E-Marketplaces: Structures and Mechanisms Chapter 2 E-Marketplaces: Structures and Mechanisms

Learning Objectives Define e-marketplaces and list their components. List the major types of e-marketplaces and describe their features. Describe the various types of EC intermediaries and their roles. Describe electronic catalogs, shopping carts, search engines, and portals. Chapter 2 Prentice Hall

Learning Objectives Describe the major types of auctions and list their characteristics. Discuss the benefits, limitations, and impacts of auctions. Describe bartering and negotiating online. The major mechanisms of Web 2.0. Chapter 2 Prentice Hall

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E-MARKETPLACES e-marketplace (marletspace) An online market, usually B2B, in which buyers and sellers exchange goods or services; the three types of e-marketplaces are private, public, and consortia. Chapter 2 Prentice Hall

E-MARKETPLACES COMPONENTS E-MARKETPLACE COMPONENTS AND PARTICIPANTS Customers Sellers Products and services digital products Goods that can be transformed to digital format and delivered over the Internet. Infrastructure: Hardware, Software and Networks Chapter 2 Prentice Hall

E-MARKETPLACES COMPONENTS front end The portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment gateway. back end The activities that support online order fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery. Chapter 2 Prentice Hall

Sun 2-10 E-MARKETPLACES COMPONENTS intermediary A third party that operates between sellers and buyers. (Matching sellers and buyers, assisting in finding bus. Partner) Other business partners —collaborate on the Internet, mostly along the supply chain (ex: shippers) Support services such as Certification and trust services (to ensure security) Disintermediation: Elimination of intermediaries between sellers and buyers. (Ex: Dell) Reintermediation: Establishment of new intermediary roles for traditional intermediaries that have been disintermediated. (Ex: edmunds.com – cars) Chapter 2 Prentice Hall

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals private e-marketplaces Online markets owned by a single company; may be either sell-side and/or buy-side e-marketplaces. sell-side e-marketplace A private e-marketplace in which one company sells either standard and/or customized products to qualified companies. (Ex: Cisco.com) buy-side e-marketplace A private e-marketplace in which one company makes purchases from invited suppliers. (Ex: Raffles hotels) Chapter 2 Prentice Hall

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals public e-marketplaces B2B marketplaces, usually owned and/or managed by an independent third party, that include many sellers and many buyers; also known as exchanges. (Ex: Stock exchange) Consortia —e-marketplaces that deal with suppliers and buyers (usually) in a single industry (may be established by buyersin the industry, OR sellers in the industry) Vertical consortia are confined to one industry Horizontal allow different industries trade there Chapter 2 Prentice Hall

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals E- Storefront ( Webstore ) A single company’s Web site where products or services are sold. (Ex: Walmart.com) e-mall (online mall) An online shopping center where many online stores are located. (ex: Hawaii.com) Chapter 2 Prentice Hall

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals TYPES OF STORES AND MALLS General stores/malls (ex:Yahoo.com) Specialized stores/malls (Ex: Buy.com – computers) Regional versus global stores Pure-play online organizations (Amazon.com) versus click-and-mortar stores (Walmart.com) Chapter 2 Prentice Hall

Information (Web) portal Sun 2-10 Types of E-Marketplaces and Mechanisms: from Storefronts to Portals Information (Web) portal A single point of access through a Web browser to business information inside and/or outside an organization. (Scattered info. – documents, DBs, E-mail messages, …etc) Chapter 2 Prentice Hall

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Types of E-Marketplaces and Mechanisms: from Storefronts to Portals Types of Portals Commercial (public) portals --- yahoo, msn Corporate portals --- rich content, narrow community Publishing portals --- large communities, diverse interests Personal portals – specific filtered info to individuals (Personalization) mobile portal A portal accessible via a mobile device. voice portal A portal accessed by telephone or cell phone. Knowledge portals Chapter 2 Prentice Hall

Intermediation in E-Commerce Brokers Infomediaries Electronic intermediaries that provide and/or control information flow in cyberspace, often aggregating information and selling it to others. e-distributor An e-commerce intermediary that connects manufacturers with business buyers (customers) by aggregating the catalogs of many manufacturers in one place—the intermediary’s Web site. Chapter 2 Prentice Hall

Intermediation in E-Commerce Intermediaries provide value-added activities and services to buyers and sellers: wholesalers, retailers, infomediaries Roles of intermediaries Search costs—databases on customer preferences Lack of privacy—anonymity of sellers and buyers Incomplete information—gather product information Contract risk—protect sellers against non-payment Pricing inefficiencies—induce appropriate trades Chapter 2 Prentice Hall

Participants, Transactions, Intermediation, and Processes in EC Chapter 2 Prentice Hall

Electronic Catalogs electronic catalogs The presentation of product information in an electronic form; the backbone of most e-selling sites. Electronic catalogs can be classified on three dimensions: The dynamics of the information presentation The degree of customization Integration with business processes Chapter 2 Prentice Hall

Electronic Catalogs Evolution of electronic catalogs Merchants—advertise and promote Customers—source of information and price comparisons Consist of product database, directory and search capability and presentation function Replication of text that appears in paper catalogs More dynamic, customized, and integrated Chapter 2 Prentice Hall

Classifications of Electronic Catalogs Dynamics of information presentation—static or dynamic Degree of customization—ready-made or customized Electronic catalogs allow integration of: Order taking and fulfillment Electronic payment Inventory and accounting system Suppliers’ extranet Relationship to paper catalogs Chapter 2 Prentice Hall

