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Introduction to B2B Electronic Commerce

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Introduction to B2B Electronic Commerce Powered By Docstoc
					Graduate Development Program




Electronic Marketplaces:
idea, promises and types.
Agenda



         1. Introduction to sourcing
         2. Introduction to B2B E-Markets
         3. Discussion: the promises of E-Markets
         4. A classification of Electronic Markets




                                                     2
Agenda



         1. Introduction to sourcing
         2. Introduction to B2B E-Markets
         3. Discussion: the promises of E-Markets
         4. A classification of Electronic Markets




                                                     3
                                     1. Sourcing
                                       2. B2B E-Markets
                                       3. Discussion
                                       4. Classification
         Trading over the Counter




Vendor                              Customer
               PRODUCT




               CASH


                                                           4
                                 1. Sourcing
                                   2. B2B E-Markets
                                   3. Discussion
                                   4. Classification
         Trading on Credit




Vendor                          Customer
            PRODUCT
            Goods Receipt

            Invoice
            CHEQUE
            Remittance Advice
            Statement
                                                       5
                                      1. Sourcing
                                        2. B2B E-Markets
                                        3. Discussion
                                        4. Classification
           Cash Control Systems




Vendor                              Customer
                PRODUCT
                Goods Receipt

Debitors        Invoice             Creditors
Control                             Control
System          CHEQUE              System
                Remittance Advice
                Statement
                                                            6
                                         1. Sourcing
                                           2. B2B E-Markets
                                           3. Discussion
                                           4. Classification
         Trading from a Distance




               Purchase Order
               PO Acknowledgement

Vendor         Delivery Docket          Customer
               PRODUCT
               Signed Delivery Docket

               Invoice
                CHEQUE
               Remittance Advice
               Statement
                                                               7
                                               1. Sourcing
                                                 2. B2B E-Markets
                                                 3. Discussion
                                                 4. Classification
              Product Control Systems




                    Purchase Order
                    PO Acknowledgement
Order Entry                                  Purchasing
Vendor
and                 Delivery Docket          Customer
                                             and
Despatching                                  Receiving
                    PRODUCT
                    Signed Delivery Docket

Debitors            Invoice                  Creditors
Control                                      Control
System              CHEQUE                   System
                    Remittance Advice
                    Statement
                                                                     8
                                     1. Sourcing
         Other Complexities            2. B2B E-Markets
                                       3. Discussion
                                       4. Classification
           Advertise
           Request for Quote
           Quote
           Contract

           Purchase Order
           PO Acknowledgement

Vendor     Delivery Docket          Customer
           PRODUCT
           Signed Delivery Docket

           Invoice
           CHEQUE
           Remittance Advice
           Statement
                                                           9
                                               1. Sourcing
              Sourcing & Marketing Systems       2. B2B E-Markets
                                                 3. Discussion
                                                 4. Classification
                 Advertise
                 Request for Quote
Marketing                                    Sourcing
                 Quote                       (Buying)
Catalogue
                 Contract

                 Purchase Order
                 PO Acknowledgement
Order Entry                                  Purchasing
Vendor
and              Delivery Docket             Customer
                                             and
Despatching                                  Receiving
                 PRODUCT
                 Signed Delivery Docket

Debitors         Invoice                     Creditors
Control                                      Control
System           CHEQUE                      System
                 Remittance Advice
                 Statement
                                                                 10
                                    1. Sourcing
         Full Model                   2. B2B E-Markets
                                      3. Discussion
                                      4. Classification
          Advertise
          Request for Quote
          Quote
          Contract

          Purchase Order
          PO Acknowledgement

Vendor    Delivery Docket          Customer
          PRODUCT
          Signed Delivery Docket

          Invoice
          CASH
          Remittance Advice
          Statement
                                                      11
                       1. Sourcing
         Full model      2. B2B E-Markets
                         3. Discussion
                         4. Classification




