Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

E commerce market mechanisms


Published on

Published in: Business, Technology
  • If you are looking for customer-oriented academic and research paper writing service try ⇒⇒⇒ ⇐⇐⇐ liked them A LOTTT Really nice solutions for the last-day papers
    Are you sure you want to  Yes  No
    Your message goes here
  • Did u try to use external powers for studying? Like ⇒ ⇐ ? They helped me a lot once.
    Are you sure you want to  Yes  No
    Your message goes here
  • Search Your Car. Gov't Seized Cars - All Makes & Models Up to 95% OFF, 4,000+ Auctions US WIDE, Listings Guaranteed in Your State, You Save Thousands! ➣➣➣
    Are you sure you want to  Yes  No
    Your message goes here
  • US Gov't Car Sales-95% Off 4,000 Gov Auctions, Live & Online US Wide Seized Auto Auctions. ➤➤
    Are you sure you want to  Yes  No
    Your message goes here
  • I got a much better car than I thought I would get for the money. Thanks Gov-Auctions, I am glad I became a member.Learn more... ✄✄✄
    Are you sure you want to  Yes  No
    Your message goes here

E commerce market mechanisms

  1. 1. E-Commerce Market Mechanisms
  2. 2. Electronic Marketplaces <ul><li>Markets facilitate exchange of </li></ul><ul><ul><li>Information </li></ul></ul><ul><ul><li>Goods </li></ul></ul><ul><ul><li>Services </li></ul></ul><ul><ul><li>Payments </li></ul></ul><ul><li>Markets create economic value for </li></ul><ul><ul><li>Buyers </li></ul></ul><ul><ul><li>Sellers </li></ul></ul><ul><ul><li>Market intermediaries </li></ul></ul><ul><ul><li>Society at large </li></ul></ul>
  3. 3. Electronic Marketplaces (cont.) <ul><li>3 main functions of markets </li></ul><ul><ul><li>Matching buyers and sellers </li></ul></ul><ul><ul><li>Facilitating the exchange of information, goods, services, and payments associated with market transactions </li></ul></ul><ul><ul><li>Providing an institutional infrastructure </li></ul></ul>
  4. 4. NTE Evens the Load <ul><li>National Transportation Exchange ( is attempting to keep trucks on the road full on both outbound and return trips—uses the Internet to connect shippers with fleet managers who have space to fill </li></ul><ul><ul><li>Creates spot market </li></ul></ul><ul><ul><li>Gets information from shippers about their needs and flexibility in dates </li></ul></ul><ul><ul><li>Works out the best deals for the shippers and the haulers </li></ul></ul><ul><ul><li>Issues the contract and handles payments </li></ul></ul><ul><ul><li>The process takes only a few minutes </li></ul></ul>
  5. 5. NTE Evens the Load (cont.) <ul><li>NTE collects a commission based on the value of each deal </li></ul><ul><li>Fleet manager gets extra revenue that they would otherwise have missed out on </li></ul><ul><li>The shipper gets a bargain price, at the cost of some loss of flexibility </li></ul><ul><li>NTE reaches down to the level of individual truck drivers and provides a much wider range of services (wireless Internet access) </li></ul>
  6. 6. Marketspace Components <ul><li>Marketspace—a marketplace in which sellers and buyers exchange goods and services for money (or for other goods and services), but do so electronically </li></ul><ul><ul><li>Customers Sellers </li></ul></ul><ul><ul><li>Goods (physical or digital) Infrastructure </li></ul></ul><ul><ul><li>Front-end Back-end </li></ul></ul><ul><ul><li>Intermediaries/business partners </li></ul></ul><ul><ul><li>Support services </li></ul></ul>
  7. 7. Marketspace Components (cont.) <ul><li>Customers </li></ul><ul><ul><li>Web surfers looking for </li></ul></ul><ul><ul><ul><li>Bargains </li></ul></ul></ul><ul><ul><ul><li>customized items </li></ul></ul></ul><ul><ul><ul><li>Collectors’ items </li></ul></ul></ul><ul><ul><ul><li>entertainment etc. </li></ul></ul></ul><ul><ul><li>Organizations account for over 85 percent of EC activities </li></ul></ul><ul><li>Sellers </li></ul><ul><ul><li>Hundreds of thousands of storefronts are on the Web </li></ul></ul><ul><ul><li>Advertising and offering millions of Web sites </li></ul></ul><ul><ul><li>Sellers can sell </li></ul></ul><ul><ul><ul><li>Direct from their Web site </li></ul></ul></ul><ul><ul><ul><li>E-marketplaces </li></ul></ul></ul>
  8. 8. Marketspace Components (cont.) <ul><li>Products </li></ul><ul><ul><li>Physical products </li></ul></ul><ul><ul><li>Digital products—goods that can be transformed to digital format and delivered over the Internet </li></ul></ul><ul><li>Infrastructure </li></ul><ul><ul><li>Hardware </li></ul></ul><ul><ul><li>Software </li></ul></ul><ul><ul><li>Networks </li></ul></ul>
