E-Marketplace

							E-COMMERCE MARKET
MECHANISM
    2.1 Functions of a Market
Matching of Buyers & Sellers             Facilitation of               Institutional
                                         Transactions                  Infrastructure
• Determination of product offerings     • Logistics                   • Legal
      • Product features offered by            • Delivery of                • Commercial
      sellers                                  information, goods or        code, contract law,
      • Aggregation of different               services to buyers           dispute resolution,
      products                           • Settlement                       intellectual
• Search (of buyers for sellers & of           • Transfer of                property
sellers for buyers)                            payments to sellers          protection
      • Price & product information      • Trust                       • Regulatory
      • Organizing bids & bartering            • Credit system,             • Rules &
      • Matching Seller offerings with         reputations, rating          regulations,
      buyer preference                         agencies like                monitoring,
• Price discovery                              Consumer Reports &           enforcement
      • Process & outcome in                   BBB. Special escrow
      determination of price                   & trust online
      • Enabling price comparison              agencies
Electronic Marketplaces
   Marketspace
    “a marketplace in which seller and buyers exchange goods & services
    for money (or for other goods and services), but do so electronically”
   Marketspace Components
       Customers
       Sellers
       Products
       Infrastructure
       Front end
       Back end
       Intermediaries
       Other business partners
       Support services
    2.2 Examples of Digital Products
Information & Entertainment               Symbols, Tokens &           Processes & Services
Products                                  Concept
• Paper based documents: books,           • Tickets &                 • Government services:
newspapers, magazines, journals,          reservations: airlines,     forms, benefits, welfare
store coupons, marketing brochures,       hotels, concerts, sports    payments, licenses
newsletter, research paper &              events, transportation      • Electronic messaging:
training materials.                       • Financial                 letters, faxes, telephone calls
• Product information: product            instruments: checks,        • Business value creation
spesifications, catalogs, user manuals,   electronic currencies,      processes: ordering,
sales training manuals                    credit cards, securities,   bookeeping, inventorying,
• Graphics: photographs, postcards,       letters of credits          contracting
calendars, maps, posters, x-rays.                                     • Auctions, bidding, bartering
• Audio: music recordings, speeches,                                  • Remote education,
lectures, industrial voices                                           telemedicine & other
• Video: movies, television programs,                                 interactive services
video clip                                                            • Cybercafes, interactive
• Software: programs, games,                                          entertainment, virtual
development tools.                                                    communities.
2.2 Examples of Digital Products
–cont-
   Digital Products
    “goods that can be transformed to digital format & delivered over the
      internet”
   Front end
    “the portion of an e-seller’s business process through which customer
       interact, including the seller’s portal, electronic catalogs, a shopping
       cart, a search engine & a payment gateway”.
   Back end
    “the activities that support online order-taking and fulfillment,
    inventory management, purchaing from suppliers, payment
    processing, packaging & delivery”
   Intermediary
    “a third party that operates between seller and buyers”
2.2 Types of E-Markets:
From Storefronts to Portals
E-Storefronts            Electronic Mall
  E-Catalog              • General stores/mall:
  A Search engine        choicemall.com, shop4.com,
  Shopping cart          spree.com
  E-Auction facilities   • Specialized stores/mall:
  A payment gateway      amazon.com
  A shipment court       • Regional vs global store:
  Customer services      parknshop.com
                         • Pure online vs click &
                         mortar stores
2.2 Types of E-Markets:
From Storefronts to Portals –cont-
   Storefront
    “a single company’s web site where products &
    service are sold”
    E-Mall
     “an online shopping center where many stores are
     located”
2.2 Types of E-Markets:
From Storefronts to Portals –cont-
• E-Marketplaces
  “an online market, usually B2B, in which buyers & sellers negotiate”

Marketplaces Information Portals
• PrivateE-                 • Publishing        portals. Eg: Techweb.com,
Marketplaces                zdnet.com
• Public E-                 • Commercial portals. MyYahoo!,
Marketplaces                lycos, msn.com
• Consortia                 • Personal portals
                            • Corporate portals
                            • Mobile portals
• Information portal
   “a personalized, single point of access through a web browser to business
information inside an organization”
   Private e-Marketplace
    “online markets owned by a single company; can be either sell-side or buy
       side marketplaces”.
    Sell-side e-Marketplace
    “A private e-market in which a company sells either standard or customized
       products to qualified companies”
    Buy-Side e-Marketplace
    “a private e-market in which a company makes purchases from invited
       suppliers”
   Public e-Marketplace
    “B2B markets, usually owned and/or managed by an independent third party,
      that include many sellers and buyers; also known as exchange”
   Consortia
    “e-marketplace tha deal with suppliers & buyers in a single industry”
2.3 Supply Chains & Value Chains
   Supply chains
    “the flow of materials, information, money & services from
      raw material supplier through factories & warehouses to
      the end customers”
   Supply Chain Components
     Upstream   supply chain
     Internal supply chain

