© farhan mir 2014 ims e-commerce bba (hons) (electronic marketplace essentials) lectures 4,5,6 by:...

© Farhan Mir© Farhan Mir

20201414 IMSIMS

E-CommerceE-CommerceBBA (Hons)BBA (Hons)

(Electronic Marketplace (Electronic Marketplace Essentials)Essentials)Lectures 4,5,6Lectures 4,5,6

By: Farhan MirBy: Farhan Mir


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AdministrationAdministration

Introduction to E-Marketplaces

The online buying process

Key EC activities and mechanism

E-Market Mechanism

Models of E-Markets

Online Auctions & Bartering

Case Studies (Dell, Ford & Peapod)


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Electronic MarketplacesElectronic Marketplaces

Markets play a central role in the economy facilitating the exchange of:

informationinformation

goodsgoods

servicesservices

paymentspayments

Markets create economic value for:

buyersbuyers

sellerssellers

market market intermediariesintermediaries

society at largesociety at large


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Electronic Marketplaces Electronic Marketplaces (cont.)(cont.)

Three main functions of markets1.1. matching buyers and sellersmatching buyers and sellers

2.2. facilitating the exchange of information, facilitating the exchange of information, goods, services, and payments goods, services, and payments associated with market transactionsassociated with market transactions

3.3. providing an institutional infrastructure, providing an institutional infrastructure, such as a legal and regulatory such as a legal and regulatory framework, that enables the efficient framework, that enables the efficient functioning of the marketfunctioning of the market


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Electronic Marketplaces Electronic Marketplaces (cont.)(cont.)In recent years markets have seen a dramatic increase in the use of IT—EC has:

increased market efficiencies by increased market efficiencies by expediting or improving functionsexpediting or improving functions

been able to significantly decrease been able to significantly decrease the cost of executing these functionsthe cost of executing these functions


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E-MarketplacesE-Marketplaces

Electronic marketplaces (e-marketplaces or marketspaces), changed several of the processes used in trading and supply chains

Greater information richness Greater information richness

Lower information search costs for buyersLower information search costs for buyers

Diminished information asymmetry between sellers Diminished information asymmetry between sellers and buyersand buyers

Greater temporal separation between time of Greater temporal separation between time of purchase and time of possession purchase and time of possession

Greater temporal proximity between time of Greater temporal proximity between time of purchase and time of possession purchase and time of possession

Ability of buyers and sellers to be in different Ability of buyers and sellers to be in different locationslocations


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Marketspace ComponentsMarketspace Components ((cont.)cont.)

Digital products: Goods that can be transformed to digital format and delivered over the Internet

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


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Marketspace ComponentsMarketspace Components (cont.)(cont.)Back end: The activities that support online order-taking. It includes fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery

Intermediary: A third party that operates between sellers and buyers


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Types of Electronic Types of Electronic MarketsMarkets

Electronic storefront: A single or company Web site where products and services are sold

Mechanisms necessary for conducting the sale:

electronic catalogselectronic catalogs

search engine search engine

e-auction facilitiese-auction facilities

payment gatewaypayment gateway

shipment court shipment court

customer servicescustomer services


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Types of Electronic Markets Types of Electronic Markets (cont.)(cont.)

e-mall (online mall): An online shopping center where many stores are located

some are merely directoriessome are merely directories

some provide shared services (e.g., some provide shared services (e.g., choicemall.com). choicemall.com).

some are actually large click-and-some are actually large click-and-mortar retailersmortar retailers

some are virtual retailers (e.g., some are virtual retailers (e.g., buy.com)buy.com)


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Types of Electronic Markets Types of Electronic Markets (cont.)(cont.)

Types of stores and mallsGeneral stores/mallsGeneral stores/malls

Specialized stores/mallsSpecialized stores/malls

Regional versus global storesRegional versus global storesOnline Distributor Vs Online BrokerOnline Distributor Vs Online Broker

Pure online organizations versus click-Pure online organizations versus click-and-mortar storesand-mortar stores


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Types of E-Marketplaces: Types of E-Marketplaces: From Storefronts to PortalsFrom Storefronts to Portals

Types of E-Marketplaces

e-marketplaceAn online market, usually B2B, in which An online market, usually B2B, in which buyers and sellers exchange goods or buyers and sellers exchange goods or services; the three types of e-marketplaces services; the three types of e-marketplaces are private, public, and consortiaare private, public, and consortia

private e-marketplacesprivate e-marketplaces

Online markets owned by a single Online markets owned by a single company; may be either sell-side or buy-company; may be either sell-side or buy-side side e-marketplaces.e-marketplaces.