  9. 9. Marketspace Components (cont.) <ul><li>Front-end business processes include </li></ul><ul><ul><li>Seller’s portal </li></ul></ul><ul><ul><li>Electronic catalogs </li></ul></ul><ul><ul><li>shopping cart </li></ul></ul><ul><ul><li>Search engine </li></ul></ul><ul><ul><li>Payment gateway </li></ul></ul><ul><li>Back-end activities are related to </li></ul><ul><ul><li>Order aggregation and fulfillment </li></ul></ul><ul><ul><li>Inventory management </li></ul></ul><ul><ul><li>Purchasing from suppliers </li></ul></ul><ul><ul><li>Payment processing </li></ul></ul><ul><ul><li>Packaging and delivery </li></ul></ul>
  10. 10. Marketspace Components (cont.) <ul><li>Intermediary— a third party that operates between sellers and buyers </li></ul><ul><li>Other business partners—collaborate on the Internet, mostly along the supply chain </li></ul><ul><li>Support services such as </li></ul><ul><ul><li>Certification and trust services </li></ul></ul><ul><ul><li>Knowledge providers </li></ul></ul>
  11. 11. Types of Electronic Markets <ul><li>Electronic storefronts—a single company’s Web site where products and services are sold </li></ul><ul><li>Mechanisms for conducting sales </li></ul><ul><ul><li>Electronic catalogs Payment gateway </li></ul></ul><ul><ul><li>Search engine Shipment court </li></ul></ul><ul><ul><li>Customer services Electronic cart </li></ul></ul><ul><ul><li>E-auction facilities </li></ul></ul><ul><li>Electronic malls (e-malls)—an online shopping center where many stores are located </li></ul>
  12. 12. Types of Electronic Markets (cont.) <ul><li>General stores/malls—large marketspaces that sell all types of products </li></ul><ul><li>Public portals </li></ul><ul><li>Specialized stores/malls—sell only one or a few types of products </li></ul><ul><li>Regional vs. global stores </li></ul><ul><li>Pure online organizations vs. click-and-mortar stores </li></ul><ul><li>Types of stores and malls </li></ul><ul><li>E-marketplaces—online market, usually B2B, in which buyers and sellers negotiate; the three types of e-marketplaces are private , public , consortia </li></ul>
  13. 13. E-Marketplaces <ul><li>Private e-marketplaces—online markets owned by a single company: </li></ul><ul><ul><li>Sell-side—company sells either standard or customized products to qualified companies </li></ul></ul><ul><ul><li>Buy-side marketplaces—company makes purchases from invited suppliers </li></ul></ul><ul><li>Public e-marketplaces—B2B markets, usually owned and/or managed by an independent third party, that include many sellers and many buyers (e xchanges) </li></ul>
  14. 14. Consortia & Information Portals <ul><li>Consortia—e-marketplaces that deal with suppliers and buyers in a single industry </li></ul><ul><ul><li>Vertical consortia are confined to one industry </li></ul></ul><ul><ul><li>Horizontal allow different industries trade there </li></ul></ul><ul><li>Information portal—a personalized, single point of access through a Web browser to business information inside (and marginally from outside) an organization </li></ul><ul><ul><li>Publishing portals Commercial portals </li></ul></ul><ul><ul><li>Personal portals Corporate portals </li></ul></ul><ul><ul><li>Mobile portals </li></ul></ul>
  15. 15. Supply Chains <ul><li>Supply chain—the flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers </li></ul><ul><ul><li>Includes organizations and processes that create and deliver the following to the end customers: </li></ul></ul><ul><ul><ul><li>Products </li></ul></ul></ul><ul><ul><ul><li>Information </li></ul></ul></ul><ul><ul><ul><li>Services </li></ul></ul></ul>
  16. 16. Supply Chains (cont.) <ul><li>A supply chain involves activities that take place during the entire product life cycle </li></ul><ul><li>It also includes: </li></ul><ul><ul><li>Movement of information and money and procedures that support the movement of a product or a service </li></ul></ul><ul><ul><li>The organizations and individuals involved </li></ul></ul>
  17. 17. Exhibit 2.3 A Simple Supply Chain
  18. 18. Supply Chain Components <ul><li>Upstream supply chain—includes the activities of suppliers (manufacturers and/or assemblers) and their suppliers </li></ul><ul><li>Internal supply chain—includes all in-house processes used in transforming the inputs received from the suppliers into the organization’s outputs </li></ul><ul><li>Downstream supply chain — includes all the activities involved in delivering the product to the final customers </li></ul>
  19. 19. Types of Supply Chains <ul><li>Integrated make-to-stock </li></ul><ul><li>Continuous replenishment </li></ul><ul><li>Build-to-order—model in which a manufacturer begins assembly of the customer’s order almost immediately upon receipt of the order </li></ul><ul><li>Channel assembly—model in which product is assembled as it moves through the distribution channel </li></ul>
  20. 20. Exhibit 2.4 Supply Chains: Integrated & Build-to-Order
