Chapter 2 E-Marketplaces Structures and Mechanisms Chapter 2

Chapter 2 E-Marketplaces: Structures and Mechanisms 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 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 Describe the major types of auctions and list their characteristics. 6. Discuss the benefits, limitations, and impacts of auctions. 7. Describe bartering and negotiating online. 8. The major mechanisms of Web 2. 0. 5. Chapter 2 Prentice Hall 2

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E-MARKETPLACES l e-marketplace (marletspace) 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 4

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 5

E-MARKETPLACES COMPONENTS 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. Prentice Hall 6

Sun 2 -10 E-MARKETPLACES COMPONENTS l l l 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 l 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 7

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals l TYPES OF E-MARKETPLACES l private e-marketplaces Online markets owned by a single company; may be either sell-side and/or buy-side e-marketplaces. l l Chapter 2 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) Prentice Hall 8

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals l public e-marketplaces B 2 B 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) l 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) l l Chapter 2 Vertical consortia are confined to one industry Horizontal allow different industries trade there Prentice Hall 9

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals l E- Storefront ( Webstore ) A single company’s Web site where products or services are sold. (Ex: Walmart. com) l e-mall (online mall) An online shopping center where many online stores are located. (ex: Hawaii. com) Chapter 2 Prentice Hall 10

Types of E-Marketplaces and Mechanisms: from Storefronts to Portals l TYPES OF STORES AND MALLS General stores/malls (ex: Yahoo. com) l Specialized stores/malls (Ex: Buy. com – computers) l Regional versus global stores l Pure-play online organizations (Amazon. com) versus click-and-mortar stores (Walmart. com) l Chapter 2 Prentice Hall 11

Sun 2 -10 Types of E-Marketplaces and Mechanisms: from Storefronts to Portals l 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, Email messages, …etc) Chapter 2 Prentice Hall 12

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Types of E-Marketplaces and Mechanisms: from Storefronts to Portals l Types of Portals l l l l 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 14

Intermediation in E-Commerce l Brokers l Infomediaries l Electronic intermediaries that provide and/or control information flow in cyberspace, often aggregating information and selling it to others. l 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 15

Intermediation in E-Commerce Intermediaries provide value-added activities and services to buyers and sellers: wholesalers, retailers, infomediaries l Roles of intermediaries l l l 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 16

Participants, Transactions, Intermediation, and Processes in EC Chapter 2 Prentice Hall 17

Electronic Catalogs electronic catalogs The presentation of product information in an electronic form; the backbone of most eselling sites. l Electronic catalogs can be classified on three dimensions: l 1. 2. 3. Chapter 2 The dynamics of the information presentation The degree of customization Integration with business processes Prentice Hall 18

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 19

Classifications of Electronic Catalogs Dynamics of information presentation—static or dynamic l Degree of customization—ready-made or customized l Electronic catalogs allow integration of: l Order taking and fulfillment l Electronic payment l Inventory and accounting system l Suppliers’ extranet l Relationship to paper catalogs l Chapter 2 Prentice Hall 20

Customized Catalogs l Assembled specifically for: A company l An individual shopper l l Customization systems can: Create branded, value-added capabilities l Allows user to compose order l May include individualized prices, products, and display formats l Automatically identify the characteristics of customers based on the transaction records l Chapter 2 Prentice Hall 21

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Search Engines, Intelligent Agents and Shopping Carts Search engine A computer program that can access databases of Internet resources, search for specific information or keywords, and report the results. l 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) l electronic shopping cart An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop. l Chapter 2 Prentice Hall 23

Auctions l 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 l Auctions deal with products and services for which conventional marketing channels are ineffective or inefficient Chapter 2 Prentice Hall 24

Limitations of Traditional Auctions l Traditional auctions are generally a rapid process l It may be difficult for sellers to move goods to the auction site l Commissions are fairly high Chapter 2 Prentice Hall 25

Electronic Auctions Electronic auctions (e-auctions)—auctions conducted online l Major online auctions 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 Many sites have certain etiquette rules that must be adhered to in order to conduct fair business l Chapter 2 Prentice Hall 26

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

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

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 l 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 31

English Auction, Ascending Price Chapter 2 Prentice Hall 32

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 33

The Reverse Auction Process Chapter 2 Prentice Hall 34

Dynamic Pricing (cont. ) l One buyer, many potential sellers (cont. ) ”Name-your-own-price” model 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 Prentice Hall 35

Limitations of Electronic Auctions Possibility of fraud—defective goods or receive goods/services without paying l Limited participation—invitation only or Open to dealers only l Lack of security—C 2 C auctions sometimes not done in an unencrypted environment l Limited software—only a few “complete”or “off-the-shelf” market-enabling solutions l Chapter 2 Prentice Hall 36

Impacts of Auctions l Auctions as a coordination mechanism l Auctions as a social mechanism to determine a price l Auctions as a highly visible distribution mechanism l Auctions as a component in ecommerce Chapter 2 Prentice Hall 37

Bartering Online l Bartering—an exchange of goods and services l Bartering exchanges l Give your offer to intermediary l Intermediary asses value of your product or service in”points” l Use “points” to buy what you need l Bartering sites must be financially secure l Alternative to bartering is to auction surplus and then use the money collected to buy items needed Chapter 2 Prentice Hall 38

Bartering Online (cont. ) l E-bartering—bartering conducted online, usually by a bartering exchange l Bartering exchange—a marketplace in which an intermediary arranges barter transactions Chapter 2 Prentice Hall 39

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 l Deal with nonpricing terms like payment method and credit l Chapter 2 Prentice Hall 40

Online Negotiating (cont. ) l Three factors that facilitate negotiated prices Intelligent agents that perform searches and comparisons l Computer technology that facilitates negotiation process l Products and services that are bundled and customized l Chapter 2 Prentice Hall 41

Web 2. 0 Mechanisms and Tools l Weblogging (blogging) Technology for personal publishing on the Internet. l 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 42

Web 2. 0 Mechanisms and Tools l 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 43

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. l mashup A Web site that combines content data from more than one source to create a new user experience. l Chapter 2 Prentice Hall 44