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E-Marketplaces: Structures, Mechanisms, Economics, and Impacts

E-Marketplaces: Structures, Mechanisms, Economics, and Impacts. Lecture 2 Supakorn Kungpisdan. Outline. E-Marketplaces Types of E-Marketplaces Intermediation in E-Commerce Electronic Catalogs and Other Market Mechanisms Auctions as EC Market Mechanisms Bartering and Negotiating Online

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E-Marketplaces: Structures, Mechanisms, Economics, and Impacts

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  1. E-Marketplaces: Structures, Mechanisms, Economics, and Impacts Lecture 2 Supakorn Kungpisdan

  2. Outline • E-Marketplaces • Types of E-Marketplaces • Intermediation in E-Commerce • Electronic Catalogs and Other Market Mechanisms • Auctions as EC Market Mechanisms • Bartering and Negotiating Online • E-Commerce In the Wireless Environments S. Kungpisdan

  3. E-Marketplaces • Markets (electronic or otherwise) have three main functions: • Matching buyers and sellers; • Facilitating the exchange of information, goods, services, and payments associated with market transactions; and • Providing an institutional infrastructure, such as a legal and regulatory framework, which enables the efficient functioning of the market. S. Kungpisdan

  4. Functions of a Market S. Kungpisdan

  5. E-Marketplaces • Electronic marketplaces (e-marketplaces or marketspaces), changed several of the processes used in trading and supply chains • Greater information richness • Lower information search costs for buyers • Diminished information asymmetry between sellers and buyers • Greater temporal separation between time of purchase and time of possession • Buy now, receive later • Greater temporal proximity between time of purchase and time of possession • Buy now, receive almost instantly • Ability of buyers and sellers to be in different locations S. Kungpisdan

  6. E-Marketplaces marketspace A marketplace in which sellers and buyers exchange goods and services for money (or for other goods and services), but do so electronically • In E-marketplace, people buy and sell physical products online • In marketspaces, people buy and sell both physical and digital products online S. Kungpisdan

  7. Marketspace components • Customers • Sellers • Sell through e-marketplace or their own websites • Products and services • Digital and physical products • Infrastructure • Network, hardware, software, etc. S. Kungpisdan

  8. Marketspace 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-taking. It includes fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery S. Kungpisdan

  9. Marketspace components • intermediary A third party that operates between sellers and buyers. • Create and manage online markets • Other business partners • Support services S. Kungpisdan

  10. The Essential Elements and Mechanisms of an Electronic Market S. Kungpisdan

  11. Roadmap • E-Marketplaces • Types of E-Marketplaces • Intermediation in E-Commerce • Electronic Catalogs and Other Market Mechanisms • Auctions as EC Market Mechanisms • Bartering and Negotiating Online • E-Commerce In the Wireless Environments S. Kungpisdan

  12. Types of E-Marketplaces • E-Marketplaces for B2C: • storefronts and Internet malls • E-Marketplaces for B2B: • Private e-marketplaces • sell-sidee-marketplaces, buy-side e-marketplaces • Public e-marketplaces • exchanges S. Kungpisdan

  13. Types of E-Marketplaces: From Storefronts to Portals • Electronic Storefronts storefront A single company’s Web site where products or services are sold • Most common mechanisms are a(n): • electronic catalog • search engine • electronic cart • e-auction facilities • payment gateway S. Kungpisdan

  14. Apple.com S. Kungpisdan

  15. 1-800-flowers.com S. Kungpisdan

  16. amazon.com S. Kungpisdan

  17. Types of E-Marketplaces: From Storefronts to Portals e-mall (online mall) An online shopping center where many online stores are located • Types of Stores and Malls • General stores/malls • Specialized stores/malls • Regional versus global stores • Pure online organizations versus click-and-mortar stores S. Kungpisdan

  18. General Store: weloveshopping.com S. Kungpisdan

  19. Types of E-Marketplaces: From Storefronts to Portals e-marketplace An online market, usually B2B, in which buyers and sellers exchange goods or services • Three types of e-marketplaces are private, public, and consortia (a group of selling or buying company) private e-marketplaces Online markets owned by a single company; may be either sell-side or buy-side e-marketplaces. S. Kungpisdan

  20. Types of E-Marketplaces: From Storefronts to Portals sell-side e-marketplace A private e-marketplace in which a company sells either standard or customized products to qualified companies • Owned by a seller • One-to-many relationship buy-side e-marketplace A private e-marketplace in which a company makes purchases from invited suppliers • Owned by a buyer • Many-to-one relationship • Reverse auction S. Kungpisdan

  21. Sell-side e-marketplace: Cisco.com S. Kungpisdan

  22. Buy-side e-marketplace: asset-auction.com S. Kungpisdan

  23. Types of E-Marketplaces: 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 information portal A single point of access through a Web browser to business information inside and/or outside an organization • Using advanced search and indexing techniques S. Kungpisdan

  24. Types of E-Marketplaces: From Storefronts to Portals • Six major types of portals • Commercial (public) portals • Offer content for diverse communities • Corporate portals (aka. enterprise portals) • Publishing portals • More specific than public portals • Personal portals • Customized specific to one audience • Mobile portals • Accessible from mobile devices • Voice portals • Website with audio interfaces • Accessible by phones • Tellme.com, Bevocal.com S. Kungpisdan

  25. Roadmap • E-Marketplaces • Types of E-Marketplaces • Intermediation in E-Commerce • Electronic Catalogs and Other Market Mechanisms • Auctions as EC Market Mechanisms • Bartering and Negotiating Online • E-Commerce In the Wireless Environments S. Kungpisdan

