CHAPTER 2

E-Marketplaces: Structures, Mechanisms and Impacts

Presented By:

Raghda Essam

Dina El-Haddad

Samar El-Haddad

Menna Hatem

Agenda

Introduction

E-Marketplaces and Its components

Transaction, Electronic Catalogs in E-Commerce

Online Auction, Bartering and Negotiating

E-Commerce in wireless environment

Competition in digital Economy and its impact on

Industries and business organization

Introduction

Electronic markets play a central role in the

economy, facilitating the exchange of information,

goods, services and payments.

In the process, they create economic value for

buyers, sellers, markets intermediaries, and for the

society at large

What is Electronic Markets?

E-Marketplace is a virtual marketplace in which sellersand buyers meet and conduct different types of transaction.

E-Market functions are the same as that of a physical marketplace

However computerized systems tend to make markets much more efficient by providing more updated information to buyers and sellers with your content.

E-Marketplace Components and participants

The major components and players in market space are:

Customers

Sellers

Product and services

Physical products

Digital products

Infrastructure

Front end

Back end

Intermediaries

Other business partners and Support services

Types of E-Marketplaces: From Storefronts to

Portals

The major B2C e-marketplaces are storefronts and

internet malls.

Electronic storefronts

An electronic store refers to a single company’s Web

site where products and services are sold, it may

belong to a manufacturer, retailer, individuals selling

from home or another type of business

Cont’d

Electronic Malls

An online shopping center where many stores are

located.

Consumers can shop in electronic malls (e-malls) similar

to malls in the physical world.

When a consumer indicates the category he/she is

interested in, the consumer is transferred to the

appropriate independent storefront

Types of Stores and Malls

General stores/ malls

These are large market spaces that sell all types of

products.

Specialized stores/ malls

These sell only one or few types of products.

Regional versus global stores

Some stores that serve customers that live nearby.

Transaction, Electronic Catalogs in E-Commerce

What is going on in these markets ?!

The Major EC activity is Electronic Trading (A seller

sells to customers, the sellers itself buys from

suppliers)

E-procurment

Buys materials, products, and so on from suppliers,

distributors(B2B),or from the government(G2B)

Intermediaries Roles

Intermediaries play an important role in commerce

by providing value-added activates and services

There are many types of intermediaries, Most well-

known in physical world (Wholesalers, retailers)

In Cyberspace , There are also electronic

Intermediaries known as infomediaries

Infomediaries Provieds and/or Control information

flow in cyberspace (Aggregating information and

selling it to others)

Brokers

A broker is a company that facilitates transactions between buyers and sellers.

Different types of brokers

• Buy/sell fulfillment

Coporation that helps consumers place buy and sell on

(eTrade)

• Virtual mall

Company that helps consumers buy from a variety of stores (Yahoo Stores)

Cont’d

• Metamediary

Firm that offers customers access to variety of stores

with transaction services such as financial services

(Amazon)

• Search Agent

Company that help consumers compare different

stores (shopping.com)

Intermediation Is Needed

Producers and consumers may interact directly

Direct interactions are sometimes undesirable or unfeasible

Intermediaries whether human or electronic can address the following five important limitations

• Search cost

• Lack of privacy

• Incomplete information

• Contract risk

• Pricing inefficiencies

E-Distributor

E-Distributor

An e-commerce intermediary that connects

manufacturers with business buyers by aggregating

the catalogs of many manufacturers in one place

Usually provide two types of services

• Relevant information about demand, supply ,prices,

and requirements

• Offer value-added services such as transfer of

products, consulting, ..

Market Mechanisms

To enable selling online, a web site usually needs EC merchant server software , the basic functionality offered by such software includes electronic catalogs, search engines, and shopping carts

Electronic Catalogs

The Presentation of product in an electronic form; the backbone of most e-selling sites

Electronic Catalogs can be classified according to three dimensions

• Dynamics of information

• Degree of customization

• Integration with business process

Cont’d

Search Engine

A computer program that can access database of internet resources , search for specific information or key words, and report the result

Software(Intelligent) agent

Software that can perform routine tasks that requrie intelligence

Electronic Shopping Cart

An Order-Processing technology that allows customers to accumulate items they wish to buy while they continue to shop

Online Auction

Auctions as EC market mechanisms

What is auction?

Auction is a market mechanisms where prices are

determined dynamically by bids.

Auctions can be done online or offline

Actions can be conducted either in public auctions sites

like eBay for example or done by invitations to private

auctions.

