E-MARKETPLACES: STRUCTURE, MECHANISMS, …repository.binus.ac.id/content/F0662/F066277224.pdf · Describe bartering and negotiating online. 8. ... An online market, usually B2B, in

EE--MARKETPLACES: MARKETPLACES: STRUCTURE, MECHANISMS, STRUCTURE, MECHANISMS,

ECONOMICS,ECONOMICS,AND IMPACTSAND IMPACTS

PrenticePrentice--HallHall

© Prentice Hall 2004© Prentice Hall 2004 22

Learning ObjectivesLearning Objectives

1.1. Define eDefine e--marketplaces and list their marketplaces and list their components.components.

2.2. List the major types of electronic List the major types of electronic markets and describe their features.markets and describe their features.

3.3. Describe the types of intermediaries Describe the types of intermediaries in EC and their roles.in EC and their roles.

4.4. Describe electronic catalogs, Describe electronic catalogs, shopping carts, and search engines.shopping carts, and search engines.


Learning ObjectivesLearning Objectives

5.5. Describe the various types of auctions and Describe the various types of auctions and list their characteristics.list their characteristics.

6.6. Discuss the benefits, limitations, and impacts Discuss the benefits, limitations, and impacts of auctions.of auctions.

7.7. Describe bartering and negotiating online.Describe bartering and negotiating online.8.8. Define mDefine m--commerce and explain its role as a commerce and explain its role as a

market mechanism.market mechanism.


Learning Objectives Learning Objectives (cont.)(cont.)

9.9. Discuss liquidity, quality, and success Discuss liquidity, quality, and success factors in efactors in e--marketplaces.marketplaces.

10.10. Describe the economic impact of EC.Describe the economic impact of EC.11.11. Discuss competition in the digital Discuss competition in the digital

economy.economy.12.12. Describe the impact of eDescribe the impact of e--marketplaces on marketplaces on

organizations.organizations.


How Raffles Hotel Is How Raffles Hotel Is Conducting ECConducting EC

The ProblemThe ProblemVery competitive industryVery competitive industryOwns and manages luxury and business Owns and manages luxury and business hotels worldwidehotels worldwideSpends lavishly on every facet of its Spends lavishly on every facet of its operationoperationSuccess depends on the company’s ability Success depends on the company’s ability to lure customers to its hotels and to lure customers to its hotels and facilities and on its ability to contain costsfacilities and on its ability to contain costs


How Raffles Hotel Is How Raffles Hotel Is Conducting EC Conducting EC (cont.)(cont.)

The SolutionThe SolutionAddress two types of issuesAddress two types of issues

BusinessBusiness--toto--consumerconsumermaintains a diversified corporate portal maintains a diversified corporate portal ((raffles.comraffles.com), open to the public), open to the public

introduces customers to the company and its introduces customers to the company and its servicesservicesinformation on the hotelsinformation on the hotelsa reservation systema reservation systemlinks to travelers’ resourceslinks to travelers’ resourcesCRM programCRM programan online store for Raffles productsan online store for Raffles products



The ResultsThe ResultsCorporate portal helps in customer acquisitionCorporate portal helps in customer acquisitionPromotions and direct sales enable the hotel to Promotions and direct sales enable the hotel to maintain a relatively high occupancy maintain a relatively high occupancy Private marketplace forces suppliers to disclose Private marketplace forces suppliers to disclose their prices and increases competition among their prices and increases competition among supplierssuppliersCompany is saving about $1 million a year on Company is saving about $1 million a year on procurement procurement Company is expanding aggressively in the Asian Company is expanding aggressively in the Asian marketsmarkets



What we can learn…What we can learn…OldOld--economy hotel transformed itself into economy hotel transformed itself into a clicka click--andand--mortar business by creating mortar business by creating two separate electronic markets: two separate electronic markets:



B2C marketB2C market——selling its services to selling its services to consumersconsumersB2B private marketB2B private market——to buy from its to buy from its suppliers and to sell products to other suppliers and to sell products to other hotelshotelsUsed several eUsed several e--commerce mechanisms:commerce mechanisms:

corporate portalcorporate portalelectronic catalogselectronic catalogsee--procurement using reverse auctionsprocurement using reverse auctions


Electronic MarketplacesElectronic Marketplaces

Markets play a Markets play a central role in the central role in the economy facilitating economy facilitating the exchange of:the exchange of:

informationinformationgoodsgoodsservicesservicespaymentspayments

Markets create Markets create economic value for:economic value for:

buyersbuyerssellerssellersmarket market intermediariesintermediariessociety at largesociety at large


Electronic Marketplaces Electronic Marketplaces (cont.)(cont.)

