chapter 2 e-marketplaces: mechanisms, tools and impact of e-commerce

Chapter 2

E-Marketplaces:

Mechanisms, Tools and Impact of E-commerce

Chapter 2 Prentice Hall 2

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, search engines, and portals.


Learning Objectives

5. 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.

9. Understand virtual worlds and their use in EC.


E-MARKETPLACES – An Overview

e-marketplace (marletspace, virtual market)

An online market, usually B2B, in which buyers and sellers exchange goods or services.

The three types of e-marketplaces are: private, public, and consortia.


E-MARKETPLACES COMPONENTS

E-MARKETPLACE COMPONENTS AND PARTICIPANTSCustomersSellersProducts and services

digital productsGoods that can be transformed to digital format and delivered over the Internet.

Infrastructure: Hardware, Software and Networks


E-MARKETPLACES COMPONENTS

front endThe 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 endThe activities that support online order fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery.

intermediaryA third party that operates between sellers and buyers. (create an manage online markets to match sellers and buyers)


Disintermediation and Reintermediation

Disintermediation: Elimination of intermediaries between sellers and buyers. (Ex: buying airline tickets directly – no agent)

Reintermediation: Establishment of new intermediary roles for traditional intermediaries that have been disintermediated. (Ex: edmunds.com – cars)


TYPES OF E-MARKETPLACES

Private e-marketplacesOnline markets owned and operated by a single company; may be either sell-side or buy-side.

sell-side e-marketplaceA private e-marketplace in which one company sells either standard and/or customized products to qualified customers – B2C or B2B (one-to-many).

(Ex: Cisco.com)buy-side e-marketplace

A private e-marketplace in which one company makes purchases from invited suppliers – B2B (many-to-one). (Ex: Raffles hotels)


TYPES OF E-MARKETPLACES

Public e-marketplaces- B2B 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.


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)

e-mall (online mall)An online shopping center where many online stores are located. (ex: emallofmaine.com)



TYPES OF STORES AND MALLSGeneral stores/malls (ex:amazon.com)

Specialized stores/malls (Ex: cars.com – cars)

Regional versus global stores (furniture – nearby customers)

Pure-play online organizations (Amazon.com) versus click-and-mortar stores (Walmart.com)



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, E-mail messages, …etc)


Customer Interaction Mechanisms: from Storefronts to Portals Types of Portals

Commercial (public) portals --- yahoo, msn Corporate (enterprise) portals --- rich content, narrow community Publishing portals --- large communities, specific interests, (extensive search

features) (zdnet.com) Personal portals – specific filtered info to individuals, narrow content,

(Personalization)

ex- netvibes.com – e-mail accounts, search engines, IM, videos, … 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


Brokers 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 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 B2BAn 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.

THE ROLES AND VALUE OF INTERMEDIARIES IN E-MARKETPLACES


Tue 25-2 Electronic Catalogs

electronic catalogs (e-catalogs)

The presentation of product information in an electronic form; the backbone of most e-selling sites.


Electronic Catalogs

Evolution of electronic catalogsMerchants—advertise and promoteCustomers—source of information and

price comparisonsConsist of product database, directory and

search capability and presentation functionReplication of text that appears in paper

catalogsMore dynamic, customized, and integrated


EC SEARCH ACTIVITIES, TYPES, AND ENGINES

Search engineA computer program that can access databases of Internet resources, search for specific information or keywords, and report the results. Types of EC Searches

Internet/Web Search enterprise search: the practice of identifying and

enabling specific content across the enterprise to be indexed, searched, and displayed to authorized users.

desktop searchSearch 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.


Software (Intelligent) Agents —software that can perform routine tasks that require intelligence E-commerce users use both search engines and

intelligent agents Search engines find products or services Software agents conduct other tasks (comparisons,

tracking movements, …etc) Voice-Powered Search electronic shopping cart

An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop.

Product configuration – self customizing products

EC SEARCH ACTIVITIES, TYPES, AND ENGINES


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.