  21. 21. Value Chain & Value System <ul><li>Value chain—the series of activities a company performs to achieve its goal(s) at various stages of the production process; each activity adds value to the company’s product or service, contributes to profit, and enhances competitive position in the market </li></ul><ul><li>Value system—a set of value chains in an entire industry, including the value chains of tiers of suppliers, distribution channels, and customers </li></ul>
  22. 22. Supply Chain & Value Chain <ul><li>Value chain and the supply chain concepts are interrelated </li></ul><ul><ul><li>Value chain shows the activities performed by an organization and the values added by each </li></ul></ul><ul><ul><li>The supply chain shows flows of materials, money, and information that support the execution of these activities </li></ul></ul>
  23. 23. Supply Chain & Value Chain (cont.) <ul><li>EC increases the value added by: </li></ul><ul><ul><li>Introducing new business models </li></ul></ul><ul><ul><li>Automating business processes </li></ul></ul><ul><li>EC smoothes the supply chain by: </li></ul><ul><ul><li>Reducing problems in the flows of material, money, and information </li></ul></ul><ul><li>EC facilitates the restructuring of business activities and supply chains </li></ul>
  24. 24. Intermediation in E-Commerce <ul><li>Intermediaries provide value-added activities and services to buyers and sellers: wholesalers, retailers, infomediaries </li></ul><ul><li>Roles of intermediaries </li></ul><ul><ul><li>Search costs—databases on customer preferences </li></ul></ul><ul><ul><li>Lack of privacy—anonymity of sellers and buyers </li></ul></ul><ul><ul><li>Incomplete information—gather product information </li></ul></ul><ul><ul><li>Contract risk—protect sellers against non-payment </li></ul></ul><ul><ul><li>Pricing inefficiencies—induce appropriate trades </li></ul></ul>
  25. 25. E-Distributors on B2B <ul><li>E-distributor—an e-commerce intermediary that connects manufacturers (suppliers) with buyers by aggregating the catalogs of many suppliers in one place—the intermediary’s Web site </li></ul><ul><li>E-distributors also provide support services </li></ul><ul><ul><li>Payments </li></ul></ul><ul><ul><li>Deliveries </li></ul></ul><ul><ul><li>Escrow services </li></ul></ul><ul><ul><li>Aggregate buyers’ and or sellers’ orders </li></ul></ul>
  26. 26. Disintermediation & Reintermediation <ul><li>Disintermediation—elimination of intermediaries between sellers and buyers </li></ul><ul><li>Reintermediation—establishment of new intermediary roles for traditional intermediaries that were disintermediated </li></ul>
  27. 27. Syndication as an EC Mechanism <ul><li>Syndication—the sale of the same good (e.g., digital content) to many customers, who then integrate it with other offerings and resell it or give it away free </li></ul>
  28. 28. Competition in the Internet Ecosystem <ul><li>Competition in the Internet ecosystem (business model of the online economy) </li></ul><ul><ul><li>Inclusive with low barriers to entry </li></ul></ul><ul><ul><li>Self-organizing </li></ul></ul><ul><ul><li>Old rules may no longer apply </li></ul></ul><ul><li>Competition is tense </li></ul><ul><ul><li>Lower buyers’ search cost </li></ul></ul><ul><ul><li>Speedy comparisons </li></ul></ul><ul><ul><li>Differentiation and personalization </li></ul></ul>
  29. 29. Competition in the Internet Ecosystem (cont.) <ul><li>Differentiation — providing a product or service that is unique </li></ul><ul><li>Personalization—the ability to tailor a product, service, or Web content to specific user preferences </li></ul><ul><li>Lower prices </li></ul>
  30. 30. Competition in the Internet Ecosystem (cont.) <ul><li>Customer service is an extremely important competitive factor </li></ul><ul><li>Some competitive factors are less important as a result of EC: </li></ul><ul><ul><li>Size of company is no longer significant </li></ul></ul><ul><ul><li>Geographical location is insignificant </li></ul></ul><ul><ul><li>Language barriers are being removed </li></ul></ul><ul><ul><li>Digital products do not have normal wear and tear </li></ul></ul>
  31. 31. Competition in the Internet Ecosystem (cont.) <ul><li>EC supports efficient markets and could result in almost perfect competition with these characteristics: </li></ul><ul><ul><li>Many buyers and sellers must be able to enter the market at no entry cost </li></ul></ul><ul><ul><li>Large buyers or sellers are not able to individually influence the market </li></ul></ul><ul><ul><li>The products must be homogeneous </li></ul></ul><ul><ul><li>Buyers and sellers must have comprehensive information about the products and about the market participants’ demands, supplies, and conditions </li></ul></ul>