          SOURCING



          ORDERING
Vendor                Customer
          DELIVERY



          PAYMENT

                                         12
                         1. Sourcing
         Major Stages      2. B2B E-Markets
                           3. Discussion
                           4. Classification




           SOURCING



           ORDERING
Vendor                  Customer
           DELIVERY



           PAYMENT

                                           13
                                    1. Sourcing
         Sub-Stages of Sourcing       2. B2B E-Markets
                                      3. Discussion
                                      4. Classification




             Contact


             Price Determination


             Product Evaluation

Vendor                             Customer
             Closure




                                                      14
                                                                    1. Sourcing
                                                                      2. B2B E-Markets
Sourcing Problems                                                     3. Discussion
                                                                      4. Classification

Vendor                                 Customer
 Contact                               Contact
      Reaching customers                    Finding required product
   Price determination                   Price determination
      Getting highest price                 Getting lowest price
   Product Evaluation                    Product Evaluation
      Making product features known         Getting right utility for price
   Closure                               Closure
   Search Costs are a Major              Search Costs are a Major
    Problem                                Problem




                                                                                      15
Agenda

         1. Introduction to sourcing
         2. Introduction to B2B E-Markets
         3. Discussion: the promises of E-Markets
         4. A classification of Electronic Markets




                                                     16
                                                           1. Sourcing
                                                         2. B2B E-Markets
                                                           3. Discussion
                                                           4. Classification

“Electronic Marketplaces”

 Electronic Marketplaces are Internet-based intermediaries who
  make money by supporting various aspects of the sourcing of goods
  (and services) for purchase by one business from another (B2B)
 Also called
    E-Exchanges, B2B Exchanges
    E-Hubs, B2B Hubs
    E-Marketspaces, B2B Market Spaces
    E-Catalogues, B2B Catalogues
    E-Procurement




                                                                               17
                                                 1. Sourcing
                                               2. B2B E-Markets
                                                 3. Discussion
                                                 4. Classification

How Marketplaces Reduce Searching Costs


     Vendors            Customers




                                          No of
                                          Connections
                                          = N2




                                                                     18
                                                 1. Sourcing
                                               2. B2B E-Markets
                                                 3. Discussion
                                                 4. Classification
How Marketplaces Reduce Searching Costs
  Vendors                     Customers




                                          No of
                                          Connections
                                          =2XN



• Reduces transaction            • Reduces transaction
  costs                            costs


                                                                     19
                               1. Sourcing
                             2. B2B E-Markets
The B2B E-Markets “Bubble”     3. Discussion
                               4. Classification




                                                   20
                                             1. Sourcing
                                           2. B2B E-Markets
               Basic Idea                    3. Discussion
                                             4. Classification


                3rd Party Web Site


Provides Offers & Content   Reviews Options
      (Catalogues)          Makes Selections


   Vendor                            Customer

       Revenue Propositions
         – Subscription
         – Transaction Fees
         – Pay for software
                                                                 21
Agenda



         1. Introduction to sourcing
         2. Introduction to B2B E-Markets
         3. Discussion: the promises of E-Markets
         4. A classification of Electronic Markets




                                                     22
                               1. Sourcing
                               2. B2B E-Markets
Promises of E-Marketplaces   3. Discussion
                               4. Classification

 ?




                                               23
                                   1. Sourcing
                                   2. B2B E-Markets
Value add for customers/buyers   3. Discussion
                                   4. Classification

 ?




                                                   24
                                    1. Sourcing
                                    2. B2B E-Markets
Value add for suppliers/sellers   3. Discussion
                                    4. Classification

 ?




                                                    25
                                                             1. Sourcing
                                                             2. B2B E-Markets
The focus of analysis: Transaction costs                   3. Discussion
                                                             4. Classification

Transaction costs are
 “the costs of running the economic system” (Arrow 1969, 48)
 the costs of incomplete, less than perfect markets


Costs ex ante:                             Costs ex post:
information costs        Contract          costs for contract
contractual costs                          monitoring
                                           costs for contract
                                           enforcement



                                                                             26
                                                          1. Sourcing
                                                          2. B2B E-Markets
Impact of IT: Move to the market                        3. Discussion
                                                          4. Classification

Hypothesis:
IOS reduce external transaction costs and thus make market
transactions comparatively more attractive.
There will be a trend from electronic hierarchies to electronic
markets.




