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Chapter 2 E-Marketplaces: Mechanisms, Tools and Impact of E-commerce Chapter 2 Copyright © 2009 Chapter 2 E-Marketplaces: Mechanisms, Tools and Impact of E-commerce Chapter 2 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Learning Objectives Define e-marketplaces and list their components. 2. List the major types of Learning Objectives 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, search engines, and portals. 1. Chapter 2 Prentice Hall 1

Learning Objectives 5. 6. 7. 8. 9. Chapter 2 Describe the major types of Learning Objectives 5. 6. 7. 8. 9. Chapter 2 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. Understand virtual worlds and their use in EC. Prentice Hall 2

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E-MARKETPLACES – An Overview l e-marketplace (marletspace, virtual market) An online market, usually B E-MARKETPLACES – An Overview l e-marketplace (marletspace, virtual market) An online market, usually B 2 B, in which buyers and sellers exchange goods or services. The three types of e-marketplaces are: private, public, and consortia. Chapter 2 Prentice Hall 5

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E-MARKETPLACES COMPONENTS l E-MARKETPLACE COMPONENTS AND PARTICIPANTS l Customers l Sellers l Products and E-MARKETPLACES COMPONENTS l E-MARKETPLACE COMPONENTS AND PARTICIPANTS l Customers l Sellers l Products and services l l Chapter 2 digital products Goods that can be transformed to digital format and delivered over the Internet. Infrastructure: Hardware, Software and Networks Prentice Hall 8

E-MARKETPLACES COMPONENTS l l l Chapter 2 front end The portion of an e-seller’s E-MARKETPLACES COMPONENTS l l l Chapter 2 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. intermediary A third party that operates between sellers and buyers. (create an manage online markets to match sellers and buyers) Prentice Hall 9

Disintermediation and Reintermediation Disintermediation: Elimination of intermediaries between sellers and buyers. (Ex: buying airline Disintermediation and Reintermediation Disintermediation: Elimination of intermediaries between sellers and buyers. (Ex: buying airline tickets directly – no agent) l Reintermediation: Establishment of new intermediary roles for traditional intermediaries that have been disintermediated. (Ex: edmunds. com – cars) l Chapter 2 Prentice Hall 10

TYPES OF E-MARKETPLACES l Private e-marketplaces Online markets owned and operated by a single TYPES OF E-MARKETPLACES l Private e-marketplaces Online markets owned and operated by a single company; may be either sell-side or buy-side. l sell-side e-marketplace A private e-marketplace in which one company sells either standard and/or customized products to qualified customers – B 2 C or B 2 B (one-to-many). (Ex: Cisco. com) l buy-side e-marketplace A private e-marketplace in which one company makes purchases from invited suppliers – B 2 B (many-to-one). (Ex: Raffles hotels) Chapter 2 Prentice Hall 11

TYPES OF E-MARKETPLACES l Public e-marketplaces - B 2 B marketplaces, usually owned and/or TYPES OF E-MARKETPLACES l Public e-marketplaces - B 2 B marketplaces, usually owned and/or managed by an independent third party (not a seller or a buyer) or by a group of buying or selling companies (referred to as consortium). - They serve many sellers and many buyers; also known as exchanges. (Ex: Stock exchange). - They are opened to the public and regulated by government or exchange’s owners. Chapter 2 Prentice Hall 12

Customer Interaction Mechanisms: from Storefronts to Portals E- Storefront ( Webstore ) A single Customer Interaction Mechanisms: from Storefronts to Portals E- Storefront ( Webstore ) A single company’s Web site where products or services are sold and usually has an online shopping cart associated with it. Many Webstores target a specific industry and find their own unique corner of the market. (Ex: Dell. com) l e-mall (online mall) An online shopping center where many online stores are located. (ex: emallofmaine. com) l Chapter 2 Prentice Hall 13

Customer Interaction Mechanisms: from Storefronts to Portals l TYPES OF STORES AND MALLS General Customer Interaction Mechanisms: from Storefronts to Portals l TYPES OF STORES AND MALLS General stores/malls (ex: amazon. com) l Specialized stores/malls (Ex: cars. com – cars) l Regional versus global stores (furniture – nearby l customers) l Pure-play online organizations (Amazon. com) versus click-and-mortar stores (Walmart. com) Chapter 2 Prentice Hall 14

