whaBAM! a Contender for eBay
By: Chris Bohacek, Tim Dres, Keith Mack, Marco Rea

Executive Summary
The following paper examines a specific case of how a company can benefit from using open source software in the business world. It explores two companies that are similar in the services that they perform but differ in philosophies. One company utilizes open source software while the other is licensing from a proprietary vendor.

The open source based company is whaBAM!, an online auction site. whaBAM!, still in its infancy, offers many benefits to buyers and sellers seeking an alternative to eBay. Although whaBAM! is still young, it has a promising future. By offering more services at lower prices, whaBAM! is hoping to convert victims of eBay’s constantly rising prices and endless fees to their simplified structure. This report analyzes the functions of these two companies in an effort to bring forth the benefits of open source solutions.

Introduction: A Look at Open Source

What is it?

Wikipedia, an online open source encyclopedia states, “Open source describes general practices in production and development which promote access to the end product’s sources.” This means that an individual can read and use the sources of a product to improve, adapt, and redistribute the altered product. Wikipedia, for example, makes their sources for their encyclopedia easily available to and editable by the end users. If someone wishes to add information to a topic, all he/she needs to do is click the edit button and type in the new information. These contributions, barring being unverifiable or violating a copyright, will be licensed under the GNU Free Documentation License. This is fairly common among open source products.

Why Open Source?

Manufacturing products in an open source format can be very beneficial. The producer of an open source product can gain expedient feedback on the product from a multitude of people. This feedback can include suggestions or actual improvements made to the original source. This peer reviewing process raises the quality of the product by allowing more experts to fix problems associated with the product. Open source solutions offer lower overhead costs to the producer. There are typically no licensing or maintenance fees associated with open source. This translates to a lower cost to the consumer of the product created from open source technologies. Support is freely available and easily accessible for open source products via the online community of the Internet. Companies which use open source methods escape being locked into a licensing agreement with a proprietary vendor of a similar product. This means the company can switch products to their advantage at their discretion.

How Has Open Source Worked?

Open source solutions to production problems and methods have worked in various industries for various companies and organizations. One such industry is the beverage industry. Many people are familiar with proprietary soft drink companies such as Coca-Cola and Pepsi. There is however, an open source soft drink available which is very similar to some of the proprietary products, called OpenCola. The recipe for making it is readily available and modifiable. Anyone can modify the recipe to create their own soft drink and bottle it for retail as long as they license the new recipe under the GNU General Public License.

The beverage industry is not the only one that wants to take advantage of the open source idea. The medical organizations are advocating the use of open source to help develop treatments of diseases that are overlooked by proprietary drug companies like Eli Lilly. The Synaptic Leap is one such organization which is doing collaborative biomedical research. This open source research effectively combines different researcher’s findings to quickly generate ideas, help eliminate redundant work, and ultimately discover cures faster.

Open source software is the most commonly utilized form of open source technology. In the software industry there is a slew of open source products available to people and organizations. Some of these products include OpenOffice and Linux. OpenOffice provides an office suite that runs on all platforms and provides an excellent alternative to proprietary programs such as MS Office at zero cost. Linux is an open source operating system that allows full access and customization to its source code, unlike the commercial software, Windows. Entrepreneurs, companies, and corporations can all take advantage of these and similar programs to sell products without the added cost of using commercial vendors. One such company that is capitalizing on the utilization of open source software is whaBAM!.

whaBAM!

About whaBAM!!

In 2001, Eren Niazi founded a company called OSS. Almost immediately after starting this business he began to work on creating an auction site that he hoped would offer a better atmosphere than other auction sites that already existed. He felt that the best way to do this was to create a unique site that would be more user-friendly for both buyer and seller. He also wanted this site to be more functional and contain more features than other sites.

In order to accomplish these goals, Niazi felt that he should get input from the people most important to the site design: potential users. After performing years of extensive market research, he finally spawned the child that he desired. He named this child whaBAM!.

Figure 1: whaBAM!! logo

whaBAM!’s Uniqueness

Everything from the name, to the software it uses is unique to whaBAM!. As Niazi had planned, his site offers a very different atmosphere than many other auction sites. Probably the most noticeable achievement of the site is its ease of use. Other sites tend to introduce a lot of clutter on the opening page; however, whaBAM! offers a very simple front page that entirely fits on most monitors (www.whaBAM!.com). This makes it very easy to begin searching and shopping.

Another trait of whaBAM! that makes it more manageable is the small number of auctions that are currently available. Sites like eBay have millions of products for sale, while whaBAM! had only 16,000 active auctions as of December 2005. By reducing the number of auctions that a buyer must cycle through, shopping time can be lowered.
When discussing the ease of use, it should also be mentioned how basic the payment plans are. Buying works similar to other sites where the buyer is not charged anything, but the huge difference is in the selling. whaBAM! only offers two options for sellers. These options have no hidden fees, and no surprises.

whaBAM! also uses many new technologies that will be discussed in more detail later in this report. Some of these technologies include:
• Open source software
• RSS feeds
• XML language
• Privacy protection
Using these technologies, whaBAM! is able to offer a truly unique searching platform.

whaBAM!’s Technology

whaBAM! is considered by many supporters to be the auction site of the new millennium. This accolade is mostly based on the fact that it is the first online auction site that was founded on open source technologies. The major open source applications that whaBAM! is running on are Linux, Apache, MySQL, and PHP. These four programs make up the LAMP infrastructure. By using these open source technologies, whaBAM! is able to reduce costs, while also promoting the development of new technologies. This also makes whaBAM! very open to changes and upgrades that will present themselves in the future.