                                                                          27
                                                         1. Sourcing
                                                         2. B2B E-Markets
Impact of IT: Move to the market                       3. Discussion
                                                         4. Classification

Malone et al. (1987 and 1989):
 IT reduces coordination (and information) costs (due to
  electronic communication, brokerage and integration effects)
 IT effects transaction attributes:
    IT-based production technology becomes more versatile and
     reduces asset specificity,
    new communication technology provides means to communicate
     easily and inexpensively even complex product descriptions


 IT facilitates an expansion of market coordination into the
  realm of complex and specialized products
 IT creates Electronic Markets
                                                                         28
Agenda



         1. Introduction to sourcing
         2. Introduction to B2B E-Markets
         3. Discussion: the promises of E-Markets
         4. A classification of Electronic Markets




                                                     29
Classifying Types of                            1. Sourcing
                                                2. B2B E-Markets
E-Marketplaces                                  3. Discussion
                                              4. Classification

 What businesses buy from other businesses
    Production inputs
    Operating inputs

 What kinds of products there are
    Commodities
    Non-commodities
    Customer-specific products




                                                               30
                                                                  1. Sourcing
                                                                  2. B2B E-Markets
Types of Products                                                 3. Discussion
                                                                4. Classification

 What types of products do businesses buy from other businesses?
 Production Inputs (things that go into the main products the business
   produces)
     Raw materials
     Fabricated components
     Packaging
 Operating inputs (things that are consumed in the course of
   producing)
       Often called MRO (Maintenance, repair, and operating)
       Stationary
       Office equipment
       Machinery
       Energy
       Labour
                                 Or Simply:
                                 Parts and Consumables
                                                                                 31
                                                          1. Sourcing
                                                          2. B2B E-Markets
Characteristics of Production Inputs                      3. Discussion
                                                        4. Classification

 Are usually specific to a particular industry
 Are sold by specialized (Vertical) suppliers and distributors




                                                                         32
                                                  1. Sourcing
             Vertical means industry specific     2. B2B E-Markets
           Horizontal means general purpose       3. Discussion
                                                4. Classification
Vertical




            Horizontal
                                                                 33
                                                          1. Sourcing
                                                          2. B2B E-Markets
Characteristics of Production Inputs                      3. Discussion
                                                        4. Classification

 Are usually specific to a particular industry
 Are sold by specialized (Vertical) suppliers and distributors
 Often require specialized logistics channels
    Eg. Corrosive chemicals




                                                                         34
                                                        1. Sourcing
                                                        2. B2B E-Markets
Characteristics of Operating Inputs                     3. Discussion
                                                      4. Classification

 Common to many industries
 Traditionally bought from suppliers and distributors who are
  generalists (horizontal)
 Usually can be delivered by generalist carriers




                                                                       35
                                                           1. Sourcing
                                                           2. B2B E-Markets
Types of Products                                          3. Discussion
                                                         4. Classification

 Commodities
    General purpose
    Easily described
    Price largely set by supply and demand (market forces)
 Non-commodities
    Purpose specific
    Difficult to describe
    Price largely set by production technology
 Customer-specific products
      Made to order for one customer
      Require detailed drawings / standards
      Usually repeat orders
      Much negotiation over price

                                                                          36
          Input
          Type
                               Classification
Product
Type              Operating   Production


  Customer-
  Specific



 Non-
 Commodity



 Commodity

                                            37
                                                                1. Sourcing
                                                                2. B2B E-Markets
How inputs are bought                                           3. Discussion
                                                              4. Classification

