Group 1 Abhishek Singh(PGP/16/003) Anshuman Tigga(PGP/16/005) Sudhanshu Shukla(PGP/16/052) Babita Pegu(PGP/16/136) Harsh Bajpai(PGP/16/197) Sotheby’s Appraisal Services.Sothebys . Sotheby’s Trusts and Estates Services. Sotheby’s International Reality Group.9 million NY based and has major presence in 98 other cities Others Divisions include Sotheby’s Financial Services. jewels and antiques at recordbreaking prices • • • In 1985 sold Van Gogh’s “Landscape with Rising Sun” for $9. Sotheby’s Insurance Brokerage Services. and Sotheby’s Restoration Services Property Consignors Property Sotheby’s Hammer price – commissio n/expenses Hammer price + buyers premium Buyers .Introduction • 255 years in fine arts auction business • Reputation for selling important painting. Some percentage of hammer price Competitive Environment Major competition from Christie Value Chain Live and online fine arts auction which connects consignor with buyers Representation Live auction in a hall. online auction through its site and partner amazon Organizational Structure Specialist. technical & operational executives Management An enriching experience of 255 years in the fine arts auction business . premier arts and antique items Value Proposition High-end auctioning of premier and valuable items Revenue Model Premiums from both consignors and buyers.Business Model Market or Audience B2C & B2B. Live Auction Process Seller contacts Sothebys specialist Authentication check Market Value evaluation Shipped to headquarters Catalogue is made Phone to Prospective buyers Buyers could leave bids Live auction Buyer Pays immediately Art transport department arranges shipping . antiques Dealers to sell only on either of Sothebys sites Dealers make catalogues Material Handling costs borne by dealers Dealers paid no sellers premium Auction lasts for two weeks on sites All lots kept in warehoused leased spaces Each lot was catalogued and managers decided on which site to sell Pick up list was generated Outsourced shipper was responsible for packing and shipping .Online Auction Process Formation of network of dealers of fine arts . Change in business model &value proposition Technology constraints.limitations of customer’s hardware & software . indicating that customersupport costs increased considerably as a result of the Internet strategy.Challenges in migrating to new ways doing the business Transparency & fairness in online auction process(increments in bid price) The approximate cost per interaction is US $10. Materials handling costs increase for these lots consigned to Sotheby’s and sold on the website. Managers and observers agree that logistics requirements (costs and operational complexity) for the auctions themselves and for shipping purchased lots increase as a result of taking auctions online .Physical Lots for virtual Auction-Drawbacks & limitations For live auctions lots were not photographed & Sotheby’s charges sellers for the photography services while in virtual auction every item is digitally photographed at no charge to the seller. Material handling costs are borne by Associates By creating the Associates network.Dealer (Associate) lots—an improved strategy for virtual auctions Sotheby’s would act as information managers and a branded outlet rather than physically handling goods. The Associates are responsible for inventorying. cataloguing.com never touches their goods and thus incurs virtually no variable costs. . occupying a position on the far left of the continuum. Sothebys.com has transformed itself from a firm with extremely low scalability occupying the far right of the scalability continuum. and shipping. to a business that is information-intensive. provision of shipping estimates. When Associates sell on the website. Sothebys. packaging. High Scalability Continuum Low Information Commodities with Standard Handling issues(Books) Unique with Unique & Awkward Standard Handling (Paintings. antiques) issues (Airline Tickets) Sothebys. Sothebys.com is an organization that suffers from the diseconomies of scale caused by the logistical and customer-support requirements of auctioning goods it provides online. and benefits from the economies of scale generated by auctioning goods associates provide online. has on the economics of a firm engaged in e-commerce. . such as customer support and logistics.com illustrates both extremes of the scalability continuum. a framework that shows what effect the need for non-information elements of service. visual means of capturing key operational differences between traditional and ecommerce methods and decide whether E-commerce model is scalable or not.Profiling E-operations Profiling method draws on the product profiling procedure developed by Terry Hill for use in operations strategy analysis Profiling provides a quick. . Profiling E-operations Self-sourcing-Degree to which an organization can encourage its customers to do some of the work of providing a product/service for themselves Utilizing the Internet to sell items that would sell for less than US$ 10. by developing an alternative model wherein .000 does not help Sotheby’s since these items are not high margin items and the costs of the employees that evaluate. who in effect become its customers. catalog and handle items is very high due to their unique skills. In contrast. Sotheby’s switches much of this work to its Associates. Associates auction off items on a virtual basis. Profiling E-operations Using Associates as sales agents also greatly improves shipping aspects and accountability/legality issues Using Associates to virtually sell items but physically handle them. the difficulty and responsibility for handling these bulky and fragile items becomes their responsibility Facilities costs can be greatly reduced for some businesses when business is conducted online because of the ability to reduce or remove physical interfaces with customers . Profiling E-operations Job specialization: Businesses can greater differentiate and specialize their workforce because of the dis-intermediation effect of not requiring real-time. face-to-face interaction with customers Scheduling becomes easier because employees can be matched with aggregated demand rather than dealing with wide fluctuations in demand at individual locations Inventory can be centralized at few distribution centers rather than holding inventory at numerous distinct locations . Sothebys Preliminary E commerce model Traditional methods Superior Facilities Cost Self Sourcing Visible/Hig h Cost E-Commerce methods Superior Virtual/Lo w Cost Low High Specialized Fluctuating Demand Centralized Job Specialization General Purpose Scheduling Inventory Steady Demand Decentralize d Information Intensity Shipping Accountabili ty/Legality Low Bulky/Fragil e Products High Virtual Products High High Low Low High Communicatio n Barriers Scalability Low . Sothebys Associates Virtual Auction model Traditional methods Superior Facilities Cost Self Sourcing Visible/Hig h Cost E-Commerce methods Superior Virtual/Lo w Cost Low High Specialized Fluctuating Demand Centralized Job Specialization General Purpose Scheduling Inventory Steady Demand Decentralize d Information Intensity Shipping Accountabili ty/Legality Low Bulky/Fragil e Products High Virtual Products High High Low Low High Communicatio n Barriers Scalability Low . is inherently more information-intensive.(Sotheby’s capability –Specialists) . while businesses delivering services with high customer support and logistics needs may see their costs rise when they put them online.Scalability success factors Organizations with information-intensive services will benefit from taking them to the web completely. The capabilities should be such that they serve as capabilities in online business. Sotheby’s should consider its capabilities before taking the business to internet. while related to its traditional offering. Sotheby’s has found a way to create a new value proposition that. References E-services: operating strategy—a case study and a method for analyzing operational benefits: Kenneth K. Roth . Aleda V. Roger Hallowell. Boyer a. Thank You .