Customized Catalogs Assembled specifically for: A company An individual shopper Customization systems can: Create branded, value-added capabilities Allows user to compose order May include individualized prices, products, and display formats Automatically identify the characteristics of customers based on the transaction records Chapter 2 Prentice Hall

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Search Engines, Intelligent Agents and Shopping Carts A computer program that can access databases of Internet resources, search for specific information or keywords, and report the results. Software (Intelligent) Agents —software that can perform routine tasks that require intelligence E-commerce users use both search engines and intelligent agents Search engines find products or services Software agents conduct other tasks (comparisons) electronic shopping cart An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop. Chapter 2 Prentice Hall

Auctions Auction—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 Auctions deal with products and services for which conventional marketing channels are ineffective or inefficient Chapter 2 Prentice Hall

Limitations of Traditional Auctions Traditional auctions are generally a rapid process It may be difficult for sellers to move goods to the auction site Commissions are fairly high Chapter 2 Prentice Hall

Electronic Auctions Electronic auctions (e-auctions)—auctions conducted online Major online auctions offer: Consumer products Electronic parts Artwork Vacation packages Airline tickets Host sites on the Internet serve as brokers offering: Services for sellers to post their goods for sale Allowing buyers to bid on those items Many sites have certain etiquette rules that must be adhered to in order to conduct fair business Chapter 2 Prentice Hall

Dynamic Pricing Dynamic pricing—prices that change based on supply and demand relationships at any given time The four major categories of dynamic pricing are based on the number of buyers and sellers involved: One buyer, one seller One seller, many potential buyers One buyer, many potential sellers Many sellers, many buyers Chapter 2 Prentice Hall

Types of Dynamic Pricing Chapter 2 Prentice Hall

Dynamic Pricing (cont.) One buyer, one seller uses Negotiation Bargaining Bartering Price will be determined by: Each party’s bargaining power Supply and demand in the item’s market Possibly business environment factors Chapter 2 Prentice Hall

Dynamic Pricing (cont.) One seller, many potential buyers Forward auction—an auction in which a seller entertains bids from buyers English auction—an auction in buyers bid on an item in sequence and the price increases with time Yankee auction—auction of multiple identical items in which bidders can bid for any number of the items offered, and the highest bid wins Chapter 2 Prentice Hall

Dynamic Pricing (cont.) Dutch auction—auction of multiple identical items, with prices starting at a very high level and declining as the auction time passes Free-fall (declining price) auction—a variation of the Dutch auction in which only one item is auctioned at a time; the price starts at a very high level and declines at fixed time intervals, the winning bid is the lowest one when the time expires Chapter 2 Prentice Hall

English Auction, Ascending Price Chapter 2 Prentice Hall

Dynamic Pricing (cont.) One buyer, many potential sellers Reverse auction (bidding, or tendering system)—auction in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the job, with price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B mechanism Chapter 2 Prentice Hall

The Reverse Auction Process Chapter 2 Prentice Hall

Dynamic Pricing (cont.) One buyer, many potential sellers (cont.) ”Name-your-own-price” model Consumer-to-business (C2B) model Many sellers, many buyers Double Auction—buyers and their bidding prices and sellers and their asking prices are matched, considering the quantities on both sides Chapter 2 Prentice Hall

Limitations of Electronic Auctions Possibility of fraud—defective goods or receive goods/services without paying Limited participation—invitation only or Open to dealers only Lack of security—C2C auctions sometimes not done in an unencrypted environment Limited software—only a few “complete”or “off-the-shelf” market-enabling solutions Chapter 2 Prentice Hall

Impacts of Auctions Auctions as a coordination mechanism Auctions as a social mechanism to determine a price Auctions as a highly visible distribution mechanism Auctions as a component in e-commerce Chapter 2 Prentice Hall

Bartering Online Bartering—an exchange of goods and services Bartering exchanges Give your offer to intermediary Intermediary asses value of your product or service in”points” Use “points” to buy what you need Bartering sites must be financially secure Alternative to bartering is to auction surplus and then use the money collected to buy items needed Chapter 2 Prentice Hall

Bartering Online (cont.) E-bartering—bartering conducted online, usually by a bartering exchange Bartering exchange—a marketplace in which an intermediary arranges barter transactions Chapter 2 Prentice Hall

Online Negotiating Online negotiation—electronic negotiation, usually done by software (intelligent) agents that perform searches and comparisons; improves bundling and customization of products and services Dynamic prices can be determined by negotiation Negotiated prices result from interactions and bargaining among sellers and buyers Expensive items like cars and real estate Deal with nonpricing terms like payment method and credit Chapter 2 Prentice Hall

Online Negotiating (cont.) Three factors that facilitate negotiated prices Intelligent agents that perform searches and comparisons Computer technology that facilitates negotiation process Products and services that are bundled and customized Chapter 2 Prentice Hall

Web 2.0 Mechanisms and Tools Weblogging (blogging) Technology for personal publishing on the Internet. blog A personal Web site that is open to the public to read and to interact with; often dedicated to specific topics or issues. Chapter 2 Prentice Hall

Web 2.0 Mechanisms and Tools wikilog (wikiblog or wiki) A blog that allows everyone to participate as a peer; anyone can add, delete, or change content. Chapter 2 Prentice Hall

Web 2.0 Mechanisms and Tools podcast A media file that is distributed over the Internet using syndication feeds for playback on mobile devices and personal computers. As with the term radio, it can mean both the content and the method of syndication. mashup A Web site that combines content data from more than one source to create a new user experience. Chapter 2 Prentice Hall