Online Auction

traditional versus E-auction

Traditional or physical auctions are still very popular although E-auction have increase rabidly .

Traditional offline auction have a lot of limitations like they last only few minutes or even seconds, the rapid process may give buyer little time to took decision either to bid or not and so the sellers may loss a chance of getting the highs price, bidder may not get what the really want(cant examine), bidder have difficulty of knowing the locations and timing of auctions and also sellers sometimes have difficulty moving goods and commissions are so high because of renting places and advertising.

E-auction : an auction conducted online

It provide the services in low costs and with wide array, every one can join individuals and corporations

it started over the LAN in 1980s and over the internet in 1995.

Normally consumer goods are not suitable for E-auctions

Traditional auction E-auction

Online Auction

Dynamic Pricing

dynamic pricing is the change in the price

depending on the supply and demand relationships

at any given time.

The main major characteristic of an auction is that

they are based on dynamic pricing.

Prices keep fluctuate basing on the supply and

demand processed unlike catalog prices which is

fixed like in stores and supermarkets

Online Auction

Type of auctions

One buyer, One seller

Negations can be done and the resulting price is determined

by both of seller and buyer.

One Seller, Many Potential buyers

The seller uses the forward auction in which the seller

entertains bid for buyers bidders increase price

sequentially.

Online Auction

Type of auctions

One buyer, Many potential sellers

Two types of auctions can be done in such case:

Reverse auction(bidding or tendering system) in which the buyer place an item for bid and sellers bid on the job in which the price keep reducing and the lowest bid win.

“name-your-own-price” model in which a buyer specifies the price and other terms that he is willing to pay and any willing seller could accept it.

Many sellers, Many buyers

When there are many sellers and buyers so buyers and their bidding prices are matched with sellers and their asking prices and this case is could double auctions

Online Auction

benefits and limitations of E-auctions

Benefits of E-auctions

Opportunity of getting higher prices for a seller Ruther than fixed one’s

Can liquidate large quantities quickly

Opportunity to find unique items for a buyer

Increase customer relationship and loyalty (in case of specialist B2B auctions sites)

Limitations of E-auctions

Minimal of security: some websites are not secured enough.

Possibility of fraud: auctions items in many cases are uniqe and here buyers can’t see or examine items.

Limited participation: some auctions are by invations only and so a lot of dealers don’t have the same opportunity of large pool of buyers

Bartering and Negotiating Online

Online Bartering

Bartering is the process of exchange goods and services.

The problem with bartering is that it is difficult of find trading partner, and that’s why they use classified ads to advertise what they need and what they offer and intermediary helps but they take almost 20-30 % commission.

E-bartering is the bartering conducted online usually in a bartering exchange.

Bartering exchange is a marketplace in which an intermediary arranges barter transactions.

Bartering and Negotiating Online

Online Negotiation

Dynamic prices can also determined by negotiations. its interaction between seller and buyer

Negations pricing are commonly used for expensive and specialized products and large quantities.

its well known in offline world (e.g. in real estate, automobile purchases and contract work)

According to choi and whinston (2000) that online negotiation is easier than offline one.

Three factors facilitate the online negotiations :

The products and services that are customized

Computers technology that facilitates the negotiation process

soft wares that search and match needs and provides quality customer serves and base where prices can be negotiate

E-Commerce in Wireless Environment

Due to widespread adoption of wireless and mobile

networks, mobile computing became more possible.

We have:

- Mobile Commerce (m-commerce/m-business): refers

to conduct of e-commerce via wireless device.

- Location-based Commerce (L-commerce): is m-

commerce targeted to customer whose preference

and needs and location (using GPS) are known.

Mobile Portals

DoCoMo’s i-mode: world’s largest mobile portal,

users can conduct large variety of m-commerce

applications:

a) Shopping guides: number of phones and addresses

b) Maps & Transportation: digital maps for routes

c) Ticketing: airline tickets

d) News & exports: fast access to global news

Competition in digital Economy

Competitive factors:

a) Lower search costs for buyers

b) Speedy comparisons

c) Lower prices

d) Customer service

e) Differentiation & Personalization

Porter’s competitive analysis in industry

Impact of EC on Business Process

Web technologies are offering organizations to re-

think strategic business models, processes,

relationships (called e-opportunities ) consists of:

a) E-Marketing: Improve marketing of existing

products

b) E- Operations: Improve marketing of existing

products

c) E- Services: Improve marketing of existing

products

Questions

Thank you