Auctions deal with products and services for which conventional marketing channels are ineffective or inefficient


Limitations of Traditional Auctions

Traditional auctions are generally a rapid process – minutes or seconds

It may be difficult for sellers to move goods to the auction site

Bidders must be presentCommissions are fairly high – ads,

employees, reserving a market


Electronic Auctions Electronic auctions (e-auctions)—auctions conducted

online – stated on 1980s Major online auctions (such as e-bay) offer:

Consumer products Electronic parts Artwork Vacation packages Airline tickets

Host sites on the Internet serve as brokers offering: Services for sellers to post their goods for sale Allowing buyers to bid on those items


Thu 27-2 Dynamic Pricing

Dynamic pricing—prices that change based on supply and demand relationships at any given time

The four major categories of dynamic pricing are based on the number of buyers and sellers involved:One buyer, one sellerOne seller, many potential buyersOne buyer, many potential sellersMany sellers, many buyers


Types of Dynamic Pricing


Dynamic Pricing (cont.)

One buyer, one seller usesNegotiationBargainingBartering

Price will be determined by:Each party’s bargaining powerSupply and demand in the item’s marketPossibly business environment factors


Dynamic Pricing (cont.) One seller, many potential buyers

Forward auction—an auction in which a seller entertains bids from buyers

English auction - an auction in which buyers bid on an item in sequence and the price increases with time

Yankee auction- auction of multiple identical items in which bidders can bid for any number of the items offered, and the highest bid wins

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


English Auction, Ascending Price



One buyer, many potential sellersReverse 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


The Reverse Auction Process



One buyer, many potential sellers (cont.)”Name-your-own-price” model- priceline.com

Consumer-to-business (C2B) modelMany 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


Limitations of Electronic Auctions

Possibility of fraud—defective goods or receive goods/services without paying

Limited participation—invitation only or Open to dealers only

Minimal security—C2C auctions sometimes not done in an unencrypted environment- credit cards could be stolen


Impacts of Auctions

Auctions as a social mechanism to determine a price – unique or rare items ex: fine arts

Auctions as a highly visible distribution mechanism – limited items to attract customers – ex: airline seats

Auctions as a component in e-commerceAuctions for profit for individuals – selling

thing on e-bay.


Bartering—an exchange of goods and servicesGive your offer to intermediaryExpensive (20-30% commission) very slow

E-bartering—bartering conducted online, usually by a bartering exchange

Bartering exchange—a marketplace in which an intermediary arranges barter transactions (variety and place)

Bartering Online


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

Dynamic prices can be determined by negotiation Negotiated prices result from interactions and

bargaining among sellers and buyersExpensive items like cars and real estate or

large quantitiesDeal with nonpricing terms like payment method

and credit


Web 2.0 Mechanisms and Tools

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

vlog (or video blog)

A blog with video content. Building Effective Blogs


Web 2.0 Tools and Services

microbloggingA 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, MP3, or just on the Web.


TwitterA free microblogging service that allows its users to send and read other users’ updates.

tweetsText-based posts up to 140 characters in length posted to Twitter.

Commercial Uses of BlogsCorporate 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.

Potential Risks of Corporate BlogsBlogs 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.

Web 2.0 Tools and Services


tagA 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 bookmarkingWeb 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.

MECHANISM AIDS FOR WEB 2.0 TOOLS: TAGS, FOLKSONOMY, AND SOCIAL BOOKMARKS


wiki (wikilog)

A blog that allows everyone to participate as a peer; anyone may add, delete, or change content.

SOCIAL NETWORK SERVICES

MECHANISM AIDS FOR WEB 2.0 TOOLS: TAGS, FOLKSONOMY, AND SOCIAL BOOKMARKS


Avatars

Animated computer characters that exhibit humanlike movements and behaviors.

individuals use them to portray themselves in virtual worlds 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

Virtual Worlds

chapter 2 e-marketplaces: mechanisms, tools and impact of e-commerce

Documents

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esellers business processes