  32. 32. Porter’s Competitive Analysis <ul><li>Porter’s competitive forces model applied to an industry views 5 major forces of competition that determine the industry’s structural attractiveness </li></ul><ul><li>These forces, in combination, determine how the economic value created in an industry is divided among the players in the industry </li></ul><ul><li>Such an industry analysis helps companies develop their competitive strategy </li></ul>
  33. 33. Exhibit 2.6: Porter’s Competitive Forces Model
  34. 34. Liquidity <ul><li>Liquidity—the need for a critical mass of buyers and sellers </li></ul><ul><ul><li>The fixed cost of deploying EC can be very high </li></ul></ul><ul><ul><li>Without a large number of buyers, sellers will not make money </li></ul></ul><ul><li>Early liquidity—achieving a critical mass of buyers and sellers as fast as possible, before the market-maker’s cash disappears </li></ul>
  35. 35. Quality Uncertainty & Assurance <ul><li>Quality uncertainty—the uncertainty of online buyers about the quality of products that they have never seen, especially from an unknown vendor </li></ul><ul><ul><li>Provide free samples </li></ul></ul><ul><ul><li>Return if not satisfied </li></ul></ul><ul><ul><ul><li>Microproduct—a small digital product costing a few cents </li></ul></ul></ul><ul><ul><li>Insurance, escrow, and other services </li></ul></ul>
  36. 36. E-Market Success Factors <ul><li>Product characteristics </li></ul><ul><ul><li>Type </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Availability of standards and product information </li></ul></ul><ul><li>Industry characteristics </li></ul><ul><ul><li>Brokers currently necessary </li></ul></ul><ul><ul><li>Intelligent systems may replace brokers </li></ul></ul><ul><li>Seller characteristics </li></ul><ul><ul><li>Consumers find sellers with the lowest prices </li></ul></ul><ul><ul><li>Low-volume, higher-profit-margin transactions </li></ul></ul><ul><li>Consumer characteristics </li></ul><ul><ul><li>Impulse buyers </li></ul></ul><ul><ul><li>Patient buyers </li></ul></ul><ul><ul><li>Analytical buyers </li></ul></ul><ul><li>Contributors to e-market success </li></ul>
  37. 37. Electronic Catalogs <ul><li>Electronic catalogs—the presentation of product information in an electronic form; the backbone of most e-selling sites </li></ul><ul><li>Evolution of electronic catalogs </li></ul><ul><ul><li>Merchants—advertise and promote </li></ul></ul><ul><ul><li>Customers—source of information and price comparisons </li></ul></ul><ul><ul><li>Consist of product database, directory and search capability and presentation function </li></ul></ul><ul><ul><li>Replication of text that appears in paper catalogs </li></ul></ul><ul><ul><li>More dynamic, customized, and integrated </li></ul></ul>
  38. 38. Classifications of Electronic Catalogs <ul><li>Dynamics of information presentation—static or dynamic </li></ul><ul><li>Degree of customization—ready-made or customized </li></ul><ul><li>Electronic catalogs allow integration of: </li></ul><ul><ul><li>Order taking and fulfillment </li></ul></ul><ul><ul><li>Electronic payment </li></ul></ul><ul><ul><li>Intranet workflow </li></ul></ul><ul><ul><li>Inventory and accounting system </li></ul></ul><ul><ul><li>Suppliers’ extranet </li></ul></ul><ul><ul><li>Relationship to paper catalogs </li></ul></ul>
  39. 39. Customized Catalogs <ul><li>Assembled specifically for: </li></ul><ul><ul><li>A company </li></ul></ul><ul><ul><li>An individual shopper </li></ul></ul><ul><li>Customization systems can: </li></ul><ul><ul><li>Create branded, value-added capabilities </li></ul></ul><ul><ul><li>Allows user to compose order </li></ul></ul><ul><ul><li>May include individualized prices, products, and display formats </li></ul></ul><ul><ul><li>Automatically identify the characteristics of customers based on the transaction records </li></ul></ul>
  40. 40. Electronic Catalogs at Boise Cascade <ul><li>Boise Cascade Office Products--$3-billion office products wholesaler of over 200,000 different items </li></ul><ul><ul><li>They had a 900-page paper catalog that was mailed once each year; minicatalogs tailored to customers’ individual needs </li></ul></ul><ul><ul><li>The company placed its catalogs online in 1996 ( </li></ul></ul>
  41. 41. Boise Cascade (cont.) <ul><li>Sales through the Web site: </li></ul><ul><ul><li>1997—20 percent </li></ul></ul><ul><ul><li>1999—30 percent </li></ul></ul><ul><ul><li>2004—80 percent (expected) </li></ul></ul><ul><li>Production of a single paper catalog took 6 weeks/production of Web catalog takes 1 week </li></ul><ul><li>Major advantage of customized catalogs is pricing </li></ul><ul><li>Electronic orders cost 55 percent less to process than paper-based orders </li></ul>
  42. 42. Boise Cascade (cont.)