Three main functions of marketsThree main functions of markets1.1. matching buyers and sellersmatching buyers and sellers2.2. facilitating the exchange of information, facilitating the exchange of information,

goods, services, and payments goods, services, and payments associated with market transactionsassociated with market transactions

3.3. providing an institutional infrastructure, providing an institutional infrastructure, such as a legal and regulatory such as a legal and regulatory framework, that enables the efficient framework, that enables the efficient functioning of the marketfunctioning of the market


Electronic Marketplaces Electronic Marketplaces (cont.)(cont.)

In recent years markets have seen a In recent years markets have seen a dramatic increase in the use of ITdramatic increase in the use of IT——EC EC has: has:

increased market efficiencies by increased market efficiencies by expediting or improving functionsexpediting or improving functionsbeen able to significantly decrease been able to significantly decrease the cost of executing these functionsthe cost of executing these functions


MarketspaceMarketspace

Marketspace: Marketspace: A marketplace in A marketplace in which sellers and buyers exchange which sellers and buyers exchange goods and services for money (or for goods and services for money (or for other goods and services), but do so other goods and services), but do so electronicallyelectronically


Marketspace ComponentsMarketspace Components

CustomersCustomersSellersSellersProductsProductsInfrastructureInfrastructureFront endFront end

Back endBack endIntermediariesIntermediariesOther business Other business partnerspartnersSupport Support servicesservices


Marketspace ComponentsMarketspace Components ((cont.)cont.)

Digital products: Digital products: Goods that can be Goods that can be transformed to transformed to digital format and digital format and delivered over the delivered over the InternetInternet

Front end: The Front end: The portion of an portion of an ee--seller’s business seller’s business processes through processes through which customers which customers interact, including interact, including the seller’s portal, the seller’s portal, electronic catalogs, electronic catalogs, a shopping cart, a a shopping cart, a search engine, and search engine, and a payment gatewaya payment gateway


Marketspace ComponentsMarketspace Components (cont.)(cont.)

Back end: The activities Back end: The activities that support online that support online orderorder--taking. It includes taking. It includes fulfillment, inventory fulfillment, inventory management, management, purchasing from purchasing from suppliers, payment suppliers, payment processing, packaging, processing, packaging, and deliveryand delivery

Intermediary: A Intermediary: A third party that third party that operates operates between sellers between sellers and buyers and buyers


Types of Electronic MarketsTypes of Electronic Markets

Electronic storefront: A Electronic storefront: A single or company Web single or company Web site where products and site where products and services are sold services are sold Mechanisms necessary Mechanisms necessary for conducting the sale:for conducting the sale:

electronic catalogselectronic catalogssearch engine search engine ee--auction facilitiesauction facilitiespayment gatewaypayment gatewayshipment court shipment court customer servicescustomer services


Types of Electronic Markets Types of Electronic Markets (cont.)(cont.)

ee--mall (online mall): mall (online mall): An online An online shopping center where many stores shopping center where many stores are locatedare located

some are merely directoriessome are merely directoriessome provide shared services (e.g., some provide shared services (e.g., choicemall.comchoicemall.com). ). some are actually large clicksome are actually large click--andand--mortar mortar retailersretailerssome are virtual retailers (e.g., some are virtual retailers (e.g., buy.combuy.com))



Types of stores and mallsTypes of stores and mallsGeneral stores/mallsGeneral stores/mallsSpecialized stores/mallsSpecialized stores/mallsRegional versus global storesRegional versus global storesPure online organizations versus clickPure online organizations versus click--andand--mortar storesmortar stores



ee--marketplace: marketplace: An online market, usually B2B, in which buyers An online market, usually B2B, in which buyers and sellers exchange goods or services; the and sellers exchange goods or services; the three types of ethree types of e--marketplaces are private, marketplaces are private, public, and consortiapublic, and consortia

Private ePrivate e--marketplaces: marketplaces: Online markets owned by a single company; can Online markets owned by a single company; can be either sellbe either sell--side or side or buysidebuyside marketplacesmarketplaces

SellSell--side eside e--marketplace:marketplace:A private eA private e--market in which a company sells market in which a company sells either standard or customized products to either standard or customized products to qualified companiesqualified companies



BuyBuy--side eside e--marketplace: marketplace: A private eA private e--market in which a company makes market in which a company makes purchases from invited supplierspurchases from invited suppliers

Public ePublic e--marketplaces: marketplaces: B2B markets, usually owned and/or managed by B2B markets, usually owned and/or managed by an independent third party, that include many an independent third party, that include many sellers and many buyers; also known as sellers and many buyers; also known as exchangesexchanges

Consortia: Consortia: EE--marketplaces owned by a small group of large marketplaces owned by a small group of large vendors, usually in a single industryvendors, usually in a single industry


Information PortalsInformation Portals

Information portal:Information portal: a single point a single point of access through a Web browser to of access through a Web browser to business information inside and/or business information inside and/or outside an organizationoutside an organization


Information Portals Information Portals (cont.)(cont.)

