E-MARKETPLACES : STRUCTURES, MECHANISMS, ECONOMICS AND IMPACTS

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Define e- marketplaces and list their components

List the major types of e-marketplaces and describe their features

Describe the various types of EC intermediaries and their roles

Describe electronic catalogs, shopping carts and search engines.

Describe the various types of auctions and list their characteristics

Discuss the benefits, limitations and impacts of auctions

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Describe bartering and negotiating online

Define m-commerce and explain its role as a market mechanism

Discuss liquidity, quality and success factors in e-marketplaces

Describe the economic impact of EC Describe the impact of e-marketplaces

on organizations3

E-Marketplaces Type of E-Marketplaces: from

storefronts to Portals Intermediation in E-Commerce Electronic Catalogs and other Market

Mechanisms Auctions as EC Market Mechanisms Bartering and Negotiating Online

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Market – play a central role in the economy, facilitating the exchange of information, goods, services and payments.

Have three main functions:- Matching buyers and sellers Facilitating the exchange of information,

goods, services and payments associated with market transactions

Providing an institutional infrastructure, such as legal and regulatory framework

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The emergence of electronic marketplaces (also called e-marketplaces or marketspaces), especially Internet-based ones, changed several of processes used in trading and supply chains

EC leverages IT with increased effectiveness and lower transaction and distribution costs, leading to more efficient, “friction-free” markets

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Customers – people worldwide who surf the Web are potential buyers of goods and services offered or advertised on the internet

Sellers – Millions of storefront on the web, advertising and offering a huge variety of items

Products and services – marketplace can sell physical products and the marketspace possible sell both physical and digital products and services

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Infrastructure – includes electronics networks, hardware, software and more

Front end – customer interact with marketspace via a front end. The components can include the seller’s portal, electronic catalogs, a shopping cart, a search engine, an auction engine and a payment gateway

Back end – all activities related to order aggregation and fulfillment, inventory management, purchasing from suppliers, accounting and finance, payment processing, packaging and delivery

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Intermediaries – a third party that operates between sellers and the buyers. Of all kinds offer their services on web. Help match buyers and sellers, provide some infrastructure services and help customer and/or sellers to institute and complete transactions

Other business partners – in addition to intermediaries, partners, shippers use the internet to collaborate

Support services – ranging from certification and escrow services to content providers

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Electronic storefront – refers to a single company’s Web site where products and services are sold. May belong to a manufacturer, to a retailer, individual selling from home or other type of business The most common mechanisms are

Electronic catalog E-auction facilities Payment gateway Shipment court Customer services

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Electronic malls – to shopping at individual storefronts which consumer can shop in electronic malls an online shopping location where many stores are located The consumer is transferred to the

appropriate independent storefront It is merely a directory Some provide share services Some actually large click-and-mortar retailers Others are virtual retailers

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General stores/malls – Large marketplaces that sell all types of products

Specialized stores/malls – Sell only one or a few types of products

Regional versus global stores – Some stores serve customers that live nearby

Pure online organizations versus click-and-mortar stores – Pure online do not have physical stores. Others are physical stores that also sell online

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Private E-Marketplaces – Owned by single company Sell-side – will sell either standard or customized

products to qualified companies. Similar to B2C Buy-side – company purchases from many

supplies Public E-Marketplaces – Are B2B markets, often

owned by third party or by a group of buying or selling companies and they serve many sellers and many buyers. Also known as exchanges

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A portal is an information gateway attempts to address information overload by enabling people to search and access relevant information from disparate IT systems and the Internet

Information portal is a single point of access through a Web browser to critical business information located inside and outside of an organization

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Commercial portals – Offer content for diverse communities and are most popular portals on the internet

Corporate portals – provide organized access to rich content within relatively narrow corporate and partners communities. Also known as enterprise portals

publishing portals – intended for communities with specific interest

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Personal portals – these target specific filtered for individuals

Mobile portals – accessible from mobile devices

Voice portals – portals with audio interfaces can be accessed by telephone or a cell phone

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Intermediaries (brokers) play an important role in commerce by providing value-added activities and services to buyers and sellers

In cyberspace they are, in addition, intermediaries that control the information flow

These electronic intermediaries are known as infomediaries

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Search costs – some intermediaries maintain databases of customer preferences and they can predict demand and reduce search costs by selectively routing information from providers to consumers