  43. 43. Search Engines <ul><li>Search engine—a computer program that can access a database of Internet resources, search for specific information or keywords, and report the results </li></ul><ul><li>Software (intelligent) agent—software that can perform routine tasks that require intelligence </li></ul>
  44. 44. Search Engines, Intelligent Agents and Shopping Carts <ul><li>E-commerce users use both search engines and intelligent agents </li></ul><ul><ul><li>Search engines find products or services </li></ul></ul><ul><ul><li>Software agents conduct other tasks (comparisons) </li></ul></ul><ul><li>Electronic shopping cart—an order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop </li></ul>
  45. 45. Auctions <ul><li>Auction—a market mechanism by which a seller places an offer to sell a product and buyers make bids sequentially and competitively until a final price is reached </li></ul><ul><li>Auctions deal with products and services for which conventional marketing channels are ineffective or inefficient </li></ul>
  46. 46. Limitations of Traditional Auctions <ul><li>Traditional auctions are generally a rapid process </li></ul><ul><li>It may be difficult for sellers to move goods to the auction site </li></ul><ul><li>Commissions are fairly high </li></ul>
  47. 47. Electronic Auctions <ul><li>Electronic auctions (e-auctions)—auctions conducted online </li></ul><ul><ul><li>Host sites on the Internet serve as brokers offering: </li></ul></ul><ul><ul><ul><li>Services for sellers to post their goods for sale </li></ul></ul></ul><ul><ul><ul><li>Allowing buyers to bid on those items </li></ul></ul></ul><ul><ul><li>Many sites have certain etiquette rules that must be adhered to in order to conduct fair business </li></ul></ul>
  48. 48. Electronic Auctions (cont.) <ul><li>Major online auctions offer: </li></ul><ul><ul><li>Consumer products </li></ul></ul><ul><ul><li>Electronic parts </li></ul></ul><ul><ul><li>Artwork </li></ul></ul><ul><ul><li>Vacation packages </li></ul></ul><ul><ul><li>Airline tickets </li></ul></ul><ul><ul><li>Collectibles </li></ul></ul><ul><ul><li>Excess supplies and inventories being auctioned off by B2B marketers </li></ul></ul>
  49. 49. Dynamic Pricing <ul><li>Dynamic pricing—prices that change based on supply and demand relationships at any given time </li></ul><ul><li>The four major categories of dynamic pricing are based on the number of buyers and sellers involved: </li></ul><ul><ul><li>One buyer, one seller </li></ul></ul><ul><ul><li>One seller, many potential buyers </li></ul></ul><ul><ul><li>One buyer, many potential sellers </li></ul></ul><ul><ul><li>Many sellers, many buyers </li></ul></ul>
  50. 50. Exhibit 2.8 Types of Dynamic Pricing
  51. 51. Dynamic Pricing (cont.) <ul><li>One buyer, one seller uses </li></ul><ul><ul><li>Negotiation </li></ul></ul><ul><ul><li>Bargaining </li></ul></ul><ul><ul><li>Bartering </li></ul></ul><ul><li>Price will be determined by: </li></ul><ul><ul><li>Each party’s bargaining power </li></ul></ul><ul><ul><li>Supply and demand in the item’s market </li></ul></ul><ul><ul><li>Possibly business environment factors </li></ul></ul>
  52. 52. Dynamic Pricing (cont.) <ul><li>One seller, many potential buyers </li></ul><ul><ul><li>Forward auction—an auction in which a seller entertains bids from buyers </li></ul></ul><ul><ul><li>English auction—an auction in buyers bid on an item in sequence and the price increases with time </li></ul></ul><ul><ul><li>Yankee auction—auction of multiple identical items in which bidders can bid for any number of the items offered, and the highest bid wins </li></ul></ul>
  53. 53. Dynamic Pricing (cont.) <ul><ul><li>Dutch auction—auction of multiple identical items, with prices starting at a very high level and declining as the auction time passes </li></ul></ul><ul><ul><li>Free-fall (declining price) auction—a variation of the Dutch auction in which only one item is auctioned at a time; the price starts at a very high level and declines at fixed time intervals, the winning bid is the lowest one when the time expires </li></ul></ul>
  54. 54. Exhibit 2.9 English Auction, Ascending Price
  55. 55. Dynamic Pricing (cont.) <ul><li>One buyer, many potential sellers </li></ul><ul><ul><li>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 price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B mechanism </li></ul></ul>
  56. 56. Exhibit 2.10 The Reverse Auction Process