Six types of portalsSix types of portals1.1. Commercial (public) portalsCommercial (public) portals2.2. Corporate portalsCorporate portals3.3. Publishing portalsPublishing portals4.4. Personal portalsPersonal portals5.5. Mobile portals: a portal accessible via a mobile Mobile portals: a portal accessible via a mobile

devicedevice6.6. Voice portals: a portal accessed by telephone Voice portals: a portal accessed by telephone

or cell phoneor cell phone


Intermediation and Syndication Intermediation and Syndication in Ein E--CommerceCommerce

Intermediaries (brokers) provide valueIntermediaries (brokers) provide value--added activities and services to buyers added activities and services to buyers and sellersand sellersIntermediaries in the physical world are Intermediaries in the physical world are wholesalers and retailerswholesalers and retailersInfomediariesInfomediaries::

electronic intermediaries that control electronic intermediaries that control information flow in cyberspace, often information flow in cyberspace, often aggregating information and selling it to aggregating information and selling it to othersothers


Exhibit 2.2 Exhibit 2.2 InfomediariesInfomediaries and and Information Flow ModelInformation Flow Model


Intermediation and Syndication Intermediation and Syndication in Ein E--Commerce Commerce (cont.)(cont.)

Roles and value of Roles and value of intermediaries in intermediaries in ee--marketsmarkets

Search costsSearch costsLack of privacyLack of privacyIncomplete Incomplete informationinformationContract riskContract riskPricing inefficienciesPricing inefficiencies



EE--distributors in B2Bdistributors in B2Bee--distributor:distributor:

An eAn e--commerce intermediary that connects commerce intermediary that connects manufacturers (suppliers) with buyers by manufacturers (suppliers) with buyers by aggregating the catalogs of many suppliers aggregating the catalogs of many suppliers in one placein one place——the intermediary’s Web sitethe intermediary’s Web site

Maintenance, repair, and operation items Maintenance, repair, and operation items ((MROsMROs): ):

Routine items that are usually not under Routine items that are usually not under regular contract with suppliersregular contract with suppliers



Disintermediation and Disintermediation and reintermediationreintermediationDisintermediation:Disintermediation:

Elimination of intermediaries between Elimination of intermediaries between sellers and buyerssellers and buyers

ReintermediationReintermediation::Establishment of new intermediary roles Establishment of new intermediary roles for traditional intermediaries that were for traditional intermediaries that were disintermediateddisintermediated



Syndication as an EC mechanismSyndication as an EC mechanismSyndication:Syndication:

The sale of the same good (e.g., digital content) The sale of the same good (e.g., digital content) to many customers, who then integrate it with to many customers, who then integrate it with other offerings and resell it or give it away free other offerings and resell it or give it away free


Diamonds ForeverDiamonds Forever——OnlineOnline

The ageThe age--old business of gem buying is old business of gem buying is very inefficient: Several layers of very inefficient: Several layers of intermediaries can jack up the price of intermediaries can jack up the price of a gem 1,000% between wholesale and a gem 1,000% between wholesale and final retail pricesfinal retail prices


Diamonds Diamonds ForeverForever——Online Online (cont.)(cont.)

American Don American Don KogenKogen made his fortune in made his fortune in ChanthaburiChanthaburi (Thailand)(Thailand)——one of the world’s one of the world’s leading centers for processing gemsleading centers for processing gemsHe started by purchasing lowHe started by purchasing low--grade gems from grade gems from sellers that arrived early in the morning and then sellers that arrived early in the morning and then selling them for a small profit to dealers who selling them for a small profit to dealers who arrived late in the dayarrived late in the dayThis quick turnover of inventory helped him build This quick turnover of inventory helped him build up his capital resourcesup his capital resourcesHe reached the U.S. gem market using He reached the U.S. gem market using advertising advertising



Using faxes, he shortened the order timeUsing faxes, he shortened the order timeIn 1998, In 1998, KogenKogen decided to use the Internetdecided to use the Internet——establishing establishing thaigem.comthaigem.com and sold his first gem and sold his first gem onlineonlineBy 2001, the revenue from his online business By 2001, the revenue from his online business reached $4.3 million, and it more than doubled reached $4.3 million, and it more than doubled (to $9.8 million) in 2002(to $9.8 million) in 2002Online sales account for 85 percent of the Online sales account for 85 percent of the revenuerevenueThe buyers are mostly dealers or retailers such The buyers are mostly dealers or retailers such as Walas Wal--Mart or QVCMart or QVC



