E-Marketplaces: Mechanisms, Tools, and Impacts
of E-Commerce
As you read the textbook and go
through this lesson, think about the following questions:
What are e-commerce activities and what
e-commerce mechanisms support them?
What are the components of the e-marketplace?
Who participates? How does participation take place?
E-MARKETPLACE COMPONENTS AND PARTICIPANTS
A
marketspace includes electronic transactions that bring about a new
distribution of goods and services. The major components and players in a
marketspace are customers, sellers, goods and services (physical or digital),
infrastructure, a front end, a back end, intermediaries and other business
partners, and support services. A brief description of each follows:
>Customers
-
The 1.6 billion people worldwide who surf the Web are potential buyers of the
goods and services offered or advertised on the Internet. These consumers are looking
for bargains, customized items, collectors’ items, entertainment,
socialization, and more. They are in the driver’s seat. They can search for
detailed information, compare, bid, and sometimes negotiate. Organizations are
the largest consumers, accounting for more than 85 percent of EC activities.
>Sellers
- Millions
of storefronts are on the Web, advertising and offering a huge variety of items.
These stores are owned by companies, government agencies, or individuals. Every
day it is possible to find new offerings of products and services. Sellers can
sell direct from their Web sites or from e-marketplaces.
>Products and services - One of the major
differences between the marketplace and the marketspace is the possible
digitization of products and services in a marketspace. Although both types of
markets can sell physical products, the marketspace also can sell digital
products, which are goods that can be transformed to digital format and instantly
delivered over the Internet. In addition to digitization of software and music,
it is possible to digitize dozens of other products and services, as shown in
Online File W2.1. Digital products have different cost curves than those of
regular products. In digitization, most of the costs are fixed, and variable
costs are very low. Thus, profit will increase very rapidly as volume
increases, once the fixed costs are paid for.
>Infrastructure - The marketspace
infrastructure includes electronic networks, hardware, software, and more. (EC
infrastructure is presented in Chapter 1; also see Online Chapter 19.)
>Front end - Customers interact with a
marketspace via a front end. The components of the front end can include the
seller’s portal, electronic catalogs, a shopping cart, a search engine, an
auction engine, and a payment gateway. (For details, see Beynon-Davies 2004.)
>Back end - All the activities that
are related to order aggregation and fulfillment, inventory management, purchasing
from suppliers, accounting and finance, insurance, payment processing,
packaging, and delivery are done in what is termed the back end of the
business. (For details, see Beynon-Davies 2004.)
>Intermediaries - In marketing, an
intermediary is typically a third party that operates between sellers and
buyers. Intermediaries of all kinds offer their services on the Web. The role
of these electronic intermediaries (as will be seen throughout the text and
especially in Chapters 3, 5, and 10) is frequently different from that of
regular intermediaries (such as wholesalers). For example, online
intermediaries create and manage the online markets. They help match buyers and
sellers, provide some infrastructure services, and help customers and/or
sellers to institute and complete transactions. They also support the vast
number of transactions that exist in providing services, as demonstrated in the
WebMD case (Case 2.1). Most of these online intermediaries operate as
computerized systems.
>Other
business partners - In addition to intermediaries, several types of
partners, such as shippers, use the Internet to collaborate, mostly along the
supply chain.
>Support
services -
Many different support services are available, ranging from certification and
escrow services (to ensure security) to content providers.
- What are the different roles of search engines, electronic catalogues, and shopping carts in the e-marketplace?
- What are online auctions?
- What is online bartering?
- What is online negotiation?
- What are some Web 2.0 tools?
- What is a virtual world?
Practice Quiz
2.1
True/False
1) EC enablers include electronic markets,
e-stores, and e-catalogs.
Answer: TRUE
2) Storefronts, malls, and portals are EC
mechanisms that support the entertainment EC activity.
Answer: FALSE
3) The emergence of electronic
marketplaces has resulted in lower information search costs for buyers and
lower transaction and distribution costs for sellers.
Answer: TRUE
4) Although both marketplaces and
marketspaces can sell physical products, the marketspace can also sell digital
products.
Answer: TRUE
5) An intermediary is a third party that
operates between sellers and buyers.
Answer: TRUE
6) Travelers using airline Web sites to
book their flights directly without the use of travel agents is resulting in
the reintermediation of travel agents.
Answer: FALSE
7) Electronic storefronts, Internet malls,
and exchanges are major B2B e-marketplaces.
Answer: FALSE
8) Brokers and infomediaries are two types
of online intermediaries.
Answer: TRUE
9) Search engines not only "search
and match," but also have capabilities that can be used to perform routine
tasks that require intelligence.
Answer: FALSE
10) An electronic shopping cart is an
order-processing technology that allows customers to accumulate items they wish
to buy while they continue to shop.
Answer: TRUE
11) Shopping carts for B2B are fairly
simple, but a shopping cart for B2C may be more complex.