Customer Interaction Mechanisms: from Storefronts to Portals l Web (Information) portal A single point Customer Interaction Mechanisms: from Storefronts to Portals l Web (Information) portal A single point of access through a Web browser to business information inside and/or outside an organization. (Scattered info. – documents, DBs, Email messages, …etc) Chapter 2 Prentice Hall 15

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Customer Interaction Mechanisms: from Storefronts to Portals l Types of Portals l Commercial (public) Customer Interaction Mechanisms: from Storefronts to Portals l Types of Portals l Commercial (public) portals --- yahoo, msn Corporate (enterprise) portals --- rich content, narrow community Publishing portals --- large communities, specific interests, (extensive search l Personal portals – specific filtered info to individuals, narrow content, l l features) (zdnet. com) (Personalization) ex- netvibes. com – e-mail accounts, search engines, IM, videos, … l l l mobile portal A portal accessible via a mobile device. voice portal A portal accessed by telephone or cell phone (to retrieve e-mail, news, and self services. Ex: 1 -800 numbers). Knowledge portals. Access knowledge by knowledge workers and facilitate collaboration Chapter 2 Prentice Hall 17

THE ROLES AND VALUE OF INTERMEDIARIES IN E-MARKETPLACES l Brokers l l l l THE ROLES AND VALUE OF INTERMEDIARIES IN E-MARKETPLACES l Brokers l l l l Buy/sell fulfillment Virtual mall – yahoo stores Metamediary (access to variety of stores with transactional (financial) services) Comparison agent – compare different stores Shopping facilitator – currency converter, lang. translators, payment, delivery Matching services – jobs to openings, buyers to products Infomediaries l Electronic intermediaries that provide and/or control information flow in cyberspace, often aggregating information and selling it to others. (2 -types: for customers, for vendors) e-distributor In B 2 B 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 18

Tue 25 -2 Electronic Catalogs l Chapter 2 electronic catalogs (e-catalogs) The presentation of Tue 25 -2 Electronic Catalogs l Chapter 2 electronic catalogs (e-catalogs) The presentation of product information in an electronic form; the backbone of most e-selling sites. Prentice Hall 19

Electronic Catalogs l Evolution of electronic catalogs l Merchants—advertise and promote l Customers—source of Electronic Catalogs l Evolution of electronic catalogs l Merchants—advertise and promote l Customers—source of information and price comparisons l Consist of product database, directory and search capability and presentation function l Replication of text that appears in paper catalogs l More dynamic, customized, and integrated Chapter 2 Prentice Hall 20

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EC SEARCH ACTIVITIES, TYPES, AND ENGINES l Search engine A computer program that can EC SEARCH ACTIVITIES, TYPES, AND ENGINES l Search engine A computer program that can access databases of Internet resources, search for specific information or keywords, and report the results. l Types of EC Searches l Internet/Web Search l enterprise search: the practice of identifying and enabling specific content across the enterprise to be indexed, searched, and displayed to authorized users. l desktop search Search tools that search the contents of a user’s or organization’s computer files, rather than searching the Internet. The emphasis is on finding all the information that is available on the user’s PC, including Web browser histories, e-mail archives, and word processed documents, as well as in all internal files and databases. Chapter 2 Prentice Hall 22

EC SEARCH ACTIVITIES, TYPES, AND ENGINES Software (Intelligent) Agents —software that can perform routine EC SEARCH ACTIVITIES, TYPES, AND ENGINES Software (Intelligent) Agents —software that can perform routine tasks that require intelligence Ø E-commerce users use both search engines and intelligent agents l Search engines find products or services l Software agents conduct other tasks (comparisons, tracking movements, …etc) l Voice-Powered Search l electronic shopping cart An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop. l Product configuration – self customizing products l Chapter 2 Prentice Hall 23