     Downstream supply chain
2.3 Supply Chains & Value Chains
-cont-
   Types of Supply Chains
     Integrated Make-to-Stock

     Continous Replenishment
     Build-to-Order

     Channel Assembly
2.3 Supply Chains & Value Chains
-cont-
   Value Chain
    “is the series of activities that an organization performs to
       achieve its goal(s) at various stage of the production
       process, from resource acquisition to product delivery”
   Value System
    “a set of value chains in an entire industry, including the
      value chains of tiers of suppliers, distribution channels,
      and customers”
2.4 Intermediation & Syndication in
E-Commerce
   Infomediaries
    “Electronic intermediaries that control information flow in
      cyberspace, often aggregating information and selling it
      to others”
   The Roles & Value of Intermediaries in E-Markets
    1.   Search Costs
    2.   Lack of privacy
    3.   Incomplete information
    4.   Contract risk
    5.   Pricing inefficiencies
2.4 Intermediation & Syndication in
E-Commerce –cont-
   E-Distributors on B2B
    “an e-commerce intermediary that connects manufactures (suppliers)
      with buyers by aggregating tha catalogs of many suppliers in one
      place-the intermediary’s website”
   Disintermediation
    “elimination of intermediaries between sellers & buyers”
   Reintermediation
    “establishment of new intermediary roles for traditional intermediaries
    that were disintermediated”
   Syndication as an EC Mechanism
    “the sale of the same good (e.g., digital content) to many customers,
       who then integrate it with other offerings and resell it or give it
       away free”
2.4 Intermediation & Syndication in
E-Commerce –cont-
2.5 Issues in E-Markets: Competition,
Liquidity, Quality & Other Success Factors
   Competition in the Internet Ecosystem
    “is the business model of the online economy”
   Competitive Factors
     Lower buyer’s search costs
     Speedy comparisons
     Differentiation & personalization
        “providing a product or service that is unique”
        “the ability to tailor a product, service, or web content to specific user
        preferences”
     Lower Price
     Customer Service
2.5 Issues in E-Markets: Competition, Liquidity,
Quality & Other Success Factors –cont-

   The characteristics necessary for perfect
    competition:
     Many buyers and sellers must be able to enter the
      market at no entry cost (no barriers to entry)
     Large buyers or sellers are not able to individually
      influence the market
     The products must be homogeneous (no product
      differentation)
     Buyers and sellers must have comprehensive information
      about the products and about the market participants’
      demands, supplies, and conditions.
2.6. Electronic Catalogs & Other
Market Mechanism
   Electronic Catalogs
    “the presentation of product information in an
    electronic form; the backbone of most e-selling sites.”
   Electronic Catalogs can be classified according to
    three dimensions:
    1. The dynamics of the information presentation
    2. The degree of customization.
    3. Integration with business processes.
2.6. Electronic Catalogs & Other
Market Mechanism –cont-
   Comparison of Online Catalogs with Paper
    Catalogs
Type       Advantages                                Disadvantages
Paper      -Easy to create without high technology   -Difficult to update changed product
Catalogs   -Reader is able to look at the catalog    information promptly
           without computer system                   -Only a limited number of products can
           - More portable than e-Catalog            be displyaed
                                                     -Limited information through photograph
                                                     and textual description is available
                                                     -No possibility for advanced multimedia
                                                     such as animation and voice

Online     -Easy to update product information       -Difficult to develop catalogs, large
Catalogs   -Able to integrate with the purchasing    fixed cost
           process                                   -There is a need for customer skill to
           -Good search and comparison               deal with computers and browsers.
           capabilities
           -Possibility of adding on voice and
           animated pictures
           -Long-term cost savings
           -Easy to customize
           -Ease of conncting order processing,
           inventory processing, & payment
           processing to system
2.7. Auctions
   “a market mechanism by which a seller places an
    offer to sell a product and buyers make bids
    sequentially and competitively until a final price is
    reached”
   e-Auction
   Dynamic Pricing & Types of Auctions
       One Buyer, One Seller
       One Seller Many Potential Buyers
           English Auction. “in which buyers bid on an item in sequence and the price with time”
           Yankee Auction. “auction of multiple identical items in which bidders can bid for any
            numbers of the items offered, and the highest bid wins”
           Dutch Auction.”aucion of multiple identical items, with prices starting at a very high level
            and declining as the auction time passes”
           Free-fall auction. “same with dutch auction, but only has one item”
       One Buyer Many Potential Sellers
           Reverse auction. “same with dutch/free-fall aution but especially for B2B or G2B.
           Name-your-own-price model. “auction model in which a would-be buyer specifies th price
            (and other terms) they are willing to pay to any willing and able seller. It is a C2B model,
            priceline.com”.
       Many Sellers, Many Buyers. Double Auction. “auction in which buyers and their
        bidding prices and sellers and their asking prices are matched, considering the
        quantities on both sides”
2.7. Auctions
   Limitations of E-Auctions
                   fraud.
     Possibility of

     Limited participation

     Lack of security

     Limited Software