Another source of technology that whaBAM! is using is RSS (Really Simple Syndication) feeds. This system allows whaBAM! users to have a summary of their auction activity accessible on any portable device that uses the XML language. In other words, users can track their auctions on their cell phones or PDA’s even when not at the computer.

whaBAM! is also on the cutting edge of privacy and account security. External auditors are hired to routinely investigate the site and any suspicious users. Although the site uses internal investigators to monitor suspicious behavior of users, the external auditors allow the users to be protected from any sources of internal fraud. Another way users are protected on the site is by keeping credit card information off of the site. Because the information is not on the site, it is impossible for hackers to steal credit card information from whaBAM!’s site.

Pricing Structure

One of the best features of whaBAM! is its incredibly simple pricing structure. Users are only offered two options to choose between. There is no fee for extra pictures. There is no fee for immediate buying. There is no fee for special HTML/fonts. There are no listing fees. There are simply no fees other than the two options that are clearly outlined on the site. The two options are:

• Option 1: $49.94/month for unlimited listing

• Option 2: 1% fee on the final selling price, this fee is only administered when the sale is completed and it is restricted by a maximum of $25 (i.e. sold for $100  fee = $1, sold for $10,000  fee = $25 not $100)

These pricing options are unparalleled by any other auction site. They are also very easy to understand and make selling products incredibly cheap and easy.

whaBAM!’s Challenge

The crucial challenge that whaBAM! faces is attracting more customers to their site. The first step in this process is attracting sellers to the site. As more products are offered by these sellers, more buyers will flock to whaBAM!. However, this is not as simple as it looks on paper. A conflict arises from the fact that most of the potential customers are already taken by the stranglehold eBay has on the online auction market. Therefore, the primary goal of the creators of whaBAM! is to understand their competitor in order to get users to switch.

eBay

The History of eBay

eBay was founded in September of 1995 by a technologist named Pierre Omidyar of San Jose. Pierre had the assistance of Jeff Skoll as a cofounder and started their idea of using the internet as a place for both people and customers to sell and purchase various goods as well as services. Once eBay started to gain popularity Meg Whitman was brought in who is a graduate of Harvard’s Business School. When Meg saw the potential that a site like eBay had with no other sites like it she brought in her own staff of professionals to take this idea to the top.

Figure 2: eBay logo

eBay on the Rise

Not long after eBay started this group of professionals under the leadership of Meg turned eBay from a site that sold strictly collectibles to I higher level market where they could sell several more items for significantly more money. While raising the bar of this online auctioning eBay staff also strived to keep the buying and selling of goods as safe as they could without making any inconveniences to the users. The main payment for products was done through sending the seller money orders, cashier’s checks, personal checks, and certain credit cards. In 1998 eBay then came out with another company called PayPal which is the only form of online quick payments offered by eBay. Because they made this the only source of quick online payments, PayPal now has over 96 million accounts worldwide to become the global leader in online payments.

The Price You Have to Pay

Because eBay has been so dominant over the past several years their policies and practices have changed. When eBay first started out there were minimal seller fees. Over the past few years eBay has slowly increased the prices of selling goods and they are now taking full advantage of their dominance. Although it does not sound big these fees are taking a large portion of peoples profits. Just listing an item on eBay that is $25.00 or less will cost up to $0.60. If your item does not sell you lose your money, however, if your item does sell eBay takes 5.25% of your profit. If you decide to pay with PayPal they also take a small percentage depending on how much you send, usually around another 5%. Now imagine this on a large scale for companies that sell mass amounts of products on eBay and all of the money they lose because eBay now takes as much money as they can. Companies and people who sell items over $1,000 must pay $4.80 to list their item plus on the sale price they must pay 5.35% on the first $25, 3% on the rest up to $1,000, and 1.50% on anything above $1,000. Business and industrial capital equipment has a standard fee of $20.00 per item no matter what it is and how many you sell along with 1% of the final selling price.