He buys raw or refined gems from all over the He buys raw or refined gems from all over the world, some online, catering to the demand of world, some online, catering to the demand of his customers his customers Thaigem’sThaigem’s competitive edge is low pricescompetitive edge is low pricesThe proximity to gem processing factories and The proximity to gem processing factories and the low labor cost enable prices significantly the low labor cost enable prices significantly lower than his online competitorslower than his online competitors



Unsatisfied customers can return Unsatisfied customers can return merchandise within 30 days, no questions merchandise within 30 days, no questions askedaskedDelivery to any place in the world is made Delivery to any place in the world is made via Federal Express, at about $15 per via Federal Express, at about $15 per shipment shipment


Electronic CatalogsElectronic Catalogs

Electronic catalogs:Electronic catalogs:The presentation of product information in an The presentation of product information in an electronic form; the backbone of most eelectronic form; the backbone of most e--selling selling sitessites

Electronic catalogs can be classified Electronic catalogs can be classified by the following dimensions:by the following dimensions:

1.1. The dynamics of the information presentationThe dynamics of the information presentation2.2. The degree of customizationThe degree of customization3.3. Integration with business processesIntegration with business processes


Exhibit 2.4 Comparison of Online Exhibit 2.4 Comparison of Online Catalogs with Paper CatalogsCatalogs with Paper Catalogs


Electronic Catalogs Electronic Catalogs (cont.)(cont.)

Customized catalogsCustomized catalogsA catalog assembled specifically for a A catalog assembled specifically for a company, usually a customer of the company, usually a customer of the catalog ownercatalog owner



Two approaches to customized Two approaches to customized catalogscatalogs

Let the customers identify the interesting Let the customers identify the interesting parts out of the total catalogparts out of the total catalogLet the system automatically identify the Let the system automatically identify the characteristics of customers based on characteristics of customers based on their transaction recordstheir transaction records



Search engineSearch engineA computer program that can access a database A computer program that can access a database of Internet resources, search for specific of Internet resources, search for specific information or keywords, and report the resultsinformation or keywords, and report the results

Software (intelligent) agent:Software (intelligent) agent:Software that can perform routine tasks that Software that can perform routine tasks that require intelligence require intelligence

Electronic shopping cart:Electronic shopping cart:An orderAn order--processing technology that allows processing technology that allows customers to accumulate items they wish to buy customers to accumulate items they wish to buy while they continue to shopwhile they continue to shop


Electronic Catalogs at Electronic Catalogs at Boise CascadeBoise Cascade

Boise Cascade Office Products Boise Cascade Office Products $4$4--billion office products wholesaler billion office products wholesaler customer base includes over 100,000 customer base includes over 100,000 large corporate customers and 1 million large corporate customers and 1 million small onessmall ones900900--page paper catalog used to be page paper catalog used to be mailed to customers once each yearmailed to customers once each yearBoise also sent miniBoise also sent mini--catalogs tailored to catalogs tailored to customers’ individual needs based on customers’ individual needs based on past buying habits and purchase patternspast buying habits and purchase patterns


Electronic Catalogs at Electronic Catalogs at Boise Cascade Boise Cascade (cont.)(cont.)

In 1996, the company placed its In 1996, the company placed its catalogs onlinecatalogs online

Customers view the catalog at Customers view the catalog at boiseoffice.comboiseoffice.comand can order straight from the site or submit and can order straight from the site or submit orders by eorders by e--mailmailThe orders are shipped the next dayThe orders are shipped the next dayCustomers are then billedCustomers are then billed

In 1997, the company generated 20 In 1997, the company generated 20 percent of its sales through the Web percent of its sales through the Web sitesite



Boise expects the Internet business to Boise expects the Internet business to generate 80 percent of its total sales by generate 80 percent of its total sales by 20042004Boise prepares thousands of individualized Boise prepares thousands of individualized catalogs for its customerscatalogs for its customerspaper customer catalog, primarily because paper customer catalog, primarily because As of 2002, the company has been sending As of 2002, the company has been sending paper catalogs only when specifically paper catalogs only when specifically requestedrequestedIt used to take about 6 weeks to produce a It used to take about 6 weeks to produce a single of the time involved in pulling single of the time involved in pulling together all the datatogether all the data



Now the process of producing a Web Now the process of producing a Web catalog that is searchable, rich in catalog that is searchable, rich in content, and available in a variety of content, and available in a variety of formats takes only 1 weekformats takes only 1 weekOne major advantage of customized One major advantage of customized catalogs is pricingcatalogs is pricingBoise estimates that electronic orders Boise estimates that electronic orders cost approximately 55 percent less to cost approximately 55 percent less to process than paperprocess than paper--based ordersbased orders




