1. Making Sense of Emerging Market Structures in B2B E-Commerce
B2B Markets
Making Sense of Emerging
Market Structures in B2B
E-Commerce

2. The 12 market structures 3 distinctive categories:
Collaborative mechanisms
Quasi-market mechanisms
Neutral market mechanisms.

3. Benefits of B2B Sites Increased reach Reduction in transaction costs
Deep customization capabilities.

4. Collaborative Market Mechanisms
Market structures that fundamentally enable the market participants to gainfully exploit electronic integration.
They are enabled when inter-organizational information systems are networked through Internet infrastructure for the purpose of sharing vital data of interest to the network members.

5. Collaborative Market Mechanisms
These market structures
Increase the collaboration capability of the network members
Help in speeding up business processes
Help eliminate duplication of resources
Cut costs
Improve responsiveness of the supply chain.

6. Quasi-Market Mechanisms
One or a small group of either the buyers or the sellers will initiate the marketplace, host and monitor, enroll market participants, and moderate the market behavior if required.
Buyer-centric marketplace, buyers take the initiative to host the market
Forward (buyer-bid) auctions: Buyers compete to obtain the business of the “seller”
Seller-centric marketplace, sellers take the initiative to host the market
Reverse (seller-bid) auctions: Sellers compete to obtain the business of the “buyer”

7. Neutral Market Mechanisms
Neutral market mechanisms include…
Exchanges
Catalogue Aggregators
Online Communities

8. Classification of B2B Market Structures
Factors used for classification
Fragmentation
Asset specificity
Complexity of product assessment
Complexity of value assessment

9. Degree of Fragmentation
The degree of fragmentation in a market is defined by the number of players and the geographical spread.
When the degree of fragmentation is high on both the supplier and the buyer side, the market tends to be open and competitive.
When there is less fragmentation, there is an opportunity for control-oriented mechanisms to characterize the market.
When the degree of fragmentation is very low, organizations tend to benefit from collaborative practices as opposed to cont

10. Degree of Fragmentation

11. Asset Specificity
Asset specificity is a function of the costs of setting up a relationship between two market participants in order to manage business transactions in a cost-effective manner.
The costs arise because of specific resources (assets) that the two market participants have to deploy a priori in order to transact business.

12. Asset Specificity
When asset specificity is high, market participants are better off by engaging in collaborative practices and superior coordination mechanisms.
When the asset specificity is very low, competitive market practices and relationships based on price benefit both the buyers and the suppliers.
In the medium asset specific situations, quasi-market mechanisms that blend both collaboration and competition are a viable alternative for the market participants.

13. Asset Specificity

14. Classification of Neutral Markets
Neutral markets have poor market liquidity because…
Complexity of product descriptions: the amount of information a buyer needs to understand the functional and technical specifications of the product or service.
Complexity of value assessment: the amount of information needed to estimate accurately the worth of an item and to either arrive at a price or select items offered at a price.

15. Classification of Neutral Markets

16. Conclusions
Organizations have to strategically identify how they will derive value by exploiting a variety of market structures
To do this, firms must examine …
Fragmentation
Asset specificity
Complexity of product assessment
Complexity of value assessment