1. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Chapter 2 E-Marketplaces: Structures, Mechanisms, Economics, and Impacts Jason C.H. Chen, Ph.D. Professor of MIS Graduate School of Business Gonzaga University Spokane, WA 99223 USA chen@jepson.gonzaga.edu

2. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Learning Objectives 1.Define e-marketplaces and list their components. 2.List the major types of e-marketplaces and describe their features. 3.Describe the various types of EC intermediaries and their roles. 4.Describe electronic catalogs, shopping carts, and search engines. 5.Describe the major types of auctions and list their characteristics.

3. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Learning Objectives 6.Discuss the benefits, limitations, and impacts of auctions. 7.Describe bartering and negotiating online. 8.Define m-commerce and explain its role as a market mechanism. 9.Discuss competition in the digital economy. 10.Describe the impact of e-marketplaces on organizations and industries.

4. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.1 E-Marketplaces e-marketplace – A marketplace in which sellers and buyers exchange goods and services for money (or for other goods and services) but do so electronically –the three types of e-marketplaces are:  private,  public, and  consortia

5. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Electronic Marketplaces In recent years markets have seen a dramatic increase in the use of IT - EC has: –increased market efficiencies by expediting or improving functions –been able to significantly decrease the cost of executing these functions

6. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Electronic Marketplaces Markets play a central role in the economy facilitating the exchange of: –information –goods –services –payments Markets create economic value for: –buyers –sellers –market intermediaries –society at large

7. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Electronic Marketplaces (cont.) Three main functions of markets 1.matching buyers and sellers 2.facilitating the exchange of information, goods, services, and payments associated with market transactions 3.providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market

8. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Marketplaces

9. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Marketplaces Customers Sellers Products and services –digital products Goods that can be transformed to digital format and delivered over the Internet Infrastructure Front end Back end Intermediaries Third parties that operates between sellers and buyers Other business partners Support services E-Marketplace Components and Participants

10. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Marketplaces 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

11. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.2 Types of E-Marketplaces: From Storefronts to Portals 1. Electronic storefront: A single or company Web site where products and services are sold 2. e-mall (Internet/online mall): An online shopping center where many stores are located Visualization and virtual realty in shopping malls Mechanisms necessary for conducting the sale: –electronic catalogs –search engine – e-auction facilities –payment gateway –shipment court –customer services –some are merely directories –some provide shared services (e.g., choicemall.com). –some are actually large click-and-mortar retailers –some are virtual retailers (e.g., buy.com)

12. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Types of E-Marketplaces: From Storefronts to Portals Types of Stores and Malls –General stores/malls –Specialized stores/malls –Regional versus global stores –Pure-play online organizations versus click- and-mortar stores

13. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Types of E-Marketplaces: From Storefronts to Portals

14. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Types of E-Marketplaces: From Storefronts to Portals Types of E-Marketplaces –1. private e-marketplaces Online markets owned by a single company; may be either sell-side and/or buy-side e-marketplaces –1a) sell-side e-marketplace A private e-marketplace in which one company sells either standard and/or customized products to qualified companies –1b) buy-side e-marketplace A private e-marketplace in which one company makes purchases from invited suppliers

15. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Types of E-Marketplaces: From Storefronts to Portals Types of E-Marketplaces (cont.) –2. 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

16. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Information Portals Information portal: a single point of access through a Web browser to business information inside and/or outside an organization A portal is an information gateway Why Portals?

17. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Information Portals (cont.) Six types of portals 1.Commercial (public) portals 2.Corporate portals 3.Publishing portals 4.Personal portals 5.Mobile portals: a portal accessible via a mobile device 6.Voice portals: a portal accessed by telephone or cell phone 7.Knowledge: access to knowledge by K workers

18. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Types of E-Marketplaces: From Storefronts to Portals

19. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce (p.50) Purpose: solve information overloaded

20. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.3 Transactions, Intermediation, and Process in E-Commerce Sellers, Buyers, and Transactions –A seller (retailer, wholesaler, or manufacturer) sells to customers –The seller buys from suppliers: either raw material (as a manufacturer) or finished goods (as a retailer)

21. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transactions, Intermediation, and Process in E-Commerce

22. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transactions, Intermediation, and Process in E-Commerce Intermediaries (brokers) provide value-added activities and services to buyers and sellers Intermediaries in the physical world are wholesalers and retailers Infomediaries: electronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to others

23. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Exhibit (extra) Infomediaries and Information Flow Model Infomediaries Infomediary Services Matching Search/complexity Privacy Informational Infrastructural Content Community Infomediary Services Matching Search/complexity Privacy Informational Infrastructural Content Community BuyersSellers Information Flow Flow of Products/Services Revenue from Buyers Membership/Subscription fee Transactions Fee for Services Revenue from Sellers Advertising Transactions Membership/Subscription fee

24. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transactions, Intermediation, and Process in E-Commerce –A broker is a company that facilitates transactions between buyers and sellers –Types of brokers  Buy/sell fulfillment  Virtual mall  Metamediary  Bounty  Search agent  Shopping facilitator

25. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Roles and value of intermediaries in e-markets Intermediaries can address the following five important limitations of direct interaction: 1.Search costs 2.Lack of privacy 3.Incomplete information 4.Contract risk 5.Pricing inefficiencies

26. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transactions, Intermediation, and Process in E-Commerce E-distributors in B2B –e-distributor: An e-commerce intermediary that connects manufacturers (suppliers) with buyers by aggregating the catalogs of many suppliers in one place - the intermediary’s Web site –Maintenance, repair, and operation items (MROs): Routine items that are usually not under regular contract with suppliers

27. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transactions, Intermediation, and Process in E-Commerce Disintermediation and reintermediation –Disintermediation: Elimination of intermediaries between sellers and buyers –Reintermediation: Establishment of new intermediary roles for traditional intermediaries that were disintermediated

28. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transactions, Intermediation, and Process in E-Commerce

29. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Intermediation and Syndication in E-Commerce Syndication as an EC mechanism –Syndication: 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

30. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.4 Electronic Catalogs and Other Market Mechanisms electronic catalogs The presentation of product information in an electronic form; the backbone of most e-selling sites Three dimensions of electronic catalogs: 1.The dynamics of the information presentation 2.The degree of customization 3.Integration with business processes

31. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Electronic Catalogs and Other Market Mechanisms

32. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Electronic Catalogs and Other Market Mechanisms search engine A computer program that can access databases of Internet resources, search for specific information or keywords, and report the results software (intelligent) agent Software that can perform routine tasks that require intelligence

33. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Electronic Catalogs and Other Market Mechanisms electronic shopping cart An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop

34. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.5 Auctions as EC Market Mechanisms Auction A competitive process in which a seller solicits consecutive bids from buyers (forward auctions) or a buyer solicits bids from sellers (backward auctions). Prices are determined dynamically by the bids Auctions can be done: –online –off-line –at public sites (eBay) –at private sites (by invitation)

35. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms (cont.) Electronic auctions (e-auctions): Auctions conducted online Host sites on the Internet serve as brokers, offering services for sellers to post their goods for sale and allowing buyers to bid on those items Conventional business practices that traditionally have relied on contracts and fixed prices are increasingly being converted into auctions with bidding for online procurements

36. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms Traditional Auctions versus E-Auctions –Limitations of traditional offline auctions  rapid process gives potential buyers little time to make a decision –electronic auction (e-auction) Auctions conducted online

37. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms Dynamic pricing: Prices that change based on supply and demand relationships at any given time

38. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms (cont.) Four major categories of dynamic pricing 1.One buyer, one seller 2.One seller, many potential buyers 3.One buyer, many potential sellers 4.Many sellers, many buyers

39. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Types of Auctions 1.One buyer, one seller One can use negotiation, bargaining, or bartering (see 2.6) 2.One seller, many potential buyers Forward auction: An auction in which a seller entertains bids from buyers Forward auctions used for fast liquidation and as a selling channel. Price is increasing; the highest bidder wins

40. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms (cont.) 3.(a) One buyer, many potential suppliers 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 (b) One buyer, many potential sellers (special model) “name-your-own-price” model: Auction model in which a would-be buyer specifies the price (and other terms) they are willing to pay to any willing and able seller. It is a C2B model, pioneered by Priceline.com

41. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce General Purchasing Process Supplier / Seller Buyer Request for Proposal/Quote (RFP/RFQ) Forecast Demand Bid Negotiate Contract Place Orders Process Orders Shipping Orders Receiving Orders Invoicing Payment Vender Performance Tracking & Management Customer Service

42. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms

43. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Auctions as EC Market Mechanisms (cont.) 4.Many sellers, many buyers Double auction: Auctions in which multiple buyers and their bidding prices are matched with multiple sellers and their asking prices, considering the quantities on both sides

44. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Benefits of E-Auctions

45. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Limitations and Impacts of E- Auctions (cont.) Limitations of e-auctions –Lack of security –Possibility of fraud –Limited participation 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

46. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Group Purchasing Organization Process RFQ Forecast Demand Negotiate Contract Place Orders Shipping Orders Invoicing VPTM RFQ Process Orders Receiving Orders Bid Payment [Stage3] VPTM : Vender Performance Tracking & Management Returns Refund Process GPOGPO [Stage1-a] RFQ [Stage2] [Stage4] Shipping / Receiving Orders Refund Process Returns Payment Invoice Shipping / Receiving Orders ……... BuyerBuyer S u p p S l i e e e r r / l l [Stage1-b] Response Confirm (Price OK)

47. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce BREAK-1 EC Application Case 2.2: Innovative Auctions (p.60)

48. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.6 Bartering and Negotiating Online Online Bartering –bartering The exchange of goods or services –e-bartering (electronic bartering) Bartering conducted online, usually in a bartering exchange –bartering exchange A marketplace in which an intermediary arranges barter transactions

49. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Bartering and Negotiating Online Online Negotiating –Negotiated pricing commonly is used for expensive or specialized products –Negotiated prices also are popular when large quantities are purchased –Much like auctions, negotiated prices result from interactions and bargaining among sellers and buyers

50. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.7 E-Commerce in the Wireless Environment mobile computing Use of portable devices, including smart cell phones, usually in a wireless environment. It permits real-time access to information, applications, and tools that, until recently, were accessible only from a desktop computer

51. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Commerce in the Wireless Environment mobile commerce (m-commerce) E-commerce conducted via wireless devices m-business The broadest definition of m-commerce, in which e-business is conducted in a wireless environment

52. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Commerce in the Wireless Environment The Mobility Revolution –Organizations are embracing mobilized computing technologies for several reasons: –Improved productivity of workers in the field –Wireless telecom support for mobility is growing quickly –More applications can run both online and offline –The prices of notebook computers, wireless handhelds, and smart phones continue to fall as their capabilities increase

53. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Commerce in the Wireless Environment The Promise of M-Commerce –location-based commerce (LBC) An m-commerce application targeted to a customer whose location, preferences, and needs are known in real time –M-Commerce Adoption  Although there are currently many hurdles to the widespread adoption of m-commerce, many companies are already shifting their strategy to the mobile world

54. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.8 Competition in the Digital Economy and Its Impact on Industries Internet ecosystem The business model of the Internet economy

55. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Competition in the Digital Economy and Its Impact on Industries Lower search costs for buyers Speedy comparisons Lower prices Customer service Barriers to entry are reduced Virtual partnerships multiply Market niches abound Differentiation and personalization Competitive Factors—Online Transactions Allow:

56. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Competition in the Digital Economy and Its Impact on Industries Differentiation Providing a product or service that is unique Personalization The ability to tailor a product, service, or Web content to specific user preferences

57. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Striving for Competitive Advantage Firm level: Industry & Competitive Analysis Business level Competitive Forces Model (discussed in chap.2) Competitive Strategy Value-Chain Analysis

58. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Competition in the Digital Economy and Its Impact on Industries Porter’s Competitive Analysis in an Industry –competitive forces model Model devised by Porter that says that five major forces of competition determine industry structure and how economic value is divided among the industry players in an industry; analysis of these forces helps companies develop their competitive strategy

59. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce PORTER ’ S FIVE COMPETITIVE FORCES MODEL THE FIRM INDUSTRY COMPETITORS NEW MARKET ENTRANTS SUPPLIERS SUBSTITUTE PRODUCTS & SERVICES CUSTOMERS Threats Bargaining power N Dr. Chen, The Trends of the Information Systems Technology TM -59 Switching cost Access to distribution channels Economies of scale Redefine products and services Improve price/performance Selection of suppler Threat of backward integration Buyer selection Switching costs Differentiation Cost-effectiveness Market access Differentiation of product or service

60. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce

61. The Five Forces Model and IS The Five Forces Model provides a way to think about how information resources can create competitive advantage. Using Porter’s Model, General Managers can: –Identify key sources of competition they face. –Recognize uses of information resources to enhance their competitive position against competitive threats –Consider likely changes in competitive threats over time N

62. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Figure 1.2: Porter’s Generic Strategy Framework – 3 Strategies for achieving Competitive Advantage Dr. Chen, The Trends of the Information Systems Technology TM -62 Competitive Mechanism Overall Cost Leadership Focus Differentiation Industrywide (Broad Target) Particular Segment only (Narrow Target) Competitive Scope Lower Cost Position Uniqueness Perceived by Customer Competitive Advantage N

63. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Porter’s Competitive Advantage Strategies Cost leadership: be the cheapest Differentiation: focus on making your product and/or service stand out for non-cost reasons Focus: occupy narrow market niche where the products/services can stand out by virtue of their cost leadership or differentiation.

64. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Cost Leadership Business Strategies and its Competitive Advantage Dr. Chen, The Trends of the Information Systems Technology TM -64 Cost Focus Differentiation Differentiation Focus Industry wide (Broad Target) Particular Segment only (Narrow Target) Competitive Scope Competitive Mechanism Lower Cost Position Uniqueness Perceived by Customer N Industrial economy Knowledge-based economy Innovation Alliance Growth

65. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Competition in the Digital Economy and Its Impact on Industries Impact on Whole Industries –Patient self-care is growing rapidly –The amount of free medical information is exploding –Patient empowerment is gaining importance –Increasing electronic interaction among patients, hospitals, pharmacies, etc. –Increasing digital hospital and other health-care facilities –Data collected about patients is growing in amount and quality –Easy and shared access to patient data –Elder care and special types of care are improving significantly due to wireless systems –Increasing need to protect patient privacy and contain cost

66. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Characteristics necessary for perfect competition are the following: –Many buyers and sellers must be able to enter the market at little or no entry cost –Large buyers or sellers are not able to individually influence the market –Products must be homogeneous (no product differentiation) –Buyers and sellers must have comprehensive information about the products and about the market participants’ demands, supplies, and conditions Competition in the Digital Economy

67. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce 2.9 Impacts of EC on Business Processes and Organizations Impacts of e-marketplaces on (improving) B2C direct marketing: –Product promotion –New sales channel –Direct savings –Reduced cycle time –Improved customer service –Brand or corporate image –Customization –Advertising –Ordering systems –Market operations –Accessibility

68. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Exhibit 2.9 The Analysis-of-Impact Framework (p.72) - Product promotion - New sales channel - Direct savings - Time to market - Customer service - Brand image - Technological & organizational learning - Customer relations - New product capabilities - New business models Improve it! Transform it! Redefine it! The OrganizationSources of business value OrganizationTechnology Mission Strategies Industry Competitors Industry level Company level EC strategy Organizational impact Technological impact New Actors New Configurations New Strategies New Information & Communication Technology Business Drivers Feedback & Impact

69. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Impacts of EC on Business Processes and Organizations Transforming Organizations –Technology and organizational learning –The changing nature of work Redefining Organizations New and improved product capabilities New industry order and business models Improving the supply chain

70. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce

71. Impacts of EC on Business Processes and Organizations

72. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Exhibit 2.12 Changes in the Supply Chain

73. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Impacts of EC on Business Processes and Organizations Impacts on manufacturing - Build-to-Order Manufacturing  build-to-order (pull system) A manufacturing process that starts with an order (usually customized). Once the order is paid for, the vendor starts to fulfill it - Real-Time Demand-Driven Manufacturing - Virtual Manufacturing - Assembly Lines

74. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transforming Organizations Impacts on finance and accounting –Executing an electronic order triggers an action in what is called the back office that include:  buyers’ credit checks  product availability checks  order confirmation  changes in accounts payable, receivables, billing, and much more –These activities must be efficient, synchronized, and fast so that the electronic trade will not be slowed down

75. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Transforming Organizations (cont.) Impacts on human resource management –EC is changing how people are recruited evaluated, promoted, and developed –EC also is changing the way training and education are offered to employees –Companies cut training costs by 50 percent or more –New e-learning systems offer two-way video, on-the- fly interaction, and application sharing

76. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Market Success Factors Product Characteristics Digitizable products can be electronically distributed to customers, resulting in very low distribution costs, allowing order-fulfillment cycle time “to be minimal” Industry Characteristics Electronic markets are most useful when they are able to directly match buyers and sellers

77. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce E-Market Success Factors (cont.) Seller Characteristics Electronic markets reduce search costs, allowing consumers to find sellers offering lower prices Consumer Characteristics e-markets require a certain degree of effort on the part of the consumer, e-markets are more conducive to consumers who do some comparison and analysis before buying

78. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Economics of E-Marketplaces Long-tail

79. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce Economics of E-Marketplaces (cont.)

80. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce

81. Managerial Issues 1.What about intermediaries? 2.Should we auction? 3.Should we barter? 4.What m-commerce opportunities are available? 5.How do we compete in the digital economy? 6.What organizational changes will be needed?

82. Dr. Chen, Electronic Commerce  Pearson/Prentice Hall & Dr. Chen, Electronic Commerce BREAK-2 EC Application Case 2.3: Wireless Pepsi Increases Productivity (p. 67)