Auctions as EC Market Auctions as EC Market MechanismsMechanisms

Auction:Auction:A market mechanism by which a seller places an A market mechanism by which a seller places an offer to sell a product and buyers make bids offer to sell a product and buyers make bids sequentially and competitively until a final price sequentially and competitively until a final price is reachedis reached

Auctions can be done:Auctions can be done:online online offoff--line line at public sites (eBay)at public sites (eBay)at private sites (by invitation)at private sites (by invitation)


Auctions as EC Market Auctions as EC Market Mechanisms Mechanisms (cont.)(cont.)

Electronic auctions (eElectronic auctions (e--auctions):auctions):Auctions conducted onlineAuctions conducted online

Host sites on the Internet serve as Host sites on the Internet serve as brokers, offering services for sellers to brokers, offering services for sellers to post their goods for sale and allowing post their goods for sale and allowing buyers to bid on those itemsbuyers to bid on those itemsConventional business practices that Conventional business practices that traditionally have relied on contracts and traditionally have relied on contracts and fixed prices are increasingly being fixed prices are increasingly being converted into auctions with bidding for converted into auctions with bidding for online procurementsonline procurements



Dynamic pricing: Dynamic pricing: Prices that Prices that change based on change based on supply and supply and demand demand relationships at relationships at any given timeany given time



Four major categories of dynamic Four major categories of dynamic pricingpricing

1.1. One buyer, one sellerOne buyer, one seller2.2. One seller, many potential buyersOne seller, many potential buyers3.3. One buyer, many potential sellersOne buyer, many potential sellers4.4. Many sellers, many buyersMany sellers, many buyers



1.1. One buyer, one sellerOne buyer, one sellerForward auction: An auction in which a Forward auction: An auction in which a seller entertains bids from buyersseller entertains bids from buyersOne seller, many potential buyersOne seller, many potential buyers

Forward auctions used for fast liquidation Forward auctions used for fast liquidation and as a selling channel. Price is increasing; and as a selling channel. Price is increasing; the highest bidder winsthe highest bidder wins


Auctions as EC Market Auctions as EC Market MechanismsMechanisms (cont.)(cont.)

2.2. One buyer, many potential suppliersOne buyer, many potential suppliersReverse auction (bidding or tendering Reverse auction (bidding or tendering system):system):

Auction in which the buyer places an item Auction in which the buyer places an item for bid (for bid (tendertender) on a request for quote ) on a request for quote (RFQ) system, potential suppliers bid on the (RFQ) system, potential suppliers bid on the job, with price reducing sequentially, and job, with price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B the lowest bid wins; primarily a B2B or G2B mechanismmechanism



3.3. One buyer, many potential sellers One buyer, many potential sellers (special model)(special model)

“name“name--youryour--ownown--price” model: price” model: Auction model in which a wouldAuction model in which a would--be buyer be buyer specifies the price (and other terms) they are specifies the price (and other terms) they are willing to pay to any willing and able seller. It willing to pay to any willing and able seller. It is a C2B model, pioneered by is a C2B model, pioneered by Priceline.comPriceline.com


Auctions as EC Market Auctions as EC Market MechanismsMechanisms (cont.)(cont.)

4.4. Many sellers, many buyersMany sellers, many buyersDouble auction: Double auction:

Auctions in which multiple buyers and their Auctions in which multiple buyers and their bidding prices are matched with multiple bidding prices are matched with multiple sellers and their asking prices, considering sellers and their asking prices, considering the quantities on both sidesthe quantities on both sides


Exhibit 2.5 The Reverse Exhibit 2.5 The Reverse Auction ProcessAuction Process


Benefits of EBenefits of E--AuctionsAuctions


Limitations of ELimitations of E--Auctions Auctions (cont.)(cont.)

Limitations of eLimitations of e--auctionsauctionsLack of securityLack of securityPossibility of fraudPossibility of fraudLimited participationLimited participation

Impacts of auctionsImpacts of auctionsAuctions as a coordination mechanismAuctions as a coordination mechanismAuctions as a highly visible distribution Auctions as a highly visible distribution mechanism.mechanism.Auctions as a component in eAuctions as a component in e--commercecommerce


Reverse Mortgage Reverse Mortgage Auctions in SingaporeAuctions in Singapore

Homebuyers in Singapore, find the Homebuyers in Singapore, find the lowest mortgage rates at lowest mortgage rates at DollardexDollardex((dollarDEX.comdollarDEX.com))

Reverse auctions are combined with Reverse auctions are combined with “group purchasing” saving:“group purchasing” saving:

$20,000 over the life of a mortgage for each $20,000 over the life of a mortgage for each homeownerhomeowner$1,200 in waived legal fees$1,200 in waived legal fees


Reverse Mortgage Reverse Mortgage Auctions in Singapore Auctions in Singapore (cont.)(cont.)

