E-MARKETPLACES :
STRUCTURES, MECHANISMS,
ECONOMICS AND IMPACTS
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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 and search
engines.
Describe the various types of auctions and list their
characteristics
Discuss the benefits, limitations and impacts of auctions
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Describe bartering and negotiating online
Define m-commerce and explain its role as a
market mechanism
Discuss liquidity, quality and success factors in
e-marketplaces
Describe the economic impact of EC
Describe the impact of e-marketplaces on
organizations
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E-Marketplaces
Type of E-Marketplaces: from storefronts to
Portals
Intermediation in E-Commerce
Electronic Catalogs and other Market
Mechanisms
Auctions as EC Market Mechanisms
Bartering and Negotiating Online
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Market – play a central role in the economy,
facilitating the exchange of information, goods,
services and payments.
Have three main functions:-
Matching buyers and sellers
Facilitating the exchange of information, goods, services
and payments associated with market transactions
Providing an institutional infrastructure, such as legal and
regulatory framework
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The emergence of electronic marketplaces (also
called e-marketplaces or marketspaces),
especially Internet-based ones, changed several
of processes used in trading and supply chains
EC leverages IT with increased effectiveness and
lower transaction and distribution costs, leading
to more efficient, “friction-free” markets
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Customers – people worldwide who surf the
Web are potential buyers of goods and services
offered or advertised on the internet
Sellers – Millions of storefront on the web,
advertising and offering a huge variety of items
Products and services – marketplace can sell
physical products and the marketspace possible
sell both physical and digital products and
services
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Infrastructure – includes electronics networks, hardware,
software and more
Front end – customer interact with marketspace via a
front end. The components can include the seller’s portal,
electronic catalogs, a shopping cart, a search engine, an
auction engine and a payment gateway
Back end – all activities related to order aggregation and
fulfillment, inventory management, purchasing from
suppliers, accounting and finance, payment processing,
packaging and delivery
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Intermediaries – a third party that operates between
sellers and the buyers. Of all kinds offer their
services on web. Help match buyers and sellers,
provide some infrastructure services and help
customer and/or sellers to institute and complete
transactions
Other business partners – in addition to
intermediaries, partners, shippers use the internet to
collaborate
Support services – ranging from certification and
escrow services to content providers
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Electronic storefront – refers to a single company’s
Web site where products and services are sold. May
belong to a manufacturer, to a retailer, individual
selling from home or other type of business
The most common mechanisms are
Electronic catalog
E-auction facilities
Payment gateway
Shipment court
Customer services
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Electronic malls – to shopping at individual
storefronts which consumer can shop in electronic
malls an online shopping location where many stores
are located
The consumer is transferred to the appropriate
independent storefront
It is merely a directory
Some provide share services
Some actually large click-and-mortar retailers
Others are virtual retailers
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General stores/malls – Large marketplaces that sell
all types of products
Specialized stores/malls – Sell only one or a few
types of products
Regional versus global stores – Some stores serve
customers that live nearby
Pure online organizations versus click-and-
mortar stores – Pure online do not have physical
stores. Others are physical stores that also sell online
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Private E-Marketplaces – Owned by single company
Sell-side – will sell either standard or customized
products to qualified companies. Similar to B2C
Buy-side – company purchases from many supplies
Public E-Marketplaces – Are B2B markets, often
owned by third party or by a group of buying or selling
companies and they serve many sellers and many
buyers. Also known as exchanges
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A portal is an information gateway attempts to
address information overload by enabling people
to search and access relevant information from
disparate IT systems and the Internet
Information portal is a single point of access
through a Web browser to critical business
information located inside and outside of an
organization
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Commercial portals – Offer content for diverse
communities and are most popular portals on the
internet
Corporate portals – provide organized access to rich
content within relatively narrow corporate and
partners communities. Also known as enterprise
portals
publishing portals – intended for communities with
specific interest
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Personal portals – these target specific filtered
for individuals
Mobile portals – accessible from mobile devices
Voice portals – portals with audio interfaces can
be accessed by telephone or a cell phone
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Intermediaries (brokers) play an important role in
commerce by providing value-added activities
and services to buyers and sellers
In cyberspace they are, in addition, intermediaries
that control the information flow
These electronic intermediaries are known as
infomediaries
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Search costs – some intermediaries maintain databases of
customer preferences and they can predict demand and reduce
