Chapter 2
E-Marketplaces: Structures and
Mechanisms.
© 2008 Pearson Prentice Hall, Electronic Commerce 2008, Efraim Turban, et al.
Reconstructed by Noor Maizudin Bin Mohamad Noor, FBA, Unitar
Learning Objectives
1. Define e-marketplaces and list their
components.
2. List the major types of e-marketplaces and
describe their features.
3. Describe the various types of EC
intermediaries and their roles.
4. Describe electronic catalogs, shopping carts,
and search engines.
5. Describe the major types of auctions and list
their characteristics.
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Learning Objectives
6. Discuss the benefits and limitations of
auctions.
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E-Marketplaces
e-marketplace
An online market, usually B2B, in which buyers and
sellers exchange goods or services
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E-Marketplaces
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E-Marketplaces
marketspace
A marketplace in which sellers and buyers exchange
goods and services for money (or for other goods and
services) but do so electronically
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E-Marketplaces
E-Marketplace Components and Participants
Customers Infrastructure
Sellers Front end
Products and services Back end
digital products Intermediaries
Goods that can be Third parties that
transformed to digital operates between sellers
format and delivered and buyers
over the Internet Other business partners
Support services
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E-Marketplaces
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 fulfillment,
inventory management, purchasing from suppliers,
payment processing, packaging, and delivery
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Types of E-Marketplaces:
From Storefronts to Portals
Electronic Storefronts
storefront
A single company’s Web site where products or
services are sold
e-mall (online mall)
An online shopping center where many online
stores are located
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Types of E-Marketplaces:
From Storefronts to Portals
Types of Stores and Malls
General stores/malls – Large marketspaces that
sell all types of products. Examples are
amazon.com, choicemall.com and the major public
portals (yahoo.com, aol.com and msn.com)
Specialized stores/malls – Sell only one or a few
types of products, such as books, flowers, cars, or
pet toys. Amazon.com started as a specialized e-
bookstore but today is a generalized store.
1800flowers.com sells flowers and related gifts.
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Types of E-Marketplaces:
From Storefronts to Portals
Types of Stores and Malls
Regional versus global stores – Some stores,
such as e-grocers or sellers of heavy furniture,
serve customers that live nearby. However, some
local stores will sell to customersin other countries if
the customer will pay the shipping, insurance, and
other costs.
Pure-play online organizations versus click-
and-mortar stores – Stores maybe pure online
organizations such as Amazon.com. Others are
physical that also sell online such as walmart.com.
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Types of E-Marketplaces:
From Storefronts to Portals
Types of E-Marketplaces
Private e-marketplaces
Online markets owned by a single company; may
be either sell-side and/or buy-side e-marketplaces
sell-side e-marketplace
A private e-marketplace in which one company
sells either standard and/or customized products
to qualified companies
buy-side e-marketplace
A private e-marketplace in which one company
makes purchases from invited suppliers
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Types of E-Marketplaces:
From Storefronts to Portals
Types of E-Marketplaces
Public e-marketplaces
B2B marketplaces, usually owned and/or managed
by an independent third party, that include many
sellers and many buyers; also known as exchanges
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Types of E-Marketplaces:
From Storefronts to Portals
information portal Types of Portals
A single point of access Commercial (public)
through a Web browser Corporate
to business information Publishing
inside and/or outside an
Personal
organization
Mobile
Voice
Knowledge
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Types of E-Marketplaces:
From Storefronts to Portals
Types of Portals
Commercial (public) –These portals offer diverse
communities and are the most popular portals on the
Internet. (yahoo.com, msn.com)
Corporate – Organized access to rich content within
relatively narrow corporate and partners’
communities.