Dollardex’sDollardex’s first project: first project: The site invited potential buyers in three The site invited potential buyers in three residential properties in Singapore to join residential properties in Singapore to join the servicethe serviceApplications, including financial credentials, Applications, including financial credentials, were made on a secure Web sitewere made on a secure Web siteSeven lending banks were invited to bid on Seven lending banks were invited to bid on the loansthe loans



In a secure “electronic room,” borrowers In a secure “electronic room,” borrowers and lenders negotiated final termsand lenders negotiated final termsAfter 2 days of negotiations of interest rates After 2 days of negotiations of interest rates and special conditions, the borrowers voted and special conditions, the borrowers voted on one bankon one bank18 borrowers on the United Overseas Bank 18 borrowers on the United Overseas Bank (UOB), paying about 0.5 percent less than (UOB), paying about 0.5 percent less than the regular mortgage interest rate as well as the regular mortgage interest rate as well as the waiver of the legal feesthe waiver of the legal fees



UOB generated $10 million of businessUOB generated $10 million of businessDollardexDollardex allows customers to participate in allows customers to participate in an individual reverse auction if they do not an individual reverse auction if they do not want to join a group want to join a group Flexibility is high; in addition to interest Flexibility is high; in addition to interest rates, banks are willing to negotiate down rates, banks are willing to negotiate down payment size and the option of switching payment size and the option of switching from a fixedfrom a fixed--rate to variablerate to variable--rate loanrate loan



On average, there are 2.6 bank bids On average, there are 2.6 bank bids per customerper customerAs of summer 2003 As of summer 2003 Dollardex.comDollardex.com also also offers car loans, insurance policies, offers car loans, insurance policies, and travel servicesand travel servicesAllows comparisons of mutual funds Allows comparisons of mutual funds that have agreed to give lower frontthat have agreed to give lower front--end feesend fees



Provides unit trusts in which you want Provides unit trusts in which you want to investto investSets up a gift registry page for your Sets up a gift registry page for your wedding and invite your givers to wedding and invite your givers to place funds in themplace funds in themReports and advice are also available Reports and advice are also available online as well as faceonline as well as face--toto--faceface


Bartering OnlineBartering Online

Bartering: Bartering: An exchange of goods and servicesAn exchange of goods and services

ee--bartering:bartering:Bartering conducted online, usually by a Bartering conducted online, usually by a bartering exchangebartering exchange

Bartering exchange:Bartering exchange:A marketplace in which an intermediary A marketplace in which an intermediary arranges barter transactionsarranges barter transactions


Negotiating OnlineNegotiating Online

Negotiated pricing used for expensive Negotiated pricing used for expensive or specialized productsor specialized productsNegotiated prices are popular when Negotiated prices are popular when large quantities are purchasedlarge quantities are purchasedResult from interactions and Result from interactions and bargaining among sellers and buyersbargaining among sellers and buyers


Negotiating Online Negotiating Online (cont.)(cont.)

Deals with Deals with nonpricingnonpricing terms, such as terms, such as payment method and creditpayment method and creditDigital products and services can be Digital products and services can be personalized and “bundled” at a personalized and “bundled” at a negotiated standard pricenegotiated standard price


EE--Commerce in the Wireless Commerce in the Wireless Environment: MEnvironment: M--CommerceCommerce

Mobile computing: Mobile computing: Permits realPermits real--time access to information, applications, time access to information, applications, and tools that, until recently, were accessible only and tools that, until recently, were accessible only from a desktop computerfrom a desktop computer

Mobile commerce (mMobile commerce (m--commerce):commerce):EE--commerce conducted via wireless devicescommerce conducted via wireless devices

mm--business: business: The broadest definition of mThe broadest definition of m--commerce, in which ecommerce, in which e--business is conducted in a wireless environmentbusiness is conducted in a wireless environment


EE--Commerce in the Wireless Commerce in the Wireless Environment: MEnvironment: M--Commerce Commerce (cont.)(cont.)

Promise of mPromise of m--commercecommerceMobility significantly changes the manner in Mobility significantly changes the manner in which people and trading partners interact, which people and trading partners interact, communicate, and collaboratecommunicate, and collaborateMobile applications are expected to change the Mobile applications are expected to change the way we live, play, and do businessway we live, play, and do businessMuch of the Internet culture may change to one Much of the Internet culture may change to one based on mobile devicesbased on mobile devicesMM--commerce creates new business models for commerce creates new business models for EC, notably locationEC, notably location--based applicationsbased applications


EE--Commerce in the Wireless Commerce in the Wireless Environment: MEnvironment: M--Commerce Commerce (cont.)(cont.)

