Introduction to Electronic Marketplaces (E- marketplaces)

ELECTRONIC MARKETPLACES (E-MARKETPLACES)  An e-marketplace is a location on the Internet where companies can obtain or disseminate information, engage in transactions, or work together in some way.  Most of the e-marketplaces provide two basis functions: –1) they allow companies to obtain new suppliers or buyers for company products, or – 2) developing streamlined trading networks that make negotiating, settlement, and delivery more efficient. Currently e-marketplaces exist in many different industries.

E-marketplaces structures  E-marketplaces can be structured in several different ways. – One way to structure a marketplace such that the market maker is neither a buyer or seller, but is a neutral third parties. eBay – Other e-marketplaces are set up be a consortium of sellers. –Buyers can also set up a marketplace to reduce their costs and obtain better purchasing terms. –Moreover, large buyers can set up another type of marketplace, a private marketplace, for their supplier networks.

E-Market is … Web-based marketplace  e-market is Web sites where buyers and sellers come together to communicate, exchange ideas, advertise, bid in auctions, conduct transactions, and coordinate inventory and fulfillment BuyersSellersMarketSite

Key Considerations For Looking At E-marketplaces  Ownership of the E-marketplace: This is crucial. Successful e-marketplaces are usually backed by good capital and this helps to ensure their success and longevity. You also do not want to be involved in a marketplace if your competitor is the major owner.  Costs: This is also important. You should compare the costs of joining the marketplace with the projected savings and efficiency gains from joining the marketplace. Look for hidden costs. Possible things that e-marketplace charge for are commissions for completed transactions, membership fees, listing fees, value added services.

key considerations  Ease of Use / Support: An e-marketplace should be easy to use and should not require a lot of training, special equipment for your staff.  Industry Fit: Many e-marketplaces are targeted toward one or two industries. Consequently the processes and structure of the marketplace are designed to maximize efficiency gains and transaction costs for that industry. Be sure your company is a good fit.  Marketplace Participation: If there are no buyers and sellers listed on the marketplace, it is unlikely that you will gain anything from joining the marketplace. A viable marketplace will have a lot of buyers and sellers - this is the only way that an e-marketplace can work.

Key considerations  Security / Privacy: Be sure that the transaction information is not published or available for a third party or a competitor. You do not want a competitor getting hold of your key supplier data or pricing information.  Other Services: Depending on your industry, you may want to check that other services the marketplace offers.  Process Integration: An efficient marketplace should be designed so that it integrates with existing buyer and seller ways of doing business.