Presentation by: Supichaya Smerchuar

Transcription

1 Chapter 2 E-Marketplaces Presentation by: Supichaya Smerchuar This presentation is part of : Electronic Commerce Faculty of Information and Computer Technology, Mae Fah Luang University. Academic Year 2008

2 Objectives Define e-marketplaces and list their components List the major types of e-marketplaces and describe their features Describe the various types of EC intermediaries and their roles Describe electronic catalogs, shopping carts, and search engines. Discuss liquidity, quality, and success factors in e- marketplaces Describe the economic impact of EC Discuss competition in the digital economy Describe the impact of e-marketplaces on organizations 2

3 Electronic marketplaces Electronic marketplace: a space in which sellers and buyers exchange goods and services for money (or for other goods and services) electronically. Functions of markets: matching buyers and sellers Facilitating exchanges of goods/services and payments associated with market transactions Provide institutional infrastructure 3

4 Changes in Markets Mechanisms Together with IT, EC has greatly increased market efficiencies by expediting or improving the functions of market And lowering transaction and distribution cost Leading to a well-organized friction-free markets 4

5 Market-space The area of actual or potential commercial value in which a company intends to operate Market-space can occur for any type of EC e.g. B2C, B2B, C2C etc. B2C Marketspace: Online storefronts B2B Marketspace: E-Marketplaces C2C Marketspace: ebay 5

6 Market-space components Customers: the hundreds of millions of people surfing the web are potential buyers of goods/services offered on the net. They looking for good deals Customized items Collectors items Entertainment etc Organizations are the major consumers of EC activities. (85%) Sellers: millions of storefronts on the Web offering a huge variety of products. ( sells can be done directly from sellers site or from E- marketplaces Products: both physical and digital products (what are the advantages of a digital product?) Infrastructure: hardware, software, networks etc. 6

7 Market-space components Front end: the portion of an e-seller s business processes through which customers interact, e.g. seller s portal, e-catalogs, shopping cart, search engine and payment gateway Back end: activities that support online order-taking. E.g. order aggregation and fulfillment, inventory management, purchasing from suppliers, payment processing, packaging and delivery Intermediaries: create and manage online markets. Match buyers and sellers, provide some infrastructure services to and help buyers/sellers to institute and complete transaction. (mostly operate as computerized systems) Other business partners: includes business collaboration mostly along supply chain. Support services: ranging from certification to trust services 7

8 Market-space Components Customers Sellers Products (physical, digital) Infrastructure Web, network, bandwidth Front end Shopping cart, search engine, e- catalog, payment gateway Back end Order fulfillment, logistics, accounting, procurement, inventory mgt. Intermediaries Business partners Support services 8

9 Types of electronic markets There are various types of marketplaces B2C Electronic storefronts Electronic malls B2B Private e-marketplace Sell-side Buy-side Public e-marketplaces consortia 9

10 Types of electronic markets B2C Electronic storefronts: single company s Web site where product/services are sold (electronic store) A storefront has various mechanism for conducting sale Electronic catalogs (presentation of product information in an electronic form) A search engine ( a program that can access a database of Internet resources, search for specific information/keywords, and report the result) An electronic shopping cart: order processing technology that allow shoppers to accumulate items they wish to buy while they continue to shop) E-auction facilities A payment gateway etc. Electronic malls: an online shopping center where many stores are located 10

11 Types of electronic markets B2B Private E-Marketplace: owned by a single company Sell-side E-Marketplace: a private e-market in which a company sells either standard or customized to qualified companies Buy-side: a private e-market in which a company buys from invited suppliers Public E-Marketplace: e-market usually owned by am independent 3 rd party with many buyers and many sellers (exchanges) Consortia: usually owned by a small group of major sellers or buyers usually in the same industry 11

12 Mechanisms Necessary for Conducting Online Sales Electronic catalogs Search engine E-auction facilities Payment gateway Shipment information Customer services Your Name Here Your Name Here 12

13 Electronic Catalogs The presentation of product information in an electronic form; the backbone of most e-selling sites Electronic catalogs considerations: The dynamics of the information presentation The degree of customization Integration with business process 13

14 Comparison of Online Catalogs with Paper Catalogs 14

15 Other Mechanisms Search engine: A computer program that can access a database of Internet resources, search for specific information or keywords, and report the results Software (intelligent) agent: Software that can perform routine tasks that require intelligence Electronic shopping cart: An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop 15

16 Impact of E-Commerce on Value Chain: Disintermediation The removal of organizations or business process layers responsible for certain intermediary steps in a given value chain Eliminating the traditional intermediaries, such as wholesalers, distributors, and retailers, to reduce the cost 16

17 Impact of E-Commerce on Value Chain: Reintermediation Reintermediation the shifting or transfer of the intermediary functions which creates a new business opportunity Reintermediation such as electronic shopping malls, directory and search engine service, and comparison aids using agents create the role of reintermediation 17

18 Intermediation in EC Disintermediation Elimination of intermediaries between sellers and buyers Reintermediation Establishment of new intermediary roles for traditional intermediaries that have been disintermediated 18

19 Intermediation in E-Commerce Intermediaries (brokers) provide value-added activities and services to buyers and sellers Intermediaries in the physical world are wholesalers and retailers E-Commerce Intermediary Infomediaries: electronic intermediaries that control information flow in cyberspace, often aggregating and manipulating information to add values before selling it to others 19

