Presentation on theme: "2.1 E-marketplaces and their components."— Presentation transcript:
1 TOPIC 2: E-marketplaces: Economics, Competition and Competitive Advantage Strategies 2.1 E-marketplaces and their components.2.2 Types of E-marketplaces and their features.2.3 Intermediaries in EC and their roles.2.4 Electronic catalogs and other market mechanisms2.5 Auctions, bartering and negotiating online.2.6 EC in the Wireless Environment: M-Commerce2.7 Liquidity, quality and success factors in e-marketplaces2.8 The economic impact of EC.2.9 Competition and strategies in the digital economy2.10 Impact of E-markets on business and organisations.
2 2.1: MarketplacesMarkets (electronic or otherwise) have three main functions:Matching buyers and sellersFacilitating the exchange of information, goods, services, and payments associated with market transactionsProviding an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market
3 2.1: Electronic Marketplaces Electronic marketplaces (e-marketplaces or marketspaces), changed several of the processes used in trading and supply chainsGreater information richnessLower information search costs for buyersDiminished information asymmetry between sellers and buyersGreater temporal separation between time of purchase and time of possessionGreater temporal proximity between time of purchase and time of possessionAbility of buyers and sellers to be in different locations
4 2.1: Marketspace Marketspace A marketspace is an electronic marketplace in which sellers and buyers exchange goods and services for money (or for other goods and services).While traditional marketplaces are constrained by their physical locations, marketspaces use technology to eliminate this constraint (by being online)
5 2.1: Marketspace Components Customers (most important)SellersProducts and services, includingdigital products: goods that can be transformed into digital format and delivered over the Internet, e.g., e-books, software, graphics, video clips, etc.InfrastructureOther business partnersFront ende-seller’s business processes through which customers interact, eg. seller’s portal & e-catalogsBack endactivities that support online order-takingIntermediariesThird party that operates between sellers & buyersSupport services
7 2.2: Storefronts Electronic storefront: A single company’s Web site where products and services are sold.Most common mechanisms necessary for conducting the sale:electronic catalogsearch engineelectronic carte-auction facilitiespayment gateway
8 2.2: Storefronts Online Mall (e-mall) Types of Stores and Malls An online shopping center where many stores are locatedTypes of Stores and MallsGeneral stores/mallsSpecialised stores/mallsRegional or global storesPure online stores or click-and-mortar stores
9 2.2: Types of E-Marketplaces An online market, usually B2B, in which buyers and sellers exchange goods or services; the three types of e-marketplaces are private, public, and consortiaPrivate e-marketplaces:Online markets owned by a single company; can be either sell-side or buy-side e-marketplacesSell-side e-marketplace:A e-marketplace in which a company sells either standard or customised products to qualified companies
10 2.2: Types of E-Marketplaces Buy-side e-marketplace:A e-marketplace in which a company makes purchases from invited suppliersPublic e-marketplaces:B2B marketplaces, usually owned and/or managed by independent third parties, that include many sellers and many buyers; also known as exchangesConsortia:E-marketplaces owned by a small group of large vendors, usually in a single industry
11 2.2: Information Portals Information Portal: Six Types of Portals A single, personalised online point of access (through a Web browser) to business information inside an organisation.Six Types of PortalsCommercial (public) portals - most popular and diverseCorporate portalsPublishing portalsPersonal portalsMobile portals: a portal accessible via a mobile deviceVoice portals: a portal accessed by telephone or cell phone.
12 2.3: Intermediation in E-Commerce Intermediaries (brokers) provide value-added activities and services to buyers and sellers, such as wholesalers and retailersInfomediaries:Electronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to othersRoles and value of intermediaries in e-marketsReduce search costsIncrease or create privacyProvide more complete informationReduce contract riskReduce pricing inefficiencies
13 2.3: Intermediation in E-Commerce e-distributor:An e-commerce intermediary that connects manufacturers (suppliers) with buyers by aggregating the catalogs of many suppliers in a single location - the intermediary’s Web siteDisintermediation:Elimination of intermediaries between sellers and buyersReintermediation:Establishment of new intermediary roles for traditional intermediaries that were disintermediated
14 Case Study: Diamonds Forever—Online The age-old business of gem buying is very inefficient:Several layers of intermediaries can jack up the price of a gem 1,000% between wholesale and final retail prices.American Don Kogen made his fortune in Chanthaburi (Thailand) - one of the world’s leading centers for processing gemsHe started by purchasing low-grade gems from sellers that arrived early in the morning and then selling them for a small profit to dealers who arrived late in the dayThis quick turnover of inventory helped him build up his capital resourcesHe reached the U.S. gem market using advertising.
