software needs refining and validatingHED 460PricingFeasible to test new pricing modelsTraditional price setting is being modernized due to information availabilityInternet reduces transaction costs for consumersOn-line prices are usually lowerHED 460PricingMost prevalent model is fixed pricingPrices are set; consumers decide79% of all e-tailers use itAmazon.com, bn.com, buy.com, etoys.com, gap.com, macys.comHED 460AuctionsPublicly held saleProperty/goods sold to highest bidder20% of on-line salesAmazon, eBay, Egghead, uBid, Yahoo!Reverse auctionBuyers specify; sellers compete to offer best price – liquidprice.comHED 460Auctions - problemsInefficient commerce and pricingArtificially bidding up pricesCollusionTwo bidders can illegally team up to winPaymentNew systems – credit card is debitedHED 460Auctions - benefitsCreate hype and bolster trafficImprove inventory managementExcess goods/returned merchandiseGenerates repeat businessEstimate consumer demandEvaluate price points for new productsHED 460Name your own priceConsumer’s suggest priceService presents price to sellersSellers decide whether to accept priceSimilar to reverse auctionPriceline.comHED 460Demand aggregationGroup buyingService assembles buyers who want to purchase same productMore buyers = lower prices1% of online salesActbig.com, mercata.com, mobshop.comHED 460Automatic price declineInitial retailPrices fall by seller-determined % at regular intervalsPrices quit declining when all is soldBasement.com, jcpenney.com, outletzoo.comHED 460HED 460Negotiated buySearch for lowest prices available for specific productShoppers negotiate with select sellers to obtain better priceHagglezone.com, nextag.comHED 460Barter sitesPerson-to-person trading communitiesTrade second-hand goodsUsers negotiate with each other and reach agreement onlineMail items to each otherIntellibarter.com, swap.com, switchhouse,com, webswap.comHED 460Internet Levels playing fieldConsumers Lowers transaction costsPrice comparisons, easily and quicklyRetailersEasy to shop the competitionAbility to track consumer clicks onlineHelps identify price thresholds and willingness to pay for different products/servicesHED 460Synonymous pricingAvailability of pricing info places overall downward pressure on priceCreates an environment of frequent price changesE-tailers offer similar products at the same priceHED 460Synonymous pricingFeasibility depends on nature of productStephen King novel is Stephen King novel, regardless of retailerWal-mart polo vs. Ralph Lauren poloDifferentiated products are not likely to experience synonymous pricingHED 460Synonymous pricingPrice is not always the driverGift givingSome consumers are unwilling to spend time to track pricesRetailers will focus on the most important products for