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Types of E-Marketplaces: Types of E-Marketplaces: From Storefronts to PortalsFrom Storefronts to Portals

Types of E-Marketplacessell-side e-marketplacesell-side e-marketplace

A private e-marketplace in which a A private e-marketplace in which a company sells either standard or company sells either standard or customized products to qualified customized products to qualified companiescompanies

buy-side e-marketplacebuy-side e-marketplace

A private e-marketplace in which a A private e-marketplace in which a company makes purchases from invited company makes purchases from invited supplierssuppliers


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Models of E-MarketsModels of E-Markets

Pure Vs. Partial Marketing

Electronic Distributor Vs. Electronic Broker

Electronic Store Vs. E-Malls

Reactive Vs. Proactive Strategy

Generalized Vs. Specific Stores/Malls

Global Vs. Regional


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E-Market E-Market EssentialsEssentials

Catalogs, Auctions, Catalogs, Auctions, Bartering & Issues of E-Bartering & Issues of E-MarketsMarkets


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Electronic CatalogsElectronic CatalogsElectronic catalogs—the presentation of product information in an electronic form; the backbone of most e-selling sitesEvolution of electronic catalogs

Merchants—advertise and promoteMerchants—advertise and promote

Customers—source of information and price Customers—source of information and price comparisonscomparisons

Consist of product database, directory and search Consist of product database, directory and search capability and presentation functioncapability and presentation function

Replication of text that appears in paper catalogsReplication of text that appears in paper catalogs

MoreMore dynamic, customized, and integrateddynamic, customized, and integrated


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Exhibit 2.4 Comparison of Exhibit 2.4 Comparison of Online Catalogs with Paper Online Catalogs with Paper CatalogsCatalogs


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Customized CatalogsCustomized CatalogsAssembled specifically for:

A companyA company

An individual shopperAn individual shopper

Customization systems can:Create branded, value-added capabilitiesCreate branded, value-added capabilities

Allows user to compose orderAllows user to compose order

May include individualized prices, May include individualized prices, products, and display formatsproducts, and display formats

Automatically identify the characteristics Automatically identify the characteristics of customers based on the transaction of customers based on the transaction recordsrecords


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Auctions as EC Market Auctions as EC Market MechanismsMechanisms

Auction:A market mechanism by which a seller A market mechanism by which a seller places an offer to sell a product and buyers places an offer to sell a product and buyers make bids sequentially and competitively make bids sequentially and competitively until a final price is reacheduntil a final price is reached

Auctions can be done:online online

off-line off-line

at public sites (eBay)at public sites (eBay)

at private sites (by invitation)at private sites (by invitation)


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Auctions as EC Market Auctions as EC Market Mechanisms Mechanisms (cont.)(cont.)

Electronic auctions (e-auctions):Auctions conducted onlineAuctions conducted online

Host sites on the Internet serve as brokers, offering services for sellers to post their goods for sale and allowing buyers to bid on those itemsConventional business practices that traditionally have relied on contracts and fixed prices are increasingly being converted into auctions with bidding for online procurements


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Dynamic pricing: Prices that Prices that change based on change based on supply and supply and demand demand relationships at relationships at any given timeany given time


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Four major categories of dynamic pricing

One buyer, one sellerOne buyer, one seller

One seller, many potential buyersOne seller, many potential buyers

One buyer, many potential sellersOne buyer, many potential sellers

Many sellers, many buyersMany sellers, many buyers


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Types of Dynamic PricingTypes of Dynamic Pricing


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Benefits of E-AuctionsBenefits of E-Auctions


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Bartering OnlineBartering OnlineBartering:

An exchange of goods and servicesAn exchange of goods and services

e-bartering:Bartering conducted online, usually by a Bartering conducted online, usually by a bartering exchangebartering exchange

Bartering exchange:A marketplace in which an intermediary A marketplace in which an intermediary arranges barter transactionsarranges barter transactions


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Issues in E-Markets: Liquidity, Issues in E-Markets: Liquidity, Quality, and Success FactorsQuality, and Success Factors

Early liquidity: Achieving a critical mass of buyers and sellers as Achieving a critical mass of buyers and sellers as fast as possible, before a start-up company’s fast as possible, before a start-up company’s cash disappearscash disappears

Quality uncertainty: The uncertainty of online buyers about the The uncertainty of online buyers about the quality of non-commodity type products that they quality of non-commodity type products that they have never seen, especially from an unknown have never seen, especially from an unknown vendorvendor

Microproduct: A small digital product costing a few cents A small digital product costing a few cents


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What is Web 2.0?What is Web 2.0?

The Social Web

. Social networking and community-

oriented sites

ex. myspace.com, friendster.com,

facebook.com, multiply.com,

tagged.com, twitter,com, etc.


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What is Web 2.0?What is Web 2.0?

The User-focused Web

. The user needs are catered:

participate, organize, read, write & play

online


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Why is it important? Why use Web Why is it important? Why use Web 2.0?2.0?

Value Content Creation . Custom search engines .

Collaboration . Communication .

Communication . Web-based journals/blogs . Outreach . Wikis . Instruction . Podcasts . Training . Videos and photos . Resource . Library marketing

development


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Web 2.0, Social Networks, Web 2.0, Social Networks, and E-Commerceand E-Commerce

Why Is There an Interest?Web 2.0 applications and especially Web 2.0 applications and especially social networks attract a huge number social networks attract a huge number of visitorsof visitors

Social networks are spreading rapidly Social networks are spreading rapidly and many of them cater to a specific and many of them cater to a specific segment of the population segment of the population

Young visitors today will grow up and Young visitors today will grow up and spend moneyspend money

Retailers stand to benefit from online communities in several important ways


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Managerial IssuesManagerial Issues

How do we compete in the digital economy?

What about intermediaries?

What organizational changes will be needed?

© farhan mir 2014 ims e-commerce bba (hons) (electronic marketplace essentials) lectures 4,5,6 by:...

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