04.04.2014
Changes in the Supply Chain
E-Marketplaces:
Structures, Mechanisms,
Economics, and Impacts
Electronic Commerce
Assist. Prof. Özge Özgen, Global E-Business and Trade
E-Marketplaces
Prentice Hall © 2006
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E-Marketplaces
 Electronic marketplaces changed several of the processes
used in trading and supply chains
 Markets (electronic or not) have three main functions:
1. Matching buyers and sellers;
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2. Facilitating the exchange of information, goods, services, and
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Greater information richness
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payments associated with market transactions; and
3. Providing an institutional infrastructure, such as a legal and
providing interorganizational market information
Lower information search costs for buyers
Diminished information asymmetry between sellers and buyers
Ability of buyers and sellers to be in different locations
Lower transaction costs
regulatory framework, which enables the efficient functioning of the
market.
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E-Marketplaces
E-Marketplaces
 Components
– Customers
– Sellers
– Products and services
 digital products
A marketplace in which sellers and buyers exchange goods and services
for money (or for other goods and services), but do so electronically
Many-to-many, web-based trading and clolaboration solution that
enables companies to buy, sell and collaborate more efficiently in
global scale
 goods that can be transformed into digital format and
delivered over the Internet
– Infrastructure
– Support services
Interorganizational information systems which allow the participating
buyers and sellers (suppliers) to exchange information about prices and
product offerings
Electronic Commerce
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Components
• Electronic Storefronts
storefront
A single company’s Web site where products or
services are sold
• Most common trading mechanisms are a(n):
– Electronic catalogue
– Auction
– Reverse Auction
– Exchange
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
back end
The activities that support online order-taking. It
includes fulfillment, inventory management,
purchasing from suppliers, payment processing,
packaging, and delivery
Electronic Commerce
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Types of E-Marketplaces:
From Storefronts to Portals
E-Marketplaces
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Trading Mechanisms
Benefits of Electronic Catalogues
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 Catalogue
The presentation of product information in an electronic form;
the backbone of most e-selling sites
 Product catalogues of many suppliers in one place in one format
 Buyers can easily compare it
 Catalogues can present extensive product information, including
Ease of updating
Ability to be integrated with the purchasing process
Coverage of a wide spectrum of products
Interactivity
Customization
Strong search capabilities
multimedia content
 Product prices posted in a catalogue are normally fixed list prices
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www.tradeindia.com
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Trading Mechanisms
 Auction
 Multiple buyers and sellers bid competitively on a contract
 OR one seller, many potential buyers
 Seller driven auction (Forward Auction)
 Prices are set dynamically through buyers’ bids submitted for products
 The prices are moving up as a result of bidding among buyers
Dynamic Pricing: Prices that change based on supply and demand
relationships at any given time
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Trading Mechanisms
Dynamic Pricing
 Dynamic pricing is the strategy of offering different
prices to different customers.
 Firms use dynamic pricing strategy to optimize inventory
management and to segment customers.
 Airlines have long used dynamic pricing to price air
travel.
 There are 2 types of dynamic pricing:
 Segmented pricing
 Negotiation.
 Reverse Auction
 Buyer driven auction
 Multiple suppliers bid competitively to provide product to individual buyer
 Prices tend to fall over time
 A reverse auction may be organized such that the lowest bid does not
automatically win
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Eg: Name-Your-Own-Price
The Reverse Auction Process
 The "Name-Your-Own-Price" system is
where a buyer specifies a price and a
product and/or service, and asks sellers
to match that combination.
 Originally pioneered by Priceline.com
 Suppliers benefit because they can sell to
the most price-conscious travelers without
publicly disclosing those low rates
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Auctions As Trading Mechanisms
Types of E-Marketplaces
 Limitations of E-Auctions
 Minimal security
 Possibility of fraud
 Limited participation
 Horizontal and Vertical
 Horizontal e-marketplaces
 37% of eBay auctions received bids within the last minute,
12% within the last 10 seconds
 Offer a product or service across industries and increase their scale
by attracting new users
 People believe that if they bid early, item can be perceived as so
valuable
 www.tradekey.com
 The winner’s curse
 Some people pay higher price for auctioned products than they would
pay an online retailer
 Entertainment benefit of online auctions
Electronic Commerce
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www.tradekey.com
Global E-Business and Trade
 Vertical e-marketplaces
 Industry specific e-marketplaces
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www.agrelma.com
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Types of E-Marketplaces:
Ownership Control Models
Types of E-Marketplaces
Seller-driven e-marketplaces
 Private and public
Promoted by a consortium of suppliers who place offers within
the same industry to many buyers
 Private e-marketplaces
 Online markets owned by a single company; may be either sell-side
Buyer-driven e-marketplaces
or buy-side e-marketplaces (one-to-many)
Maintained by a few large buying companies that aim at
attracting many suppliers
AimShifting power to the buyer’s side
 Public e-marketplaces
 B2B marketplaces, usually owned and/or managed by an
independent third party, that include many sellers and many buyers
 Open trading environment (many-to-many)
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Global E-Business and Trade
Revenue Sources
Revenue Sources
 Transaction Fees
 Membership and License Fees
 Advertising
 Professional Service Fees
 Value-added Service Fees
 Transaction Fees
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 The e-marketplace charges a fee that is based on the value of the
transaction conducted on the market
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Revenue Sources
www.tradeindia.com
 Membership and
License Fees
 One time
joining fee
 Annual
maintenance
fee for
preserving the
membership
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Revenue Sources
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Revenue Sources
 Advertising
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 Professional Service Fees
Banners
Hyperlinks to company’s Web Site
Links to company’s presentations
Commercial e-mail to targeted members
Eg: http://www.tradeindia.com/Shopping/product-and-services/banners.html
 Consulting service
 Training service
 Online catalog service
 Value-added Service Fees
 come from third parties
 ispection services
 logistics etc.
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Online Catalog Service of
www.tradeindia.com
www.alibaba.com
• Adding a detailed description of the
company and products online.
• Displaying up to 15 photographs of the
products/services to attract online
visitors.
• Choosing the style you want from 5340
attractive catalog designs.
• Adding/editing photographs of products
online through a personalized user
interface called 'My Trade India'.
• Sending online trade inquiries to
buyers/importers around the globe.
• http://seller.alibaba.com/training/vodCourseDetail.
htm?courseId=302700003
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Global E-Business and Trade
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Exhibit 2.6 Porter’s Competitive
Forces Model
Electronic Commerce
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