Auctions Auction—a competitive process in which a seller solicits consecutive bids from buyers (forward Auctions 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. l Auctions deal with products and services for which conventional marketing channels are ineffective or inefficient l Chapter 2 Prentice Hall 24

Limitations of Traditional Auctions l Traditional auctions are generally a rapid process – minutes Limitations of Traditional Auctions l Traditional auctions are generally a rapid process – minutes or seconds l It may be difficult for sellers to move goods to the auction site l Bidders must be present l Commissions are fairly high – ads, employees, reserving a market Chapter 2 Prentice Hall 25

Electronic Auctions Electronic auctions (e-auctions)—auctions conducted online – stated on 1980 s l Major Electronic Auctions Electronic auctions (e-auctions)—auctions conducted online – stated on 1980 s l Major online auctions (such as e-bay) offer: l Consumer products l Electronic parts l Artwork l Vacation packages l Airline tickets l Host sites on the Internet serve as brokers offering: l Services for sellers to post their goods for sale l Allowing buyers to bid on those items l Chapter 2 Prentice Hall 26

Thu 27 -2 Dynamic Pricing Dynamic pricing—prices that change based on supply and demand Thu 27 -2 Dynamic Pricing Dynamic pricing—prices that change based on supply and demand relationships at any given time l The four major categories of dynamic pricing are based on the number of buyers and sellers involved: l One buyer, one seller l One seller, many potential buyers l One buyer, many potential sellers l Many sellers, many buyers l Chapter 2 Prentice Hall 27

Types of Dynamic Pricing Chapter 2 Prentice Hall 28 Types of Dynamic Pricing Chapter 2 Prentice Hall 28

Dynamic Pricing (cont. ) l One buyer, one seller uses Negotiation l Bargaining l Dynamic Pricing (cont. ) l One buyer, one seller uses Negotiation l Bargaining l Bartering l l Price will be determined by: Each party’s bargaining power l Supply and demand in the item’s market l Possibly business environment factors l Chapter 2 Prentice Hall 29

Dynamic Pricing (cont. ) l One seller, many potential buyers l Forward auction—an auction Dynamic Pricing (cont. ) l One seller, many potential buyers l Forward auction—an auction in which a seller entertains bids from buyers l English auction - an auction in which buyers bid on an item in sequence and the price increases with time l Yankee auction- auction of multiple identical items in which bidders can bid for any number of the items offered, and the highest bid wins l 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 l Chapter 2 Prentice Hall 30

English Auction, Ascending Price Chapter 2 Prentice Hall 31 English Auction, Ascending Price Chapter 2 Prentice Hall 31

Dynamic Pricing (cont. ) l One buyer, many potential sellers Reverse auction (bidding, or Dynamic Pricing (cont. ) l 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 B 2 B or G 2 B mechanism Chapter 2 Prentice Hall 32

The Reverse Auction Process Chapter 2 Prentice Hall 33 The Reverse Auction Process Chapter 2 Prentice Hall 33

Dynamic Pricing (cont. ) l One buyer, many potential sellers (cont. ) ”Name-your-own-price” model- Dynamic Pricing (cont. ) l One buyer, many potential sellers (cont. ) ”Name-your-own-price” model- priceline. com l Consumer-to-business (C 2 B) model l l Many l Chapter 2 sellers, many buyers Double Auction- buyers and their bidding prices and sellers and their asking prices are matched, considering the quantities on both sides – stocks and commodities Prentice Hall 34

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Limitations of Electronic Auctions l Possibility of fraud—defective goods or receive goods/services without paying Limitations of Electronic Auctions l Possibility of fraud—defective goods or receive goods/services without paying l Limited participation—invitation only or Open to dealers only l Minimal security—C 2 C auctions sometimes not done in an unencrypted environment- credit cards could be stolen Chapter 2 Prentice Hall 36

Impacts of Auctions l Auctions as a social mechanism to determine a price – Impacts of Auctions l Auctions as a social mechanism to determine a price – unique or rare items ex: fine arts l Auctions as a highly visible distribution mechanism – limited items to attract customers – ex: airline seats l Auctions as a component in e-commerce l Auctions for profit for individuals – selling thing on e-bay. Chapter 2 Prentice Hall 37