eBay’s Policies

eBay has many policies to keep their image respectable and admirable. They have extensive rules regarding user agreements to make sure there are no abusers or their site which can be seen at http://pages.eBay.com/help/policies/user-agreement.html . This covers the broad view of eBay and what users should expect. However, many of eBay’s policies depend on the users themselves. People’s reputation on eBay depends on feedback left from other’s who have conducted business with that person or company. You can leave positive, neutral, or negative feedback based on your experience along with a brief comment about the other party. To the surprise of many, this plays a significant role in who buyers will purchase from and who sellers will sell to. There is also user help with locating people who sell illegal products such as tobacco, alcohol, weapons, and most importantly item misrepresentation. This protects users from purchasing fake or damaged products. As well as the fear of being caught selling a misrepresented item, these sellers also will be punished by eBay and the victim or buyer will receive their money back in most cases. For more rules on selling items on eBay you may visit http://pages.eBay.com/help/policies/seller-rules-overview.html . eBay also takes a stand on the privacy and protection of users’ identities. eBay never asks for contact information or specifics for people to try and obtain so users are kept safe. Each user creates their own user name so that no further information is given to other users. For more explanations on user identities you may go to the following site http://pages.eBay.com/help/policies/identity-ov.html and for more information on privacy you can visit http://pages.eBay.com/help/policies/privacy-policy.html .

whaBAM! or eBay

Comparison

By exploring the open source software and technologies, businesses can alter or tailor their products to an individual. Companies can now carry out their business online with the use of open source technologies such as auctioning, including advertising, selling, buying, or distributing products. The internet is a powerful communications medium that allows its users instant access and allows business to operate without borders in the form of auctioning. With the internet and the use of this technology, businesses can offer a little more than before. The low transaction costs, so everything could be a little cheaper than the traditional supermarket.

Some of the popular brick-and-mortar businesses or traditional stores that we are familiar with are growing by expanding their business onto the internet and using these technologies. For example: Intero “a real estate company”, one of the fastest-growing real estate companies in history chooses whaBAM! Some of the reasons why Intero decided to use the newly developed auction site are because they feel as though their clients receive significantly higher online exposure for their brokered homes, supported by the ongoing promotional activities of both Intero and whaBAM! Another reason is that not only it gives the clients a new channel for fast and effective marketing of their properties, but also provides incredible exposure at a reasonable price, which relates to saving money in the long run.

For the general public, they can use the technology as a way to test or evaluate a product and report it to the company. In return, the company can review the public evaluations to make their product to an even better quality that the public would like. Or they can discard the entire product and come up with something new. On the other hand, another common method that some people are taking an advantage of is using the whaBAM! website to sell unwanted gifts. Some people re-gift the gifts that they receive from another family member and give to someone else who might benefit from the gift. By selling the unwanted gifts online people can avoid the potential re-gifting embarrassment, and best of all, buyers can find some amazing deals from sellers who paid nothing for their gifts.

The Showdown – eBay vs. whaBAM!

eBay & whaBAM! both are good auction sites; however, there are some differences between the two. Beginning with whaBAM!, their biggest competitor and who they will always will be match up against is eBay. eBay works on a per-item listing fee plus a sales commission basis. Which is basically, when you list an item on eBay, you are charged an insertion fee. If the item you list sells, you are also charged a final value fee. The total cost of selling an item is the insertion fee plus the final value fee. While EBay is the industry leader in online auctions, WhaBAM!.com offers a lower cost alternative for items that be sold for less than $25. whaBAM! has no per-item seller fees, but rather a flat monthly payment of $10 allows sellers to post 30 items for auction/sale ($50 makes that unlimited). So if you have 20 items valued at $20 each, you’ll pay just $10 to move your goods on whaBAM!, compared to $32 plus more fees on eBay. At the $50 per month flat listing fee, you can just list all your items up there, and you do not have to worry about how much you are making, as opposed to having to pay a percentage of all your sales on each individual item. While the new premier site has only a tiny fraction of the listings of eBay (a recent search of the "books" categories revealed 10 listings on whaBAM! compared with about 604,000 on EBay). But of course, whaBAM! (still in Beta) has nowhere near the market that EBay offers — at least for now.

Recently, eBay have had some problems with its clients using the PayPal method for payments. Traders accuse PayPal of being heavy-handed, saying that it will authorize a payment from a buyer's or seller's account and then try to get back the money by threatening court action or debt collectors. PayPal acts as police, judge and jury in these cases. Traders do not have the financial stability to challenge any legal threat, so they give in to the corrupt system and pay up. However, sellers often fail to meet these rules because PayPal claims they have sent the item to an address that is different from the credit card user’s details, or have not replied quickly enough to PayPal's e-mails. Then again as sellers, they do not have the buyer's credit card details, so it can be very difficult and time consuming to ensure the addresses match.

Conclusion

Without any doubt about it, whaBAM! will give eBay “the run for their money”, the open source technology and the social networking features that are available to the businesses and the general public will be beneficial and suitable to the target audience. The features will allow buyers and sellers to network that increases the sense of a community on the site.

With the new features, users will be able to link to other users, and when a mutual link is established between two of the users, they can then see information from each other's profile that would normally be hidden. Users will be able to see if a seller or high bidder on an item is connected to them through their network, in which case they can send them an invitation for a direct connection if they share a common interest. whaBAM! plans additional social networking features including enhanced profile fields and user pictures, as well as online photo albums of user's collections. It also plans to give sellers the ability to provide special promotions or information to members of their network.

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