© Farhan Mir 2014 IMS E-Commerce BBA (Hons) (Electronic Marketplace Essentials) Lectures 4,5,6 By: Farhan Mir

© Farhan Mir 2014 IMS Administration 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)

© Farhan Mir 2014 IMS Electronic Marketplaces Markets play a central role in the economy facilitating the exchange of:informationgoodsservicespayments Markets create economic value for: buyers buyerssellers market intermediaries society at large

© Farhan Mir 2014 IMS Electronic Marketplaces (cont.) Three main functions of markets 1. matching buyers and sellers 2. facilitating the exchange of information, goods, services, and payments associated with market transactions 3. providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market

© Farhan Mir 2014 IMS Electronic Marketplaces (cont.) In recent years markets have seen a dramatic increase in the use of IT—EC has: increased market efficiencies by expediting or improving functions been able to significantly decrease the cost of executing these functions

© Farhan Mir 2014 IMS E-Marketplaces Electronic marketplaces (e-marketplaces or marketspaces), changed several of the processes used in trading and supply chains Greater information richness Lower information search costs for buyers Diminished information asymmetry between sellers and buyers Greater temporal separation between time of purchase and time of possession Greater temporal proximity between time of purchase and time of possession Ability of buyers and sellers to be in different locations

© Farhan Mir 2014 IMS Marketspace Components ( 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

© Farhan Mir 2014 IMS Marketspace Components (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

© Farhan Mir 2014 IMS Types of Electronic Markets Electronic storefront: A single or company Web site where products and services are sold Mechanisms necessary for conducting the sale: electronic catalogs search engine e-auction facilities e-auction facilities payment gateway shipment court customer services

© Farhan Mir 2014 IMS

© Farhan Mir 2014 IMS

© Farhan Mir 2014 IMS Types of Electronic Markets (cont.) e-mall (online mall): An online shopping center where many stores are located some are merely directories some provide shared services (e.g., choicemall.com). some are actually large click-and-mortar retailers some are virtual retailers (e.g., buy.com)

© Farhan Mir 2014 IMS

© Farhan Mir 2014 IMS

© Farhan Mir 2014 IMS Types of Electronic Markets (cont.) Types of stores and malls General stores/malls Specialized stores/malls Regional versus global stores Online Distributor Vs Online Broker Pure online organizations versus click-and- mortar stores

© Farhan Mir 2014 IMS Types of E-Marketplaces: From Storefronts to Portals Types of E-Marketplaces e-marketplace 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 private e-marketplaces Online markets owned by a single company; may be either sell-side or buy-side e-marketplaces.

© Farhan Mir 2014 IMS Types of E-Marketplaces: From Storefronts to Portals Types of E-Marketplaces sell-side e-marketplace A private e-marketplace in which a company sells either standard or customized products to qualified companies buy-side e-marketplace A private e-marketplace in which a company makes purchases from invited suppliers

© Farhan Mir 2014 IMS Models 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

© Farhan Mir 2014 IMS E-Market Essentials Catalogs, Auctions, Bartering & Issues of E-Markets

© Farhan Mir 2014 IMS Electronic Catalogs Electronic catalogs—the presentation of product information in an electronic form; the backbone of most e-selling sites Evolution of electronic catalogs Merchants—advertise and promote Customers—source of information and price comparisons Consist of product database, directory and search capability and presentation function Replication of text that appears in paper catalogs More dynamic, customized, and integrated

© Farhan Mir 2014 IMS Exhibit 2.4 Comparison of Online Catalogs with Paper Catalogs

© Farhan Mir 2014 IMS

© Farhan Mir 2014 IMS Customized Catalogs Assembled specifically for: A company An individual shopper Customization systems can: Create branded, value-added capabilities Allows user to compose order May include individualized prices, products, and display formats Automatically identify the characteristics of customers based on the transaction records

© Farhan Mir 2014 IMS Auctions as EC Market Mechanisms 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 Auctions can be done:onlineoff-line at public sites (eBay) at private sites (by invitation)

© Farhan Mir 2014 IMS Auctions as EC Market Mechanisms (cont.) Electronic auctions (e-auctions): Auctions 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 items Conventional business practices that traditionally have relied on contracts and fixed prices are increasingly being converted into auctions with bidding for online procurements

© Farhan Mir 2014 IMS Auctions as EC Market Mechanisms (cont.) Dynamic pricing: Prices that change based on supply and demand relationships at any given time

© Farhan Mir 2014 IMS Auctions as EC Market Mechanisms (cont.) Four major categories of dynamic pricing One buyer, one seller One seller, many potential buyers One buyer, many potential sellers Many sellers, many buyers

© Farhan Mir 2014 IMS Types of Dynamic Pricing

© Farhan Mir 2014 IMS Benefits of E-Auctions

© Farhan Mir 2014 IMS Bartering Online Bartering: An exchange of goods and services e-bartering: Bartering conducted online, usually by a bartering exchange Bartering exchange: A marketplace in which an intermediary arranges barter transactions

© Farhan Mir 2014 IMS Issues in E-Markets: Liquidity, Quality, and Success Factors Early liquidity: Achieving a critical mass of buyers and sellers as fast as possible, before a start-up company’s cash disappears Quality uncertainty: The uncertainty of online buyers about the quality of non-commodity type products that they have never seen, especially from an unknown vendor Microproduct: A small digital product costing a few cents

© Farhan Mir 2014 IMS 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.

© Farhan Mir 2014 IMS What is Web 2.0? The User-focused Web. The user needs are catered: participate, organize, read, write & play online

© Farhan Mir 2014 IMS Why is it important? Why use Web 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

© Farhan Mir 2014 IMS Web 2.0, Social Networks, and E-Commerce Why Is There an Interest? Web 2.0 applications and especially social networks attract a huge number of visitors Social networks are spreading rapidly and many of them cater to a specific segment of the population Young visitors today will grow up and spend money Retailers stand to benefit from online communities in several important ways

© Farhan Mir 2014 IMS Managerial Issues How do we compete in the digital economy? What about intermediaries? What organizational changes will be needed?