  57. 57. Dynamic Pricing (cont.) <ul><li>One buyer, many potential sellers (cont.) </li></ul><ul><ul><li>” Name-your-own-price” model </li></ul></ul><ul><ul><li>Consumer-to-business (C2B) model </li></ul></ul><ul><li>Many sellers, many buyers </li></ul><ul><ul><li>Double Auction—buyers and their bidding prices and sellers and their asking prices are matched, considering the quantities on both sides </li></ul></ul>
  58. 58. Limitations of Electronic Auctions <ul><li>Possibility of fraud—defective goods or receive goods/services without paying </li></ul><ul><li>Limited participation—invitation only or Open to dealers only </li></ul><ul><li>Lack of security—C2C auctions sometimes not done in an unencrypted environment </li></ul><ul><li>Limited software—only a few “complete”or “off-the-shelf” market-enabling solutions </li></ul>
  59. 59. Impacts of Auctions <ul><li>Auctions as a coordination mechanism </li></ul><ul><li>Auctions as a social mechanism to determine a price </li></ul><ul><li>Auctions as a highly visible distribution mechanism </li></ul><ul><li>Auctions as a component in e-commerce </li></ul>
  60. 60. Reverse Mortgage Auctions in Singapore <ul><li>Homebuyers like to get the lowest possible mortgage rates </li></ul><ul><ul><li>In Singapore, uses reverse auctions that are combined with “group purchasing” </li></ul></ul><ul><li>Dollardex’s first project: </li></ul><ul><ul><li>Site invited potential buyers to fill out applications on a secure Web site </li></ul></ul><ul><ul><li>7 lending banks were invited to bid on the loans </li></ul></ul>
  61. 61. Reverse Mortgage Auctions in Singapore (cont.) <ul><ul><li>In a secure electronic room, borrowers and lenders negotiated the deal, 2 days later the borrowers voted for one bank </li></ul></ul><ul><ul><li>Borrowers negotiated loans 0.5 per-cent less than the regular rate and waiver of the legal fees with United Overseas Bank (UOB) </li></ul></ul><ul><ul><li>UOB generated $10 million of business </li></ul></ul><ul><li>Dollardex allows customers to participate in an individual reverse auction if they do not want to join a group </li></ul>
  62. 62. <ul><li>Bartering—an exchange of goods and services </li></ul><ul><ul><li>Bartering exchanges </li></ul></ul><ul><ul><ul><li>Give your offer to intermediary </li></ul></ul></ul><ul><ul><ul><li>Intermediary asses value of your product or service in”points” </li></ul></ul></ul><ul><ul><ul><li>Use “points” to buy what you need </li></ul></ul></ul><ul><ul><li>Bartering sites must be financially secure </li></ul></ul><ul><ul><li>Alternative to bartering is to auction surplus and then use the money collected to buy items needed </li></ul></ul>Bartering Online
  63. 63. Bartering Online (cont.) <ul><li>E-bartering—bartering conducted online, usually by a bartering exchange </li></ul><ul><li>Bartering exchange—a marketplace in which an intermediary arranges barter transactions </li></ul>
  64. 64. Online Negotiating <ul><li>Online negotiation—electronic negotiation, usually done by software (intelligent) agents that perform searches and comparisons; improves bundling and customization of products and services </li></ul><ul><li>Dynamic prices can be determined by negotiation </li></ul><ul><li>Negotiated prices result from interactions and bargaining among sellers and buyers </li></ul><ul><ul><li>Expensive items like cars and real estate </li></ul></ul><ul><ul><li>Deal with nonpricing terms like payment method and credit </li></ul></ul>
  65. 65. Online Negotiating (cont.) <ul><li>Three factors that facilitate negotiated prices </li></ul><ul><ul><li>Intelligent agents that perform searches and comparisons </li></ul></ul><ul><ul><li>Computer technology that facilitates negotiation process </li></ul></ul><ul><ul><li>Products and services that are bundled and customized </li></ul></ul>
  66. 66. <ul><li>Mobile computing permits real-time access to information, applications, and tools that, until recently, were accessible only from a desktop computer </li></ul><ul><li>Mobile commerce (m-commerce)— </li></ul><ul><li>e-commerce conducted via wireless devices </li></ul><ul><li>M-business—the broadest definition of </li></ul><ul><li>m-commerce, in which e-business is conducted in a wireless environment </li></ul>Mobile Commerce
  67. 67. The Promise of M-Commerce <ul><li>Mobility significantly changes the manner in which people and customers: </li></ul><ul><ul><li>Interact </li></ul></ul><ul><ul><li>Communicate </li></ul></ul><ul><ul><li>Collaborate </li></ul></ul><ul><li>Mobile applications are expected to change the way we: </li></ul><ul><ul><li>Live </li></ul></ul><ul><ul><li>Play </li></ul></ul><ul><ul><li>Do business </li></ul></ul>