 Spot Buying
      Once off purchase for immediate need
      No long term relationship
      Buy on price and minimal description
      Minimal contract
      Appropriate to commodities
 Systematic Buying
      Repeat transactions involved
      Contract is needed
      Criteria include quality, supply performance etc. as well as price
      Relationship oriented
      Products may be highly specific

                                                                               38
                                                     1. Sourcing
                                                     2. B2B E-Markets
Processes                                            3. Discussion
                                                   4. Classification

 Spot buying            Systematic Buying
      Source item            Source suppliers
      Requisition            Request for quote
      Approval               Evaluate quotes
      Purchase order         Contract
                              Requisition
                              Approval
                              Purchase Order …




                                                                    39
                                                           1. Sourcing
                                                           2. B2B E-Markets
Types of Products                                          3. Discussion
                                                         4. Classification

 Commodities                                           Spot Buy
    General purpose
    Easily described
    Price largely set by supply and demand (market forces)
 Non-commodities
    Purpose specific
    Difficult to describe
    Price largely set by technology
 Customer-specific products
      Made to order for one customer
      Require detailed drawings / standards
      Usually repeat orders                           Systematic
      Much negotiation over price                        Buy
                                                                          40
          Input                                         B2B E-Markets Matrix
          Type
Product
Type                      Operating                        Production
                  ???                                  Reverse Auctions
                                                           Freemarkets.com

  Customer-
  Specific

                  Horizontal Hubs                      Vertical Hubs
                  (E-Procurement Hubs)                 (Catalog Hubs, Vortals)
                        Ariba                               SciQuest.com
 Non-                   W.W.Granger                         PlasticsNet.com
 Commodity                                                  Covisint
                                                            Chemdex (out-of-biz)

                  E-Auctions                           E-Exchanges
                  (Yield Managers)                          E-Steel (Now Newview)
                        Employease (out-of-biz)             PaperExchange.com
 Commodity              Adauction.com (out-of-biz)
                        CapacityWeb.com (out-of-biz)

                                                                                    41
          Input                                              B2B E-Markets Matrix
          Type
Product
Type                          Operating                         Production
                  ???                                  Reverse Auctions
                                                  Auction for general
                                                           Freemarkets.com

  Customer-                                       purpose operating inputs
  Specific
                                                  Very effective when the
                  Horizontal Hubs
                                                  product is strongly
                                                        Vertical Hubs
                  (E-Procurement Hubs)            “perishable”Hubs, Vortals)
                                                        (Catalog
 Non-
                        Ariba                             - hotel bookings
                                                             Chemdex, e-Chemicals
                        W.W.Granger                          SciQuest.com
 Commodity                                                - advertising
                                                             PlasticsNet.com


                  E-Auctions                            is entirely
                                                  Price E-Exchanges
                  (Yield Managers)                          E-Steel demand
                                                  determined by(now NewView)
                        Employease (out-of-biz)              PaperExchange.com
 Commodity              Adauction.com (out-of-biz)
                        CapacityWeb.com (out-of-biz)

                                                                                    42
          Input                                             B2B E-Markets Matrix
          Type
Product
Type                            Operating                      Production
                  ???                                  Reverse Auctions
                                                           Freemarkets.com
           Sellers place “lots” of
  Customer-
  Specific items on a web exchange
             Buyers place bids for
                 Horizontal Hubs                       Vertical Hubs
             items
                 (E-Procurement Hubs)                  (Catalog Hubs, Vortals)
                        Ariba                               SciQuest.com
 Non-
         Prices W.W.Granger are
                 and bids                                   PlasticsNet.com
 Commodity       BizBuyer.com                               Covisint
         matched as per stock                               Chemdex (out-of-biz)
         exchange
             E-Auctions                                E-Exchanges
                  (Yield Managers)                         E-Steel (Now NewView)
                        Employease (out-of-biz)            PaperExchange.com
 Commodity              Adauction.com (out-of-biz)
                        CapacityWeb.com (out-of-biz)

                                                                                   43
          Input                                             B2B E-Markets Matrix
          Type
Product
Type                          Operating                       Production
                  ???                                   Reverse Auctions
                                                       Sellers upload their
                                                            Freemarkets.com

