Internet Based Business Model Dubli

Topics: Network effect, Auction theory, Marketing Pages: 4 (1398 words) Published: April 6, 2011
Dubli.com is an auction, shopping and entertainment portal based on a pay-to-shop model. Traditionally, all pay-to-shop models create value for customers by effectively leveraging the initial payments made by the customers. In the case of Dubli.com, this initial payment can be leveraged much more effectively due to the possibilities available in an internet environment. The internet enables customers to simultaneously and speedily access information about the auction item and to take further decisions on that information. Dubli uses this effective leverage of initial payments in all its lines of business, but most profoundly in its auction business which is the area of innovation we have decided to focus on.

Dubli.com has pioneered and implements two unique reverse auction models. Unlike traditional auction models where buyers bid to increase the price of the item, in these models each bid decreases the price of the item and the winner can buy the item at the lowest price. The 2 models work as follows: (i) Dubli Express auction: The customer can initially only see the original list price of the item – the price they would pay on the high street. In order to view the current price of the item, the customer uses 1 pre-purchased credit ($ 0.80). This reduces the price of that item by $ 0.25, as does every other attempt to view the price by other customers. At this point, the customer can choose to either buy the item at the current price or to wait for the price to be lowered further by other bidders. Thus the prices of the items are constantly lowered and Dubli makes a margin of $ 0.50 on each bid. This results in savings for the auction winner and a substantial margin to Dubli at the cost of only small losses by a large number of bidders. (ii) Dubli Unique Bid auction: Bidders bid on an item for a limited period of time but do not have a choice to buy the item during the auction. With each bid, which costs 1 credit (approx $0.80) the bidder is told whether...
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