  68. 68. The Promise of M-Commerce (cont.) <ul><li>The PC-based Internet culture may change to one based on mobile devices </li></ul><ul><li>M-commerce creates new business models for EC, notably location-based applications </li></ul><ul><li>Many large corporations with huge marketing presence are transforming their businesses to include m-commerce-based products and services </li></ul><ul><ul><li>Microsoft AT&T </li></ul></ul><ul><ul><li>Intel AOL-Time-Warner </li></ul></ul><ul><ul><li>Sony </li></ul></ul>
  69. 69. I-Mode: Successful Mobile Portal <ul><li>Shopping guides </li></ul><ul><li>Maps and transportation </li></ul><ul><li>Ticketing </li></ul><ul><li>News and reports </li></ul><ul><li>Personalized movie service </li></ul><ul><li>Entertainment </li></ul><ul><li>Dining and reservations </li></ul><ul><li>Additional services </li></ul><ul><ul><li>Banking </li></ul></ul><ul><ul><li>Stock trading </li></ul></ul><ul><ul><li>Telephone directory searches </li></ul></ul><ul><ul><li>Dictionary services </li></ul></ul><ul><ul><li>Horoscopes </li></ul></ul>An example of the spread of m-commerce is DoCoMo’s i-Mode; some applications of I-Mode are:
  70. 70. Impacts of E-Markets on Business Processes & Organizations <ul><li>Product promotion </li></ul><ul><li>New sales channel </li></ul><ul><li>Direct savings </li></ul><ul><li>Reduced cycle time </li></ul><ul><li>Customer service </li></ul><ul><li>Brand or corporate image </li></ul><ul><li>Customization </li></ul><ul><li>Advertising </li></ul><ul><li>Ordering systems </li></ul><ul><li>Market operations </li></ul><ul><ul><li>Impacts of e-markets on B2C direct marketing: </li></ul></ul>
  71. 71. Exhibit 2.11 Analysis-of-Impacts Framework
  72. 72. Transforming Organizations <ul><li>Technology and organizational learning </li></ul><ul><ul><li>To survive, companies will have to learn and adapt quickly to the new technologies </li></ul></ul><ul><ul><li>Corporate change must be planned and managed </li></ul></ul><ul><ul><li>New technologies will require new organizational structures and approaches </li></ul></ul>
  73. 73. Transforming Organizations (cont.) <ul><li>The changing nature of work </li></ul><ul><ul><li>Driven by increased competition in the global marketplace, firms are Reducing the number of employees and Outsourcing whatever work they can to countries where wages are significantly less </li></ul></ul><ul><ul><li>The upheaval brought on by these changes creates new opportunities and new risks; forces us to think new ways of about jobs, careers, and salaries </li></ul></ul>
  74. 74. Transforming Organizations (cont.) <ul><ul><li>Digital-Age workers will have to be very flexible—truly secure jobs will be few, many will work from home </li></ul></ul><ul><ul><li>Digital-Age companies will have to prize its core of essential workers as its most valuable asset—empowering them and providing them with means to expand their knowledge and skill base </li></ul></ul>
  75. 75. Redefining Organizations <ul><li>New and improved product capabilities </li></ul><ul><ul><li>E-markets allow for new products to be created and/or for existing products to be customized in innovative ways </li></ul></ul><ul><ul><li>Customer profiles and data on customer preferences—source of information for improving products or designing new ones </li></ul></ul><ul><ul><li>Mass customization enables manufacturers to create specific products for each customer, based on the customer’s exact needs </li></ul></ul>
  76. 76. Redefining Organizations (cont.) <ul><li>New business models </li></ul><ul><ul><li>E-markets affect individual companies, products, entire industries </li></ul></ul><ul><li>Improving the supply chain </li></ul><ul><li>Impacts on manufacturing </li></ul><ul><ul><li>Manufacturing systems changing from mass production lines to demand-driven, just-in-time manufacturing </li></ul></ul><ul><ul><li>Virtual manufacturing enables global manufacturing plants to run as though they were one in location </li></ul></ul>
  77. 77. Exhibit 2.12a Changes in the Supply Chain
  78. 78. Exhibit 2.12b Changes in the Supply Chain
  79. 79. Redefining Organizations (cont.) <ul><li>Impacts on Manufacturing (cont.) </li></ul><ul><ul><li>Build-to-Order—the biggest change in manufacturing will be the move to build-to-order systems </li></ul></ul><ul><ul><ul><li>Manufacturing or assembly will start only after an order is received </li></ul></ul></ul><ul><ul><ul><li>Will change not only the production planning and control, but also the entire supply chain </li></ul></ul></ul>