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21 Roles and Values of Intermediaries in E-Markets Intermediaries Lower search costs Improve privacy More complete information Reduce pricing inefficiencies Roles Values 21

22 E-Markets Success Factors Product Characteristics Digitizable products can be electronically distributed to customers, resulting in very low distribution costs, allowing order-fulfillment cycle time to be minimal Industry Characteristics Electronic markets are most useful when they are able to directly match buyers and sellers 22

23 E-Markets Success Factors (cont.) Seller Characteristics Electronic markets reduce search costs, allowing consumers to find sellers offering lower prices Consumer Characteristics E-markets require a certain degree of effort on the part of the consumer, e-markets are more conducive to consumers who do some comparison and analysis before buying 23

24 Digital Economy An economy based on new trading mechanisms where transactions are more efficient, demands and supplies are more fluid, and information is playing an important role in generating wealth 24

25 Impact of Internet on Industry Structure E-commerce changes the nature of players in an industry and their relative bargaining power by changing: the basis of competition among rivals the barriers to entry the threat of new substitute products the strength of suppliers the bargaining power of buyers 25

26 Competition in the Digital Economy Porter s Competitive Analysis in an Industry competitive forces model Model, devised by Porter, that says that five major forces of competition determine industry structure and how economic value is divided among the industry players in an industry; analysis of these forces helps companies develop their competitive strategy 26

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28 Competitive Factors in the Digital Economy Lower search costs for buyers Speedy comparisons Differentiation and personalization Differentiation: Providing a product or service that is unique Personalization: The ability to tailor a product, service, or Web content to specific user preferences Lower prices Customer service 28

29 E-commerce Business Models Business model set of planned activities designed to result in a profit in a marketplace Business plan document that describes a firm s business model E-commerce business model aims to use and leverage the unique qualities of Internet and Web 29

30 Developing a new business model generally requires a consideration of Value Proposition Products/services to offer Delivery channels Revenue generation Marketspace Resource Financial Model 30

31 Key Ingredients of a Business Model 31

32 Value Proposition Defines how a company s product or service fulfills the needs of customers Target customers Customer benefits Firm s competitiveness Questions to ask: Why will customers choose to do business with your firm instead of another? What will your firm provide that others do not or cannot? Examples of successful value propositions include: Personalization/customization Reduction of product search costs Reduction of price discover costs Facilitation of transactions by managing product delivery 32

33 Value Proposition Definition : The result of a combination of choices about the customers, the benefits offered and the unique capabilities of the firm: Target Segments Key Key Benefits + Offered + Unique Capabilities Value Proposition Misslily The special occasion segment Fresh flowers Complementary gifts Low prices Online experience Unique, broad product line of complementary gifts Misslily serves the special occasion segment by providing fresh flowers and unique complementary gifts 33

34 Revenue Model Describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital Terms financial model and revenue model often used interchangeably Major types: Advertising revenue model Subscription revenue model Transaction fee revenue model Sales revenue model Affiliate revenue model 34

35 Advertising Revenue Model Web site that offers content, services and/or products also provides a forum for advertisements and receives fees from advertisers Example: Yahoo.com 35

36 Subscription Revenue Model Web site that offers users content or services charges a subscription fee for access to some or all of its offerings Examples: Consumer Reports Online Yahoo! Platinum 36

37 Transaction Fee Revenue Model Company that receives a fee for enabling or executing a transaction Examples: ebay.com E-Trade.com 37

38 Sales Revenue Model Company derives revenue by selling goods, information, or services to customers Examples: Amazon.com LLBean.com Gap.com 38

39 Affiliate Revenue Model Sites that steer business to an affiliate receive a referral fee or percentage of the revenue from any resulting sales Example: MyPoints.com 39

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41 Market Opportunity Refers to a company s intended marketspace and the overall potential financial opportunities available to the firm in that marketspace Marketspace the area of actual or potential commercial value in which a company intends to operate Realistic market opportunity is defined by revenue potential in each of market niches in which company hopes to compete 41

42 Competitive Environment Refers to the other companies selling similar products and operating in the same marketspace Influenced by: how many competitors are active how large their operations are what market share for each competitor is how profitable these firms are how they price their products 42

43 Competitive Environment (cont) Direct competitors companies that sell products or services that are very similar and into the same market segment Example: Priceline.com and Travelocity.com Indirect competitors companies that may be in different industries but that still compete indirectly because their products can substitute for one another Example: CNN.com and ESPN.com 43

44 Competitive Advantage Achieved when firm can produce a superior product and/or bring product to market at a lower price than most, or all, of competitors Firms achieve competitive advantage when they are able to obtain differential access to the factors of production that are denied to competitors Asymmetry when one participant in a market has more resources than others 44

45 Competitive Advantage (cont) Types of competitive advantage include: First mover advantage results from a firm being first into a marketplace Unfair competitive advantage occurs when one firm develops an advantage based on a factor that other firms cannot purchase Companies leverage their competitive assets when they use their competitive advantages to achieve more advantage in surrounding markets 45

46 Market Strategy A plan that details how a company intends to enter a new market and attract customers Best business concepts will fail if not properly marketed to potential customers 46

47 Organizational Development Describes how the company will organize the work that needs to be accomplished Work is typically divided into functional departments Move from generalists to specialists as the company grows 47

48 Management Team Employees of the company responsible for making the business model work Strong management team gives instant credibility to outside investors A strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary 48