DoCoMo’sDoCoMo’s((nttdocomo.comnttdocomo.com) i) i--ModeMode——pioneering pioneering wireless servicewireless service——with a few clicks on with a few clicks on a handset, ia handset, i--Mode Mode users can conduct a users can conduct a large variety of mlarge variety of m--commerce activitiescommerce activities

Shopping guidesShopping guidesMaps and transportationMaps and transportationTicketingTicketingNews and reportsNews and reportsPersonalized movie Personalized movie serviceserviceEntertainmentEntertainmentDining and reservationsDining and reservationsAdditional servicesAdditional services


Issues in EIssues in E--Markets: Liquidity, Markets: Liquidity, Quality, and Success FactorsQuality, and Success FactorsEarly liquidity: Early liquidity:

Achieving a critical mass of buyers and sellers as fast Achieving a critical mass of buyers and sellers as fast as possible, before a startas possible, before a start--up company’s cash up company’s cash disappearsdisappears

Quality uncertainty: Quality uncertainty: The uncertainty of online buyers about the quality of The uncertainty of online buyers about the quality of nonnon--commodity type products that they have never commodity type products that they have never seen, especially from an unknown vendorseen, especially from an unknown vendor

MicroproductMicroproduct: : A small digital product costing a few cents A small digital product costing a few cents


EE--Market Success Factors Market Success Factors

Product CharacteristicsProduct CharacteristicsDigitizableDigitizable products can be electronically products can be electronically distributed to customers, resulting in very distributed to customers, resulting in very low distribution costs, allowing orderlow distribution costs, allowing order--fulfillment cycle time “to be minimal”fulfillment cycle time “to be minimal”

Industry CharacteristicsIndustry CharacteristicsElectronic markets are most useful when Electronic markets are most useful when they are able to directly match buyers they are able to directly match buyers and sellersand sellers


EE--Market Success Factors Market Success Factors (cont.)(cont.)

Seller CharacteristicsSeller CharacteristicsElectronic markets reduce search costs, Electronic markets reduce search costs, allowing consumers to find sellers offering allowing consumers to find sellers offering lower priceslower prices

Consumer CharacteristicsConsumer Characteristicsee--markets require a certain degree of effort markets require a certain degree of effort on the part of the consumer, eon the part of the consumer, e--markets are markets are more conducive to consumers who do some more conducive to consumers who do some comparison and analysis before buyingcomparison and analysis before buying


Economics of Economics of EE--MarketplacesMarketplaces


Economics of Economics of EE--Marketplaces Marketplaces (cont.)(cont.)


Economics of Economics of EE--Marketplaces Marketplaces (cont.)(cont.)


Competition in the Digital Competition in the Digital EconomyEconomy

Internet ecosystem: Internet ecosystem: The business model of the Internet economyThe business model of the Internet economy

Competitive factorsCompetitive factorsLower search costs for buyersLower search costs for buyersSpeedy comparisonsSpeedy comparisonsDifferentiation and personalizationDifferentiation and personalization

Differentiation: Providing a product or service that is Differentiation: Providing a product or service that is unique unique Personalization: The ability to tailor a product, service, Personalization: The ability to tailor a product, service, or Web content to specific user preferences or Web content to specific user preferences

Lower pricesLower pricesCustomer serviceCustomer service


Competition in the Competition in the Digital Economy Digital Economy (cont.)(cont.)

Characteristics necessary for Characteristics necessary for perfect perfect competition competition are the following:are the following:

Many buyers and sellers must be able to enter the Many buyers and sellers must be able to enter the market at little or no entry costmarket at little or no entry costLarge buyers or sellers are not able to individually Large buyers or sellers are not able to individually influence the marketinfluence the marketProducts must be homogeneous (no product Products must be homogeneous (no product differentiation) differentiation) Buyers and sellers must have comprehensive Buyers and sellers must have comprehensive information about the products and about the information about the products and about the market participants’ demands, supplies, and market participants’ demands, supplies, and conditionsconditions


Competition in the Competition in the Digital Economy Digital Economy (cont.)(cont.)