Lack of privacy – intermediaries can relay messages and make pricing and allocation decisions without revealing the identity of one or both parties

Incomplete information – An intermediaries can gather product information from sources other than the product provider, including independent evaluators and other customers

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Contract risk – intermediaries have a number of tools to reduce contract risk. The threat of publicizing behavior or removing a seal of approval may encourage both producers and customers to meet the broker’s standard for fail dealing. The broker can provide insurance against bad behavior

Pricing inefficiencies – intermediaries can use pricing mechanisms that induce just the appropriate trades

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Disintermediation – Elimination of intermediaries between sellers and buyers

Reintermediation – establishment of new intermediary roles for traditional intermediaries that have been disintermediated

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Electronic catalogs Search engine and intelligent agents Shopping carts E-auction Online negotiating

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Consist of a product database, directory and search capabilities and presentation function

Are the backbone of most e-commerce sales sites Merchants – objective is to advertise and promote products

and service Customer – purpose is to locate information on products and

services Can be searched quickly with the help of search engines and

interactive Become more dynamic, customized and integrated with

selling and buying procedures Become more integrated with shopping carts, order taking

and payment

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The dynamics of the information presentation Static catalogs – information is presented in text and static

pictures Dynamic catalogs – information is presented in motion

pictures or animation, supplemental sound The degree of customization

Standard catalogs- merchants offer the same catalog to any customer

Customized catalogs – content, pricing and display are tailored to the characteristics of specific customers

Integration with business processes – integration with order taking and fulfillment of electronic payment systems, intranet workflow software and systems, inventory and account systems, supplier or customers extranets and paper catalogs

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Search engine – a computer program that can access a database of internet resources, search for specific information or keywords and report the results

Software intelligent – can do more than just “search and match”. It has capabilities that can be used to perform routine tasks that require intelligence. Can be used in e-commerce to support tasks such as comparing prices, interpreting information, monitoring activities and working as an assistant.

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Electronic shopping cart is an order-processing technology that allows customers to accumulate items they wish to buy while they continue shop

Allow a customer to select items, review what has been selected, make changes and finalize the list.

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Uses a competitive process by which a seller solicits consecutive bids from buyers or a buyer solicits bids from sellers

Several types of auction :- online, offline, public or private

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Dynamic pricing – price that are not fixed, but allow to fluctuate as supply and demand in a market change One buyer one seller – use negotiation, bargaining or bartering One seller many potential buyer – seller use a forward auction,

an auction in which a seller entertains bids from multiple buyers One buyer, many potential sellers – two popular types

Reverse auction – bidding/tendering system is affective. Buyer places an item to buy for bid. Potential suppliers bid on the item, reducing price sequentially until the bidders do not reduce the price further. The winner is the one with the lowest bid

Name-your-own-price – a-would-be buyer specifies the price that he/she wiling to pay to any willing and able seller. Example : priceline.com

Many sellers, many buyers – buyers and their bidding prices are matched with sellers and their asking prices based on the quantities on both sides.

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Benefits – see the Additions 2.1(p 58) Limitation

Minimal security – some C2C auctions conducted are not secure but B2B auctions are conducted over highly secure private lines

Possibility fraud – buyer may get defective products. Also buyers can commit fraud by receiving goods or services without paying for them

Limited participation – some are by invitation only others are open to dealer only. This may be a disadvantages to sellers.

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Impact Auction as a coordination mechanism – as an efficient

coordination mechanism for establishing an equilibrium in price

Auction as a social mechanism to determine a price – provide the requisite exposure of purchased and sale orders and hence liquidity of the market in which an optimal price can be determined

Auction as a highly visible distribution mechanism – a supplier typically auctions off a limited number of items, to gain attention and to attract those customer who are bargain hunter

Auction as an EC component - can be stand alone or combined with other e-commerce activities

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Online bartering – bartering conducted online can improve the matching process by attracting more partners to the barter. Can be faster and better matched can be found. How?

Online negotiating – due to customization and bundling of products and services, it often is necessary to negotiate both prices an terms for online sales. Three factor may facilitate online negotiation :- The products and services that are bundled and

customized The computer technology that facilitates the negotiation

process The software intelligent agents that perform searches and

comparison

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