Answer: FALSE
12) An auction is a market mechanism that
uses a competitive process by which a seller solicits consecutive bids from
buyers or a buyer solicits bids from sellers.
Answer: TRUE
13) Auctions are based on dynamic pricing.
Answer: TRUE
14) Reverse auctions are bidding or
tendering systems in which the buyer places an item for bid on a request for
quote system; then potential suppliers bid on the job, with the price reducing sequentially,
and the lowest bid wins.
Answer: TRUE
15) In the one buyer, many potential
sellers dynamic pricing configuration, the sellers use a forward auction.
Answer:
FALSE
2.2
Multiple Choice
1) Electronic markets are the EC mechanism
supporting the
A)
communicate, collaborate and learn EC activities.
B)
presence and delivery, find information, compare, and analyze EC activities.
C)
improve performance EC activities.
D)
entertainment EC activities.
Answer: B
2) Each of the following is a main
function of traditional and electronic markets except
A)
matching buyers and sellers.
B)
facilitating the exchange of information, goods, services, and payments
associated with market transactions.
C)
financing the transformation of raw materials into finished products.
D)
providing an institutional infrastructure, such as a legal and regulatory
framework that enables the efficient functioning of the market.
Answer: C
3) Digital products have different cost
curves than those of regular products because in digitization
A)
most costs are variable, and fixed costs are low.
B)
most costs are fixed, and variable costs are very low.
C)
most costs are fixed, but variable costs are high.
D)
all costs are variable.
Answer: B
4) The portion of an e-seller's business
through which customers interact, including the seller's portal, electronic
catalogs, shopping cart, and payment gateway is the
A)
front end of the business.
B)
back end of the business.
C)
infrastructure for the business.
D)
intermediary in the business.
Answer: A
5) The elimination of various types of
agents that mediate between buyers and sellers, such as travel and insurance
agents, is referred to as
A)
automation.
B)
disintermediation.
C)
remediation.
D)
e-distribution.
Answer: B
6) Online markets that are owned and
operated by a single company and that are either sell-side or buy-side are
known as
A)
private e-marketplaces.
B)
commercial portals.
C)
e-malls.
D)
B2B marketplaces.
Answer: A
7) Public e-marketspaces are
A)
usually B2B markets.
B)
often owned by a third party or consortium.
C)
usually regulated by the government.
D)
all of the above.
Answer: D
8) Functionalities provided by EC merchant
server software include
A)
electronic catalogs.
B)
search engines.
C)
shopping carts.
D)
all of the above.
Answer: D
9) The presentation of product information
in an electronic form and also serving as the backbone of most e-selling sites
describes
A)
e-distributor.
B)
Kindle.
C)
e-magazine.
D)
electronic catalog.
Answer: D
10) Search tools that search the contents
of a user's or organization's computer files, rather than searching the
Internet are
A)
desktop search tools.
B)
enterprise search tools.
C)
search engine tools.
D)
host search tools.
Answer: A
11) A market mechanism that uses a
competitive process in which a seller solicits consecutive bids from buyers or
a buyer solicits bids from sellers best defines
A)
electronic shopping.
B)
request for proposal.
C)
auction.
D)
request for quotation.
Answer: C
12) The most common and traditional form
of auctions in which one seller entertains bids from many buyers best describes
A)
forward auctions.
B)
reverse auctions.
C)
bidding auction systems.
D)
tendering systems.
Answer: A
13) The dynamic pricing configuration
where the resulting price is determined by each party's bargaining power,
supply and demand in the item's market, and possibly business environment factors
best describes
A)
one buyer, one seller.
B)
one seller, many potential buyers.
C)
one buyer, many potential sellers.
D)
many sellers, many buyers.
Answer: A
14) All of the following are benefits of
e-auctions to buyers except:
A)
can liquidate large quantities quickly.
B)
convenience of bidding anywhere and any time.
C)
opportunity to bargain.
D)
opportunities to find unique items.
Answer: A
15) Which of the following statements
about bartering is false?
A)
It is the oldest method of trade.
B)
It is primarily done between individuals and private parties.
C)
The problem with bartering is that it is difficult to find trading partners.
D)
Intermediaries can be helpful, but they are expensive and very slow.
Answer: B
2.3
Fill in the Blank
1) ________ refers to an online market,
usually B2B, in which buyers and sellers exchange goods or services.
Answer: E-marketplace
2) A marketplace in which sellers and
buyers exchange goods and services for money (or other goods and services), but
do so electronically defines ________.
Answer: marketspace
3) ________ refers to 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.
Answer: Front end
4) A private e-marketplace in which one
company sells either standard and/or customized products to qualified companies
defines ________.
Answer: buy-side e-marketplace
5) An ________ is an online shopping
center where many online stores are located.
Answer: e-mall
6) ________ are electronic intermediaries
that provide and/or control information flow in cyberspace, often aggregating
information and selling it to others.