Publishing – These portals are intended for
communities with specific interests (techweb.com,
zdnet.com)
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Types of E-Marketplaces:
From Storefronts to Portals
Types of Portals
Personal – These target specific filtered information
for individuals
Mobile – Portals that are accessible from mobile
devices
Voice – Web sites with audio interfaces
Knowledge – Enable access to knowledge by
knowledge workers and facilitate collaboration
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Transactions, Intermediation,
and Process in E-Commerce
Sellers, Buyers, and Transactions
A seller (retailer, wholesaler, or manufacturer) sells
to customers
The seller buys from suppliers: either raw material
(as a manufacturer) or finished goods (as a retailer)
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Transactions, Intermediation,
and Process in E-Commerce
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Transactions, Intermediation,
and Process in E-Commerce
The Roles and Value of Intermediaries in E-
marketplaces
The two types of online intermediaries are
infomediaries and brokers
infomediaries
Electronic intermediaries that provide and/or control
information flow in cyberspace, often aggregating
information and selling it to others
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Transactions, Intermediation,
and Process in E-Commerce
A broker is a company that facilitates transactions
between buyers and sellers
Types of brokers
Buy/sell fulfillment – A corporation that helps
consumers place buy and sell orders (eTrade)
Virtual mall – A company that helps consumers
buy from a variety of stores (Yahoo! Stores)
Metamediary – A firm that offers customers
access to a variety of stores and provides them
with transaction services, such as financial
services (Amazon zShops)
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Transactions, Intermediation,
and Process in E-Commerce
Types of brokers
Bounty – An intermediary that will locate a
person, place, or idea for a fee (BountyQuest)
Search agent – A company that helps
consumers compare different stores
(Shopping.com)
Shopping facilitator – A company that helps
consumers use online shops by providing
currency conversion, language translation,
payment features and delivery solutions
(MyOrbital.com)
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Transactions, Intermediation,
and Process in E-Commerce
Intermediaries can address the following five
important limitations of direct interaction:
Search costs
It may be expensive for providers and
consumers to find each other
Some intermediaries maintain databases of
customer preferences, and they can predict
demand and reduce search costs by
selectively routing information from providers
to consumers and by matching customers with
products and/or services
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Transactions, Intermediation,
and Process in E-Commerce
Intermediaries can address the following five
important limitations of direct interaction:
Lack of privacy
Either the buyer or seller may wish to remain
anonymous or at least protect some
information relevant to a trade.
Intermediaries can relay messages and make
pricing and allocation decisions without
revealing the identity of one or both parties
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Transactions, Intermediation,
and Process in E-Commerce
Intermediaries can address the following five
important limitations of direct interaction:
Incomplete information
The buyer may need more information than
the seller is able or willing to provide.
An intermediary can gather product
information from sources other than the
product provider, including independent
evaluators and other customers
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Transactions, Intermediation,
and Process in E-Commerce
Intermediaries can address the following five important
limitations of direct interaction:
Contract risk
A consumer may refuse to pay after receiving a
product, or a producer may provide inferior products
or give inadequate postpurchase service
Intermediaries can:
Disseminate information about the past behavior
of providers and consumers; or
Accept responsibility for the behavior of parties in
transactions; or
Provide insurance against bad behavior
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Transactions, Intermediation,
and Process in E-Commerce
Intermediaries can address the following five
important limitations of direct interaction:
Pricing inefficiencies
In order to secure a desirable price for a
product, providers and consumers may miss
opportunities for mutually desirable trades
Intermediaries can use pricing mechanisms
that induce just the appropriate trades; for
example, dealing with an imbalance of buy and
sell orders in stock market
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Transactions, Intermediation,
and Process in E-Commerce
disintermediation
Elimination of intermediaries between sellers and
buyers
reintermediation
Establishment of new intermediary roles for
traditional intermediaries that have been
disintermediated, or for newcomers
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Electronic Catalogs
and Other Market Mechanisms
electronic catalogs
The presentation of product information in an
electronic form; the backbone of most e-selling sites
Three dimensions of electronic catalogs:
The dynamics of the information presentation-
Catalogs may be static or dynamic. In static
catalogs, information is presented in text and
static pictures. In dynamic catalogs, information is
presented in motion pictures or animation,
possibly with supplemental sound.
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Electronic Catalogs
and Other Market Mechanisms
Three dimensions of electronic catalogs:
The degree of customization – Catalogs may
be standard or customized. In standard catalogs,
merchants offer the same catalog to any
customer. In customized catalogs, content,
pricing, and display are tailored to the
characteristics of specific customers.