  Customer-                                            catalogue and product
  Specific                                             descriptions and prices to
                                                       the third party hub
                  Horizontal Hubs                       Vertical Hubs
                  (E-Procurement Hubs)                  (Catalog search catalogues
                                                       Buyers Hubs, Vortals)
 Non-
                        Ariba                          for right product at right
                                                             Chemdex, e-Chemicals
                        W.W.Granger
 Commodity                                             priceSciQuest.com
                                                             PlasticsNet.com


                  E-Auctions                           E-procurement hubs often
                                                         E-Exchanges
                  (Yield Managers)                     include workflow features
                                                             E-Steel
                        Employease (out-of-biz)
 Commodity              Adauction.com (out-of-biz)
                                                       such PaperExchange.com
                                                              as requisition
                        CapacityWeb.com (out-of-biz)   approval
                                                                                    44
                       1. Sourcing
                       2. B2B E-Markets
Manual Procurement     3. Discussion
                     4. Classification




                                      45
                  1. Sourcing
                  2. B2B E-Markets
e-Procurement     3. Discussion
                4. Classification




                                 46
                                   1. Sourcing
                                   2. B2B E-Markets
Process Benefits                   3. Discussion
                                 4. Classification

   Eliminates erratic Buying
   Maximises Volume Discounts
   Reduces Order Cost
   Reduces Order Cycle-time
   Reduces Errors




                                                  47
          Input                                             B2B E-Markets Matrix
          Type
Product
Type                          Operating                        Production
                  ???                                  Reverse Auctions
                                                           Freemarkets.com
          As for E-procurement
 Customer-hubs
 Specific
          Often include extensive
          descriptive data using
               Horizontal Hubs                         Vertical Hubs
               (E-Procurement Hubs)                    (Catalog Hubs, Vortals)
          hypertext Ariba                                   SciQuest.com
 Non-               W.W.Granger                             PlasticsNet.com
 Commodity support work flow
          Also      BizBuyer.com                            Covisint
                                                            Chemdex (out-of-biz)

                  E-Auctions                           E-Exchanges
                  (Yield Managers)                         E-Steel (now NewView)
                        Employease (out-of-biz)            PaperExchange.com
 Commodity              Adauction.com (out-of-biz)
                        CapacityWeb.com (out-of-biz)

                                                                                   48
          Input                               B2B E-Markets Matrix
          Type
Product
Type                    Operating                Production
                  ???                    Reverse Auctions
                                             Freemarkets.com
           Buyer distributes Request
  Customer- Quote (RFQ) via hub to
           for
  Specific may sellers.

            Includes detailed drawings
                 Horizontal Hubs         Vertical Hubs
                 (E-Procurement
            / specifications Hubs)
                      Ariba
                                         (Catalog Hubs, Vortals)
                                              SciQuest.com
 Non-           W.W.Granger                   PlasticsNet.com
 Commodity
        Sellers prepare a bid
                BizBuyer.com                  Covisint
                                              Chemdex (out-of-biz)

            E-Auctions                   E-Exchanges
        Lowest bid wins the
            (Yield Managers)                 E-Steel (now NewView)
                   (?)
        contractAdauction.com                PaperExchange.com
 Commodity        CapacityWeb.com
            Stops at contract stage
                                                                     49
                     1. Sourcing
                     2. B2B E-Markets
Reverse Auctions     3. Discussion
                   4. Classification




                                    50
                     1. Sourcing
                     2. B2B E-Markets
Reverse Auctions     3. Discussion
                   4. Classification




                                    51
                                                              1. Sourcing
                                                              2. B2B E-Markets
Reverse Auctions                                              3. Discussion
                                                            4. Classification