Porter’s competitive forces model: Porter’s competitive forces model: The model that says that five major The model that says that five major forces of competition determine industry forces of competition determine industry structure and how economic value is structure and how economic value is divided among the industry players in the divided among the industry players in the industry; analysis of these forces helps industry; analysis of these forces helps companies develop their competitive companies develop their competitive strategystrategy


Exhibit 2.9 Porter’s Competitive Exhibit 2.9 Porter’s Competitive Forces Model: How the Internet Forces Model: How the Internet

Influences Industry StructureInfluences Industry Structure


Impacts of EImpacts of E--Markets on Business Markets on Business Processes and OrganizationsProcesses and OrganizationsImproving direct marketingImproving direct marketing

Product promotionProduct promotionNew sales channelNew sales channelDirect savingsDirect savingsReduced cycle timeReduced cycle timeImproved customer serviceImproved customer serviceBrand or corporate imageBrand or corporate imageCustomizationCustomizationAdvertisingAdvertisingOrdering systemsOrdering systemsMarket operationsMarket operations


Exhibit 2.10: Exhibit 2.10: The AnalysisThe Analysis--ofof--Impacts FrameworkImpacts Framework


Exhibit 2.11: The Changing Exhibit 2.11: The Changing Face of MarketingFace of Marketing


Transforming Organizations Transforming Organizations

Technology and organizational Technology and organizational learninglearning——the changing nature of workthe changing nature of workRedefining organizationsRedefining organizationsNew and improved product capabilitiesNew and improved product capabilitiesNew business modelsNew business modelsImproving the supply chainImproving the supply chainImpacts on manufacturingImpacts on manufacturing

BuildBuild--toto--order: Production system in which order: Production system in which manufacturing or assembly will start only after manufacturing or assembly will start only after an order is receivedan order is received


Exhibit 2.12: How Customization Exhibit 2.12: How Customization is Done Online (Nike Shoes)is Done Online (Nike Shoes)


Exhibit 2.13: Changes in the Exhibit 2.13: Changes in the Supply ChainSupply Chain


Exhibit 2.13: Changes in the Exhibit 2.13: Changes in the Supply Chain Supply Chain (cont.)(cont.)


Transforming Organizations Transforming Organizations (cont.)(cont.)

Impacts on finance and accountingImpacts on finance and accountingExecuting an electronic order triggers an action Executing an electronic order triggers an action in what is called the back office that include:in what is called the back office that include:

buyers’ credit checksbuyers’ credit checksproduct availability checksproduct availability checksorder confirmationorder confirmationchanges in accounts payable, receivables, changes in accounts payable, receivables, billing, and much morebilling, and much more

These activities must be efficient, synchronized, These activities must be efficient, synchronized, and fast so that the electronic trade will not be and fast so that the electronic trade will not be slowed downslowed down


Transforming Organizations Transforming Organizations (cont.)(cont.)

Impacts on human resource Impacts on human resource managementmanagement

EC is changing how people are recruited EC is changing how people are recruited evaluated, promoted, and developedevaluated, promoted, and developedEC also is changing the way training and EC also is changing the way training and education are offered to employeeseducation are offered to employeesCompanies cut training costs by 50 percent or Companies cut training costs by 50 percent or moremoreNew eNew e--learning systems offer twolearning systems offer two--way video, way video, onon--thethe--fly interaction, and application sharingfly interaction, and application sharing


Managerial IssuesManagerial Issues

1.1. How do we compete in the digital How do we compete in the digital economy?economy?

2.2. What about intermediaries?What about intermediaries?3.3. What organizational changes will be What organizational changes will be

needed?needed?


Managerial Issues Managerial Issues (cont.)(cont.)

4.4. Should we auction?Should we auction?5.5. Should we barter?Should we barter?6.6. What mWhat m--commerce opportunities are commerce opportunities are

available?available?


SummarySummary

1.1. EE--marketplaces and their marketplaces and their components.components.

2.2. The major types of eThe major types of e--markets.markets.3.3. The role of intermediaries.The role of intermediaries.4.4. Electronic catalogs, search engines, Electronic catalogs, search engines,

and shopping carts.and shopping carts.


Summary Summary (cont.)(cont.)

5.5. Types of auctions and their Types of auctions and their characteristics.characteristics.

6.6. The benefits and limitations of The benefits and limitations of auctions.auctions.

7.7. Bartering and negotiating.Bartering and negotiating.8.8. The role of mThe role of m--commerce.commerce.


Summary Summary (cont.)(cont.)

9.9. Liquidity, quality, and success factors Liquidity, quality, and success factors in ein e--markets.markets.

10.10. Economic impact of EC.Economic impact of EC.11.11.Competition in the digital economy.Competition in the digital economy.12.12.The impact of eThe impact of e--markets on markets on

organizations.organizations.

Documents

E-MARKETPLACES: STRUCTURE, MECHANISMS, …repository.binus.ac.id/content/F0662/F066277224.pdf · Describe bartering and negotiating online. 8. ... An online market, usually B2B, in