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Electronic Catalogs
and Other Market Mechanisms
Three dimensions of electronic catalogs:
Integration with business processes –
Catalogs can be classified according to the
degree of integration with the following business
processes or features: order taking and
fulfillment, electronic payment systems, inventory
and accounting systems; suppliers’ and
customers’ extranets.
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Electronic Catalogs
and Other Market Mechanisms
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Electronic Catalogs
and Other Market Mechanisms
search engine
A computer program that can access databases of
Internet resources, search for specific information or
keywords, and report the results. Google, Altavista
and Lycos are popular search engines.
software (intelligent) agent
Software that can perform routine tasks that require
intelligence. For example, software agents can be
used to support tasks such as comparing prices,
interpreting information, and monitoring activities.
Users can even chat with agents.
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Electronic Catalogs
and Other Market Mechanisms
electronic shopping cart
An order-processing technology that allows
customers to accumulate items they wish to buy
while they continue to shop (similar to a shopping
cart in the physical world). The software program of
an electronic shopping cart allows customers to
select items, review what has been selected, make
changes, and the finalized the list. Clicking on ‘buy’
will trigger the actual purchase.
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Auctions as EC Market Mechanisms
auction
A competitive process in which a seller solicits
consecutive bids from buyers (forward auctions) or a
buyer solicits bids from sellers (backward auctions).
Prices are determined dynamically by the bids
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Auctions as EC Market Mechanisms
Traditional Auctions versus
E-Auctions
Limitations of traditional offline auctions
rapid process gives potential buyers little time
to make a decision
In many cases, the bidders do not have much
time to examine the goods
It may be difficult for sellers to move goods to
an auction site
electronic auction (e-auction)
Auctions conducted online. Example: eBay
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Auctions as EC Market Mechanisms
Types of Auctions
One buyer, one seller
One seller, many potential buyers
One buyer, many potential sellers
Many sellers, many buyers
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Auctions as EC Market Mechanisms
Types of Auctions
One buyer, one seller – One can use
negotiation, bargaining, or bartering. The resulting
price will be determined by each party’s
bargaining power, supply and demand in the
item’s market.
One seller, many potential buyers. The seller
uses a forward auction, an auction in which a
seller entertains bids from buyers. Bidders
increase price sequentially
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Auctions as EC Market Mechanisms
One buyer, many potential sellers
reverse auction (bidding or tendering system)
Auction in which the buyer places an item for bid
(tender) on a request for quote (RFQ) system,
potential suppliers bid on the job, with the price
reducing sequentially, and the lowest bid wins;
primarily a B2B or G2B mechanism
“name-your-own-price” model
Auction model in which a would-be buyer specifies
the price (and other terms) he or she is willing to
pay to any willing and able seller. It is a C2B model
that was pioneered by Priceline.com
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Auctions as EC Market Mechanisms
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Auctions as EC Market Mechanisms
Many sellers, many buyers
double 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
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Auctions as EC Market Mechanisms
Benefits of E-Auctions
Benefits to Sellers
Increased revenues from broadening bidder
base and shortening cycle time
Opportunity to bargain instead of selling at a
fixed price
Sellers can gain more customer dollars by
offering items directly
Improved customer relationship and loyalty
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Auctions as EC Market Mechanisms
Benefits of E-Auctions
Benefits to Buyers
Opportunities to find unique items and
collectibles
Participation in e-auctions can be entertaining
and exciting
Buyers can bid from anywhere, even with a cell
phone; they do not have to travel to an auction
place
With the help of a third party, buyers can remain
anonymous
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Auctions as EC Market Mechanisms
Limitations of E-Auctions
Minimal security – some of the auctions
conducted on the Internet are not secure because
they are not done in an unencrypted environment.
This means that credit card numbers could be
stolen during the payment process.
Possibility of fraud – Because the buyer cannot
see the items, the buyer may get the defective
products. Also, buyers can commit fraud by
receiving goods or services without paying them
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Auctions as EC Market Mechanisms
Limitations of E-Auctions
Limited participation – Some auctions are by
invitation only; others are open to dealers only.
Limited participation may be a disadvantage to
sellers, who usually benefit from as large a pool
of buyers as possible
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The End
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