search costs by selectively routing information from providers
to consumers
Lack of privacy – intermediaries can relay messages and make
pricing and allocation decisions without revealing the identity
of one or both parties
Incomplete information – An intermediaries can gather
product information from sources other than the product
provider, including independent evaluators and other customers
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Contract risk – intermediaries have a number of tools to
reduce contract risk. The threat of publicizing behavior
or removing a seal of approval may encourage both
producers and customers to meet the broker’s standard
for fail dealing. The broker can provide insurance against
bad behavior
Pricing inefficiencies – intermediaries can use pricing
mechanisms that induce just the appropriate trades
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Disintermediation – Elimination of intermediaries
between sellers and buyers
Reintermediation – establishment of new
intermediary roles for traditional intermediaries
that have been disintermediated
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Electronic catalogs
Search engine and intelligent agents
Shopping carts
E-auction
Online negotiating
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Consist of a product database, directory and search capabilities and
presentation function
Are the backbone of most e-commerce sales sites
Merchants – objective is to advertise and promote products and service
Customer – purpose is to locate information on products and services
Can be searched quickly with the help of search engines and interactive
Become more dynamic, customized and integrated with selling and buying
procedures
Become more integrated with shopping carts, order taking and payment
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The dynamics of the information presentation
Static catalogs – information is presented in text and static pictures
Dynamic catalogs – information is presented in motion pictures or
animation, supplemental sound
The degree of customization
Standard catalogs- merchants offer the same catalog to any customer
Customized catalogs – content, pricing and display are tailored to the
characteristics of specific customers
Integration with business processes – integration with order taking and
fulfillment of electronic payment systems, intranet workflow software and
systems, inventory and account systems, supplier or customers extranets and
paper catalogs
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Search engine – a computer program that can access a
database of internet resources, search for specific
information or keywords and report the results
Software intelligent – can do more than just “search and
match”. It has capabilities that can be used to perform
routine tasks that require intelligence. Can be used in e-
commerce to support tasks such as comparing prices,
interpreting information, monitoring activities and
working as an assistant.
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Electronic shopping cart is an order-processing
technology that allows customers to accumulate
items they wish to buy while they continue shop
Allow a customer to select items, review what
has been selected, make changes and finalize the
list.
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Uses a competitive process by which a seller
solicits consecutive bids from buyers or a buyer
solicits bids from sellers
Several types of auction :- online, offline, public
or private
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Dynamic pricing – price that are not fixed, but allow to fluctuate as supply and
demand in a market change
One buyer one seller – use negotiation, bargaining or bartering
One seller many potential buyer – seller use a forward auction, an auction in
which a seller entertains bids from multiple buyers
One buyer, many potential sellers – two popular types
Reverse auction – bidding/tendering system is affective. Buyer places an
item to buy for bid. Potential suppliers bid on the item, reducing price
sequentially until the bidders do not reduce the price further. The winner is
the one with the lowest bid
Name-your-own-price – a-would-be buyer specifies the price that he/she
wiling to pay to any willing and able seller. Example : [Link]
Many sellers, many buyers – buyers and their bidding prices are matched
with sellers and their asking prices based on the quantities on both sides.
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Benefits – see the Additions 2.1(p 58)
Limitation
Minimal security – some C2C auctions conducted are not
secure but B2B auctions are conducted over highly secure
private lines
Possibility fraud – buyer may get defective products. Also
buyers can commit fraud by receiving goods or services
without paying for them
Limited participation – some are by invitation only others
are open to dealer only. This may be a disadvantages to
sellers.
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Impact
Auction as a coordination mechanism – as an efficient
coordination mechanism for establishing an equilibrium in price
Auction as a social mechanism to determine a price – provide the
requisite exposure of purchased and sale orders and hence liquidity
of the market in which an optimal price can be determined
Auction as a highly visible distribution mechanism – a supplier
typically auctions off a limited number of items, to gain attention and
to attract those customer who are bargain hunter
Auction as an EC component - can be stand alone or combined
with other e-commerce activities
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Online bartering – bartering conducted online can improve the
matching process by attracting more partners to the barter. Can be
faster and better matched can be found. How?
Online negotiating – due to customization and bundling of products
and services, it often is necessary to negotiate both prices an terms
for online sales. Three factor may facilitate online negotiation :-
The products and services that are bundled and customized
The computer technology that facilitates the negotiation process
The software intelligent agents that perform searches and
comparison
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