 Benefits to Buyer
      Can reduce number of suppliers
      Process is more formalised eg. rigid milestones
      Buyer must consider wider range of suppliers
      Reduces the time of the price-negotiations phase
      Results in discovery of the market price
 Benefits to supplier
      Level playing field might work for non-incumbant suppliers
      Involvement may open up new opportunities
      Provides market information
      Suppliers can be selective about work they take
      Usually results in long term contracts

                                                                             52
          Input                                  B2B E-Markets Matrix
          Type
Product
Type                         Operating             Production
                  ???                        Reverse Auctions
                                                 Freemarkets.com
                                          MRO Reverse Auction?
  Customer-
  Specific
                                          Receive bids for high
                                          specialised operating
                  Horizontal Hubs            Vertical Hubs
                  (E-Procurement Hubs)    inputs (eg. tools and dies)
                                             (Catalog Hubs, Vortals)
                        Ariba                    Chemdex, e-Chemicals
 Non-                   W.W.Granger
                                          Anyone know of any
                                                 SciQuest.com
 Commodity                                       PlasticsNet.com
                                          examples?
                  E-Auctions                 E-Exchanges
                  (Yield Managers)               E-Steel
                        Adauction.com            PaperExchange.com
 Commodity              CapacityWeb.com
                        Youtilities.com
                                                                        53
                                                               1. Sourcing
                                                               2. B2B E-Markets
Three Basic Hub Strategies                                     3. Discussion
                                                             4. Classification

 Matching
    Facilitate matching of buyer to seller
    Match price to utility
 Aggregation
    Bring a lot of parties together to reduce transaction costs
      (particularly search costs)
 Market making
     Use auction to determine true market price




                                                                              54
          Input                                              B2B E-Markets Matrix
          Type
Product
Type                          Operating              Production
                  ???                          Strategies
                                      Matching Reverse Auctions
                                                             Freemarkets.com

  Customer-                                 Used as a demand leveling
  Specific                                  strategy eg. get rid of excess
                                            inventory
                  Horizontal Hubs                        Vertical Hubs
                  (E-Procurement Hubs)      Buyers       (Catalog sellers.
                                                       are alsoHubs, Vortals)
                        Ariba                           Chemdex, e-Chemicals
 Non-                   W.W.Granger
                                            Therefore every new participant
                                                        SciQuest.com
 Commodity                                  improves effectiveness
                                                        PlasticsNet.com


                  E-Auctions                             E-Exchanges
                  (Yield Managers)                           E-Steel (now NewView)
                        Employease (out-of-biz)              PaperExchange.com
 Commodity              Adauction.com (out-of-biz)
                        CapacityWeb.com (out-of-biz)

                                                                                     55
          Input                                        B2B E-Markets Matrix
  Aggregation Strategies
          Type
Product
Type                      Operating
  Utility maximisation and price                          Production
  minimisation by increasing
                ???                               Reverse Auctions
                                                      Freemarkets.com
  choices
  Customer-
  Specific
  More buyers only benefits sellers
  – more sellers only benefits
  buyers        Horizontal Hubs                   Vertical Hubs
               (E-Procurement Hubs)               (Catalog Hubs, Vortals)
                   Ariba                               SciQuest.com
 Non-              W.W.Granger                         PlasticsNet.com
 Commodity                                             Covisint
                                                       Chemdex (out-of-biz)

               E-Auctions                         E-Exchanges
               (Yield Managers)                       E-Steel )now NewView)
                   Employease (out-of-biz)            PaperExchange.com
 Commodity         Adauction.com (out-of-biz)
                   CapacityWeb.com (out-of-biz)

                                                                              56
          Input                                  B2B E-Markets Matrix
          Type
Product
Type                            Operating           Production
                  ???                       Reverse Auctions
                                                Freemarkets.com