  26. Intermediation in EC infomediaries Electronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to others • Five limitations of direct interaction • Search costs • Producers may not know consumer demands • Difficult to consumers to find the right products • Lack of privacy • Incomplete information • Gather information from sources other than producers • Contract risk • Provide insurance, check behavior of buyers and sellers • Pricing inefficiencies • Gather insufficient information, unfair price S. Kungpisdan

  27. Infomediaries and the Information Flow Model S. Kungpisdan

  28. Intermediation in EC infomediaries Agents that mediate between sellers and buyers • Match sellers and buyers by providing relevant information about demand, supply, prices, and requirements • Offer value-added services e.g. product transfer, escrow, payment disintermediation Elimination of intermediaries between sellers and buyers reintermediation Establishment of new intermediary roles for traditional intermediaries that have been disintermediated S. Kungpisdan

  29. Disintermediation: Virginblue.com S. Kungpisdan

  30. Reintermediation: Expedia.com S. Kungpisdan

  31. Roadmap • E-Marketplaces • Types of E-Marketplaces • Intermediation in E-Commerce • Electronic Catalogs and Other Market Mechanisms • Auctions as EC Market Mechanisms • Bartering and Negotiating Online • E-Commerce In the Wireless Environments S. Kungpisdan

  32. Electronic Catalogs and Other Market Mechanisms electronic catalogs The presentation of product information in an electronic form; the backbone of most e-selling sites • Classification of electronic catalogs • The dynamics of the information presentation • Static VS dynamic • The degree of customization • Standard (same price to any customer) VS customized catalogs (to particular customers) • Integration with business processes • Browse products and check availability simultaneously S. Kungpisdan

  33. Electronic Catalogs and Other Market Mechanisms • Online catalogs • Ease of updating • Ability to be integrated with the purchasing process • Coverage of a wide spectrum of products • Interactivity • Customization • Strong search capabilities Tool to build online catalogs: Microsoft Commerce Server 2002 S. Kungpisdan

  34. Online VS Paper Catalogs S. Kungpisdan

  35. Electronic Catalogs and Other Market Mechanisms • Two approaches to creating customized catalogs • Let the customers identify the parts of interest to them from the total catalog • Let the system automatically identify customer characteristics based on the customer’s transaction records • Need data mining technology S. Kungpisdan

  36. Electronic Catalogs and Other Market Mechanisms 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) agent Software that can perform routine tasks that require intelligence S. Kungpisdan

  37. Roadmap • E-Marketplaces • Types of E-Marketplaces • Intermediation in E-Commerce • Electronic Catalogs and Other Market Mechanisms • Auctions as EC Market Mechanisms • Bartering and Negotiating Online • E-Commerce In the Wireless Environments S. Kungpisdan

  38. Auctions 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 • Online, offline, public, private auctions • Limitations of Traditional Off-line Auctions • The rapid process may give potential buyers little time to make a decision • Bidders do not have much time to examine the goods • Bidders must usually be physically present at auctions • Difficult for sellers to move goods to an auction site • Commissions are fairly high S. Kungpisdan

  39. Auctions (cont’d) electronic auction (e-auction) Auctions conducted online dynamic pricing Prices that change based on supply and demand relationships at any given time catalog pricing VS dynamic pricing S. Kungpisdan

  40. Types of Dynamic Pricing RFQ = Request for Quote S. Kungpisdan

  41. Auctions (cont’d) • Types of auctions • One Buyer, One Seller • One Seller, Many Potential Buyers forward auction An auction in which a seller entertains bids from buyers • 4 types of forward auctions: • English and Yankee auctions  prices increase as the auction progresses • Dutch and free-fallauctions  prices decline as the auction progresses S. Kungpisdan

  42. Auctions (cont’d) • Types of auctions • 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 the price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B mechanism S. Kungpisdan

  43. The Reverse Auction Process S. Kungpisdan

  44. Auctions (cont’d) • Types of auctions • One Buyer, Many Potential Sellers “name-your-own-price” model Auction model in which a would-be buyer specifies the price (and other terms) he or she is willing to pay to any willing and able seller. It is a C2B model that was pioneered by Priceline.com S. Kungpisdan

  45. Auctions (cont’d) • Types of auctions • 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 Single VS double auctions S. Kungpisdan

  46. Auctions (cont’d) • Limitations of E-Auctions • Minimal security • Possibility of fraud • Limited participation • Impacts of E-Auctions • Auctions as a coordination mechanism • To establish an equilibrium in price • Auctions as a social mechanism to determine a price • Especially unique or rare products • Auctions as a highly visible distribution mechanism • Easily attract potential buyers • Auctions as an EC component S. Kungpisdan

  47. Roadmap • E-Marketplaces • Types of E-Marketplaces • Intermediation in E-Commerce • Electronic Catalogs and Other Market Mechanisms • Auctions as EC Market Mechanisms • Bartering and Negotiating Online • E-Commerce In the Wireless Environments S. Kungpisdan

  48. Bartering and Negotiating Online bartering The exchange of goods or services • Intermediaries can help but high commission (20-30%) e-bartering (electronic bartering) Bartering conducted online, usually by a bartering exchange bartering exchange A marketplace in which an intermediary arranges barter transactions S. Kungpisdan

  49. Tradeaway.com S. Kungpisdan

  50. Bartering and Negotiating Online (cont’d) • Negotiation • Commonly used for expensive, specialized, high-volume products • Negotiations VS auctions S. Kungpisdan

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