Bartering Online l Bartering—an exchange of goods and services l Give your offer to Bartering Online l Bartering—an exchange of goods and services l Give your offer to intermediary l Expensive (20 -30% commission) l very slow l E-bartering—bartering conducted online, usually by a bartering exchange l Bartering exchange—a marketplace in which an intermediary arranges barter transactions (variety and place) Chapter 2 Prentice Hall 38

Online Negotiating Online negotiation—electronic negotiation, usually done by software (intelligent) agents that perform searches 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 l Dynamic prices can be determined by negotiation l Negotiated prices result from interactions and bargaining among sellers and buyers l Expensive items like cars and real estate or large quantities l Deal with nonpricing terms like payment method and credit l Chapter 2 Prentice Hall 39

Web 2. 0 Mechanisms and Tools l BLOGGING (WEBLOGGING) blog A personal Web site Web 2. 0 Mechanisms and Tools l BLOGGING (WEBLOGGING) blog A personal Web site that is open to the public to read and to interact with; dedicated to specific topics or issues. A blog is differentiated by its personal nature, unique content and frequency of updates l vlog (or video blog) A blog with video content. l Building Effective Blogs l Chapter 2 Prentice Hall 40

Web 2. 0 Tools and Services l Chapter 2 microblogging A form of blogging Web 2. 0 Tools and Services l Chapter 2 microblogging A form of blogging that allows users to write messages (usually up to 140 characters) and publish them, either to be viewed by anyone or by a restricted group that can be chosen by the user. These messages can be submitted by a variety of means, including text messaging, instant messaging, e-mail, MP 3, or just on the Web. Prentice Hall 41

Web 2. 0 Tools and Services l l l Twitter A free microblogging service Web 2. 0 Tools and Services l l l Twitter A free microblogging service that allows its users to send and read other users’ updates. tweets Text-based posts up to 140 characters in length posted to Twitter. Commercial Uses of Blogs Corporate uses of blogs mirror some of the characteristics of personal blogs and can be used for informational or PR purposes. They can be updated regularly and may put a human face on a firm. l Potential Risks of Corporate Blogs are able to focus on niche areas and react quickly. The major risk is in this quick reaction, where posts may not be as well though out or vetted as desired. Chapter 2 Prentice Hall 42

MECHANISM AIDS FOR WEB 2. 0 TOOLS: TAGS, FOLKSONOMY, AND SOCIAL BOOKMARKS l l MECHANISM AIDS FOR WEB 2. 0 TOOLS: TAGS, FOLKSONOMY, AND SOCIAL BOOKMARKS l l l tag A nonhierarchical keyword or term assigned to a piece of information (such as an Internet bookmark, digital image, video clip, or any computer document). folksonomy (collaborative tagging, social classification, social indexing, social tagging) The practice and method of collaboratively creating, classifying, and managing tags to annotate and categorize content. social bookmarking Web service for sharing Internet bookmarks. The sites are a popular way to store, classify, share, and search links through the practice of folksonomy techniques on the Internet and intranets. Chapter 2 Prentice Hall 43

MECHANISM AIDS FOR WEB 2. 0 TOOLS: TAGS, FOLKSONOMY, AND SOCIAL BOOKMARKS l wiki MECHANISM AIDS FOR WEB 2. 0 TOOLS: TAGS, FOLKSONOMY, AND SOCIAL BOOKMARKS l wiki (wikilog) A blog that allows everyone to participate as a peer; anyone may add, delete, or change content. l SOCIAL NETWORK SERVICES Chapter 2 Prentice Hall 44

Virtual Worlds l Avatars Animated computer characters that exhibit humanlike movements and behaviors. individuals Virtual Worlds l Avatars Animated computer characters that exhibit humanlike movements and behaviors. individuals use them to portray themselves in virtual worlds l BUSINESS ACTIVITIES AND VALUE IN VIRTUAL WORLDS 1. Creating and managing a virtual business 2. Conducting regular business activities 3. Providing services for those who build, manage, or make money with virtual properties Chapter 2 Prentice Hall 45