  Customer-
  Specific

          Market making strategies
                  Horizontal Hubs           Vertical Hubs
                  (E-Procurement Hubs)      (Catalog Hubs, Vortals)
                  through
 Non- Least priceW.W.Granger competition
                        Ariba                    SciQuest.com
                                                 PlasticsNet.com
      (markets forces)
 Commodity       BizBuyer.com                    Covisint
                                                 Chemdex (out-of-biz)
     Allows buyers to reach more
             E-Auctions                     E-Exchanges
     sellers (Yield Managers)                   E-Steel (now NewView)
                   Adauction.com                PaperExchange.com
 Commodity         CapacityWeb.com
     Susceptible to collusion
                                                                        57
                                                      1. Sourcing
                                                      2. B2B E-Markets
Market Fragmentation                                  3. Discussion
                                                    4. Classification

 Supply-side fragmentation
    Many suppliers few buyers
    Buyers face search and order processing cost




                                                                     58
                                                                1. Sourcing
                                                                2. B2B E-Markets
Market Fragmentation                                            3. Discussion
                                                              4. Classification

 Opportunity for forward aggregator




                            Supply-side
                            aggregator

•   Lowers sourcing costs by giving       •   Reduces price by market
    access to large players                   liquidity

                                                                               59
                                       1. Sourcing
                                       2. B2B E-Markets
Market Fragmentation                   3. Discussion
                                     4. Classification

   Demand-side fragmentation
     Many buyers few suppliers
     Buyers lack purchasing power




                                                      60
                                                               1. Sourcing
                                                               2. B2B E-Markets
Market Fragmentation                                           3. Discussion
                                                             4. Classification

 Opportunity for reverse aggregator




                              Demand-side
                              Aggregator

•   Lowers transaction cost             •   Reduces price by increasing
                                            buying power
                                        •   Reduces procurement costs
                                                                              61
Wrap-up: important bits of knowledge

 Transaction process & transaction costs
                                                                                                                                  SOURCING




                                                                                                                                  ORDERING


                                                                                              Ven                                                                                              Customer
                                                                                              dor


                                                                                                                                  DELIVERY




                                                                                                                                  PAYMENT




 (Initial) promises of Electronic Marketplaces (discussion)
    move to the market ???                                                                                         Spot Buy




 Types of products and sourcing
                                                                                                            Systematic Buy


                                                                        Input Type
                                                                                                                                                                        B2B E-Markets Matrix




 Classification of Electronic Marketplaces
                                              Product Type

                                                                                                        Operating                                                                   Production




                                                                                     ???                                                                            Reverse Auctions
                                                                                                                                                    Auction general purpose operating inputs                   Freemarkets.co
                                                                                                                                                                                                               m
                                                                                                                                                    Very effective when the product is strongly “perishable”
                                                    Customer-Specific                                                                                                                                                           -

                                                                                                                                                                                                                                h
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                                                                                                                                                                                                                                o
                                                                                                                                                                                                                                o
                                                                                     Horizontal Hubs                                                                Vertical Hubs                                               k
                                                                                     (E-Procurement Hubs)                                                           (Catalog Hubs, Vortals)                                     i
                                                                                                                     Ariba                                                                                     Chemdex, e-      n
                                                                                                                     W.W.Granger                                                                               Chemicals        g
                                                  Non-Commodity                                                                                                                                                                 s
                                                                                                                                                                                                               SciQuest.com
                                                                                                                                                                                                                                -
                                                                                                                                                                                                               PlasticsNet.co
                                                                                                                                                                                                               m                a
                                                                                                                                                                                                                                d
                                                                                                                                                                                                                                v
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                                                                                                                                                                                                                                r
                                                                                                                                                                                                                                t
                                                                                     E-Auctions
                                                                                                                                                                                                                                i
                                                                                     (Yield Managers)                                                               E-Exchanges                                                 s
                                                                                                                     Employease (out-of-biz)
                                                                                                                     Adauction.com (out-of-biz)                                                                E-Steel (now     i
                                                                                                                     CapacityWeb.com (out-of-biz)                                                              NewView)         n
                                                                                                                                                                                                               PaperExchang     g
                                                  Commodity                                                                                                                                                    e.com




                                                                                                                                                                                                                                    62
                                                                                                                                                    Price is entirely determined by demand
Wrap-up: wisdoms

 ?




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