  80. 80. A New Model for Small Movers <ul><li>When the U.S. economy started to slow down, and fuel prices increased </li></ul><ul><ul><li>DM & S (a small trucking company with $1.8 million in annual sales) started to lose money </li></ul></ul><ul><ul><li>A major problem in the trucking industry: </li></ul></ul><ul><ul><ul><li>Trucks need to move cargos at certain times </li></ul></ul></ul><ul><ul><ul><li>They may not have a full load causing lost revenue </li></ul></ul></ul><ul><ul><li>DM & S created a reverse-auction service </li></ul></ul><ul><ul><ul><li>Small moving companies bid on jobs of moving goods for individuals </li></ul></ul></ul><ul><ul><ul><li>Customers with flexible moving dates benefit the most </li></ul></ul></ul>
  81. 81. Small Movers (cont.) <ul><li> cost $15,000 to create: </li></ul><ul><ul><li>Customers place notice of their job on the site </li></ul></ul><ul><ul><li>Small truckers start to bid </li></ul></ul><ul><ul><li>Customers can get huge discounts </li></ul></ul><ul><ul><li>Truckers can earn money to help cover their fuel expenses </li></ul></ul><ul><li>During the first few months of operation </li></ul><ul><ul><li>4 truckers increased to 20 </li></ul></ul><ul><ul><li>Increased revenues by $14,000 </li></ul></ul><ul><ul><li>The Web site won third place in In c.’s Web innovations in 2000 </li></ul></ul>
  82. 82. Redefining Organizations (cont.) <ul><li>Impacts on finance and accounting </li></ul><ul><ul><li>E-markets require special finance and accounting systems—most are electronic payment systems complicated by legal issues and international standards </li></ul></ul><ul><ul><li>Executing an electronic order triggers back-office transactions </li></ul></ul><ul><ul><li>These activities must be efficient, synchronized, and fast so the electronic trade will not be slowed down </li></ul></ul>
  83. 83. Cisco’s Virtual Close <ul><li>Cisco Systems supplies vast networks that connect computers to the Internet </li></ul><ul><ul><li>Virtual Close was developed to allow companies to close its accounting records (its “books”) more quickly </li></ul></ul><ul><ul><li>Cisco is implementing such a system for itself for closing quarterly accounts </li></ul></ul><ul><ul><ul><li>Used to take up to 10 days; within 4 years it took 2 days—significantly cut its cost </li></ul></ul></ul><ul><ul><ul><li>By 2002 or 2003 Cisco hopes to close the books with 1 hour’s notice, on any day in the quarter </li></ul></ul></ul>
  84. 84. Cisco’s Virtual Close (cont.) <ul><li>Advantages of Virtual Close </li></ul><ul><ul><li>Companies can become proactive, spotting problems at any time </li></ul></ul><ul><ul><li>New opportunities can be detected early </li></ul></ul><ul><ul><li>Enables quick “drill down” analysis, which locates the causes of either poor or excellent performance </li></ul></ul><ul><ul><li>Brings huge productivity gains related to corporate financial reporting </li></ul></ul>
  85. 85. Redefining Organizations (cont.) <ul><li>Impact on human resource management and training </li></ul><ul><ul><li>EC is changing how people are recruited, evaluated, promoted, and developed </li></ul></ul><ul><ul><li>EC also is changing the way training and education are offered to employees </li></ul></ul><ul><ul><ul><li>Online distance learning and virtual courses are exploding </li></ul></ul></ul><ul><ul><ul><li>Companies are cutting training costs by 50 percent or more </li></ul></ul></ul>
  86. 86. Redefining Organizations (cont.) <ul><ul><li>New e-learning systems offer two-way video, on-the-fly interaction, application sharing </li></ul></ul><ul><ul><li>E- learning may be their ticket to corporate survival as changing environments, new technologies, and continuously changing procedures make it necessary for employees to be trained and retrained constantly </li></ul></ul>
  87. 87. Managerial Issues <ul><li>How do we compete in the digital economy? </li></ul><ul><li>What about intermediaries? </li></ul><ul><li>What organizational changes will be needed? </li></ul><ul><li>Should we auction? </li></ul><ul><li>What should be auctioned? </li></ul><ul><li>Should we have our own auction site or use a third-party site? </li></ul><ul><li>Should we barter? </li></ul><ul><li>What m-commerce opportunities are available? </li></ul>
  88. 88. Summary <ul><li>E-marketplaces and their components </li></ul><ul><li>The major types of e-markets </li></ul><ul><li>Supply chains and value chains </li></ul><ul><li>The role of intermediation </li></ul><ul><li>Competition, quality, and liquidity in </li></ul><ul><li>e-markets </li></ul><ul><li>Electronic catalogs, search engines, and shopping carts </li></ul><ul><li>Types of auctions and their characteristics </li></ul>