15 Case Study: Diamonds Forever—Online Using faxes, he shortened the order timeIn 1998, Kogen decided to use the Internet -establishing thaigem.com and sold his first gem onlineBy 2001, the revenue from his online business reached $4.3 million, and it more than doubled (to $9.8 million) in 2002Online sales account for 85 percent of the revenueThe buyers are mostly dealers or retailers such as Wal-Mart or QVC
16 Case Study: Diamonds Forever—Online He buys raw or refined gems from all over the world, some online, catering to the demand of his customersThaigem’s competitive edge is low pricesThe proximity to gem processing factories and the low labour cost enable prices significantly lower than his online competitors.Unsatisfied customers can return merchandise within 30 days, no questions askedDelivery to any place in the world is made via Federal Express, at about $15 per shipment.
17 2.4: Electronic Catalogs Electronic catalogs: The presentation of product information in an electronic form; the backbone of most e-selling sites.They consist of a product database, a directory with search capabilities, and a presentation function.Electronic catalogs can be classified by the following dimensions:The dynamics of the information presentationThe degree of customisationIntegration with business processesCustomised catalogsA catalog assembled specifically for a company, usually a customer of the catalog owner
19 2.4: E-Catalogs, Search Engines & Shopping Carts A computer program that can access a database of Internet resources, search for specific information or keywords, and report the resultsSoftware (intelligent) agent:Software that can perform routine tasks that require intelligenceElectronic shopping cart:An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop
20 Case Study: Electronic Catalogs at Boise Cascade Boise Cascade Office Products$4-billion office products wholesaler customer base includes over 100,000 large corporate customers and 1 million small ones900-page paper catalog used to be mailed to customers once each yearBoise also sent mini-catalogs tailored to customers’ individual needs based on past buying habits and purchase patternsIn 1996, the company placed its catalogs onlineCustomers view the catalog at boiseoffice.com and can order straight from the site or submit orders byThe orders are shipped the next dayCustomers are then billed
21 Case Study: Electronic Catalogs at Boise Cascade In 1997, the company generated 20 percent of its sales through the Web siteNow the process of producing a Web catalog that is searchable, rich in content, and available in a variety of formats takes only 1 weekOne major advantage of customised catalogs is pricingBoise estimates that electronic orders cost approximately 55 percent less to process than paper-based orders
22 2.5: Auctions Auction: Auctions can be done: A market mechanism by which a seller places an offer to sell a product and buyers made bids sequentially and competitively until a final price is reached.Auctions can be done:onlineoff-lineat public sites (eBay)at private sites (by invitation)
23 2.5: Auctions Electronic auction (e-auction): Dynamic pricing Traditional auctions are limited by the short duration of the auction itself and the physical location of the auction.Electronic auctions (conducted online) can occur over greater time periods and are not limited by location since they take place in electronic marketspaces.Dynamic pricingPrices that change based on supply and demand relationships at any given timeDynamic pricing has the advantage of being constantly updated and moving towards the true market price.The disadvantages: its constant variability and possibility that the market price is below the sellers expected price.
24 2.5: Auctions Types of auctions: One buyer-one seller On seller-many buyersForward auctions used for fast liquidation and as a selling channel. Price is increasing; the highest bidder wins. (Forward auction: An auction in which a seller entertains bids from buyers).One buyer-many potential sellersReverse auction (bidding or tendering system) in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid, with price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B mechanism
25 2.5: Auctions Types of auctions (cont’d): One buyer-many sellers (special mode)“name-your-own-price” model:An auction model in which a would-be buyer specifies the price (and other terms) they are willing to pay to any willing and able seller.It is a C2B model, pioneered by Priceline.comMany buyers-many sellersDouble auction:Auctions in which multiple buyers and their bidding prices are matched with multiple sellers and their asking prices, considering the quantities on both sides.
27 2.5: Auctions: Benefits to Buyers, Sellers & Auctioneers Auctions provide several advantages to buyers because they allow them to purchase goods from a wide variety of sellers without the constraint of time or place.The wide variety of different auctions styles meets the needs of a wide variety of different purchasers.Auctions benefit sellers by allowing them to sell to a huge potential marketplace not constrained by time or place.Additionally, it allows them to sell goods that may only have a very small target market.Sellers are able to sell their goods at the prevailing global market price.Auctioneers benefit from auctions because it provides a business model that allows their firms to stay in business.They are able to benefit from usage by both buyers and sellers.
28 2.5: Auctions: Limitations and Impacts Limitations of e-auctionsLack of securityPossibility of fraudLimited participationImpacts of auctionsAuctions as a coordination mechanismAuctions as a highly visible distribution mechanism.Auctions as a component in e-commerceBy bringing together many potential buyers in a given location, online auctions provide the liquidity necessary to create a marketplace for unique items.