Answer: Infomediaries
7) A ________ is an auction in which a
seller entertains bids from buyers, and bidders increase the price
sequentially.
Answer: forward auction
8) The ________ is an auction in which the
buyer places an item for bid on a request for quote system, potential suppliers
bid on the job, with the price reducing sequentially, and the lowest bid wins.
Answer: reverse auction
9) The ________ is an auction model in which
a would-be buyer specifies the price he or she is willing to pay to any willing
and able seller.
Answer: name-your-own-price model
10) ________ is a marketplace in which an
intermediary arranges barter transactions.
Answer: Bartering exchange
2.4
Essay
1)
List the six major EC trading activity categories.
Answer: The six major EC trading activity categories
are:
(1)
presence and discovery, find information, compare, analyze;
(2)
trading buy, sell, exchange;
(3)
communicate, collaborate, learn;
(4)
entertainment;
(5)
improve performance;
(6)
other activities, recruit, customer service.
2)
Discuss intermediation, disintermediation, and reintermediation.
Answer: Intermediation occurs when a third party
operates between buyers and sellers. Intermediaries provide information about
demand, supply, prices, and requirements or they offer value-added services.
E-marketplaces, infomediaries and portals provide information for free or low
cost, resulting in the disintermediation or elimination of the intermediary.
Reintermediation occurs when the disintermediated entity takes on new
intermediary roles.
Chapter Quiz
1. An intermediary is a third party that operates
between sellers and buyers.
A.
True
B.
False
2. Travelers using airline Web sites to book their
flights directly without the use of travel agents is resulting in the
reintermediation of travel agents.
A.
True
B.
False
3. Reverse auctions are bidding or tendering systems
in which the buyer places an item for bid on a request for quote system; then
potential suppliers bid on the job, with the price reducing sequentially, and
the lowest bid wins.
A.
True
B.
False
4. An order-processing technology that allows
customers to accumulate items they wish to buy while they continue to shop best
defines.
A.
mobile
portal.
B.
e-fulfillment
agent.
C.
electronic shopping cart.
D.
intelligent
agent.
5. A market mechanism that uses a competitive process
in which a seller solicits consecutive bids from buyers or a buyer solicits
bids from sellers best defines:
A.
electronic
shopping.
B.
request
for proposal.
C.
request
for quotation.
D.
auction.
6. Impacts of auctions include:
A.
highly
visible distribution mechanism.
B.
EC
component in a business model.
C.
profit
for individuals.
D.
all of the above.
7. The elimination of various types of agents that
mediate between buyers and sellers, such as travel and insurance agents, is
referred to as:
A.
remediation.
B.
disintermediation.
C.
automation.
D.
e-distribution.
8. Popular search engines include each of the
following except:
A.
Lycos.
B.
Google.
C.
Linux.
D.
AltaVista.
9. Each of the following is a type of EC search
except:
A.
Internet/Web
search.
B.
enterprise
search.
C.
host search.
D.
desktop
search.
10. Major department and discount stores are
classified as:
A.
regional
stores.
B.
general malls.
C.
specialized
malls.
D.
pure-play
stores.
11. Digital products have different cost curves than
those of regular products because in digitization:
A.
most
costs are fixed, but variable costs are high.
B.
most costs are fixed, and variable
costs are very low.
C.
most
costs are variable, and fixed costs are low.
D.
all
costs are variable.
12. Types of business activities in virtual worlds
include each of the following except:
A.
assembling physical products.
B.
conducting
regular business activities, such as advertising.
C.
creating
and managing a virtual business.
D.
providing
services for those who build, manage, or make money with virtual properties.
13. Web sites with audio interfaces that can be
accessed by a cell phone best describes:
A.
knowledge
portals.
B.
intelligent
engines.
C.
voice portals.
D.
mobile
portals.
14. Benefits of e-auctions to sellers include:
A.
convenience
of bidding anywhere and anytime.
B.
anonymity.
C.
lack
of differentiation.
D.
optimal price is determined by the
market.
15. Which of the following are EC activities supported
by Web 2.0 tools and social network services?
A.
presence
and discovery
B.
compare
and analyze
C.
trading,
buy, sell, exchange
D.
entertainment
16. All of the following are benefits of e-auctions to
buyers except:
A.
can liquidate large quantities quickly.
B.
opportunity
to bargain.
C.
opportunities
to find unique items.
D.
convenience
of bidding anywhere and anytime.
17. Although both marketplaces and marketspaces can
sell physical products, the marketspace can also sell digital products.
A.
True
B.
False
18. An auction
is a market mechanism that uses a competitive process by which a seller
solicits consecutive bids from buyers or a buyer solicits bids from sellers.
A.
True
B.
False
19. EC enablers include electronic markets, e-stores,
and e-catalogs.
A.
True
B.
False
