E-Commerce Mekanisme Pasar

(Market Mechanisms)

E-Commerce Mekanisme Pasar

(Market Mechanisms)

Learning Objectives

Define e-marketplaces and their components List the major types of e-markets and their features Define supply chains and value chains and understand their

roles Describe the role of intermediaries in EC Describe electronic catalogs, shopping carts, and search

engines Describe the various types of auctions and list their

characteristics Discuss the benefits, limitations, and impacts of auctions Describe bartering and negotiating online Describe the impact of e-marketplaces on organizations Define m-commerce and explain its role as a market

mechanism

Electronic Marketplaces

Markets facilitate exchange of Information Goods Services Payments

Markets create economic value for Buyers Sellers Market intermediaries Society at large

Electronic Marketplaces [2]

Three main functions of markets Matching buyers and sellers Facilitating the exchange of information,

goods, services, and payments associated with market transactions Providing an institutional infrastructure

Marketspace Components

Marketspace: a marketplace in which sellers and buyers exchange goods and services for money (or for other goods and services), but do so electronically Customers Sellers Goods (physical or digital) Infrastructure Front-end Back-end Intermediaries/business partners Support services

Marketspace Components [2]

Customers Web surfers looking for

• Bargains• customized items• Collectors’ items• entertainment etc.

Organizations account for over 85 percent of EC activities

Sellers Hundreds of thousands of

storefronts are on the Web Advertising and offering

millions of Web sites Sellers can sell

• Direct from their Web site • E-marketplaces

Marketspace Components [3]

Products Physical products Digital products—

goods that can be transformed to digital format and delivered over the Internet

Infrastructure Hardware Software Networks

Marketspace Components [4]

Front-end business processes include Seller’s portal Electronic catalogs shopping cart Search engine Payment gateway

Back-end activities are related to Order aggregation and

fulfillment Inventory management Purchasing from suppliers Payment processing Packaging and delivery

Marketspace Components [5]

Intermediary a third party that operates between sellers

and buyersOther business partners collaborate on the Internet, mostly along the

supply chainSupport services such as Certification and trust services Knowledge providers

Types of Electronic Markets

Electronic storefronts a single company’s Web site where products

and services are soldMechanisms for conducting sales Electronic catalogs Payment gateway Search engine Shipment court Customer services Electronic cart E-auction facilities

Electronic malls (e-malls) an online shopping center where many stores

are located

Types of Electronic Markets [2]

General stores/malls—large marketspaces that sell all types of products

Public portals Specialized stores/malls—

sell only one or a few types of products

Regional vs. global stores

Pure online organizations vs. click-and-mortar stores

Types of stores and malls

E-marketplaces online market, usually B2B, in which buyers and sellers negotiate; the three types of e-marketplaces are private, public, consortia

E-Marketplaces

Private e-marketplaces Online markets owned by a single company:

• Sell-side: company sells either standard or customized products to qualified companies

• Buy-side marketplaces: company makes purchases from invited suppliers

Public e-marketplaces B2B markets, usually owned and/or managed

by an independent third party, that include many sellers and many buyers (exchanges)

Consortia & Information Portals

Consortia E-marketplaces that deal with suppliers and

buyers in a single industry• Vertical consortia are confined to one industry• Horizontal allow different industries trade there

Information portal A personalized, single point of access through

a Web browser to business information inside (and marginally from outside) an organization

• Publishing portals Commercial portals • Personal portals Corporate portals • Mobile portals

Supply Chains

Supply chain The flow of materials, information, money, and

services from raw material suppliers through factories and warehouses to the end customers Includes organizations and processes that

create and deliver the following to the end customers:

– Products – Information– Services

Supply Chains [2]

A supply chain involves activities that take place during the entire product life cycle

It also includes: Movement of information and money and

procedures that support the movement of a product or a service The organizations and individuals involved

A Simple Supply Chain

Supply Chain Components

Upstream supply chain includes the activities of suppliers

(manufacturers and/or assemblers) and their suppliers

Internal supply chain includes all in-house processes used in

transforming the inputs received from the suppliers into the organization’s outputs

Downstream supply chain includes all the activities involved in delivering

the product to the final customers

Types of Supply Chains

Integrated make-to-stockContinuous replenishmentBuild-to-order—model in which a

manufacturer begins assembly of the customer’s order almost immediately upon receipt of the order

Channel assembly—model in which product is assembled as it moves through the distribution channel

Supply Chains: Integrated & Build-to-Order

Value Chain & Value System

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

Value system a set of value chains in an entire industry,

including the value chains of tiers of suppliers, distribution channels, and customers

Supply Chain & Value Chain

Value chain and the supply chain concepts are interrelated Value chain shows the activities performed

by an organization and the values added by each The supply chain shows flows of materials,

money, and information that support the execution of these activities

Intermediation in E-Commerce

Intermediaries provide value-added activities and services to buyers and sellers: wholesalers, retailers, infomediaries

Roles of intermediaries Search costs: databases on customer preferences Lack of privacy: anonymity of sellers and buyers Incomplete information: gather product information Contract risk: protect sellers against non-payment Pricing inefficiencies: induce appropriate trades

E-Distributors on B2B

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

E-distributors also provide support services Payments Deliveries Escrow services Aggregate buyers’ and or sellers’ orders

Disintermediation &Reintermediation

Disintermediation elimination of intermediaries between sellers

and buyersReintermediation establishment of new intermediary roles for

traditional intermediaries that were disintermediated

Syndication as an EC Mechanism

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

Competition in the Internet Ecosystem

Competition in the Internet ecosystem (business model of the online economy) Inclusive with low barriers to entry Self-organizing Old rules may no longer apply

Competition is tense Lower buyers’ search cost Speedy comparisons Differentiation and personalization

Competition in the Internet Ecosystem [2]

Differentiation providing a product or service that is unique

Personalization the ability to tailor a product, service, or Web

content to specific user preferencesLower prices

Competition in the Internet Ecosystem [3]

Customer service is an extremely important competitive factor

Some competitive factors are less important as a result of EC: Size of company is no longer significant Geographical location is insignificant Language barriers are being removed Digital products do not have normal wear and

tear

Competition in the Internet Ecosystem [4]

EC supports efficient markets and could result in almost perfect competition with these characteristics: Many buyers and sellers must be able to enter the

market at no entry cost Large buyers or sellers are not able to individually

influence the market The products must be homogeneous Buyers and sellers must have comprehensive

information about the products and about the market participants’ demands, supplies, and conditions

Porter’s Competitive Analysis

Porter’s competitive forces model applied to an industry views 5 major forces of competition that determine the industry’s structural attractiveness

These forces, in combination, determine how the economic value created in an industry is divided among the players in the industry

Such an industry analysis helps companies develop their competitive strategy

Porter’s Competitive Forces Model

Liquidity

Liquidity The need for a critical mass of buyers and

sellers• The fixed cost of deploying EC can be very high• Without a large number of buyers, sellers will not

make moneyEarly liquidity Achieving a critical mass of buyers and sellers

as fast as possible, before the market-maker’s cash disappears

Quality Uncertainty & Assurance

Quality uncertainty The uncertainty of online buyers about the

quality of products that they have never seen, especially from an unknown vendor

• Provide free samples• Return if not satisfied

– Microproduct—a small digital product costing a few cents• Insurance, escrow, and other services

E-Market Success Factors

Product characteristics Type Price Availability of standards

and product information Industry

characteristics Brokers currently

necessary Intelligent systems may

replace brokers

Seller characteristics Consumers find sellers

with the lowest prices Low-volume, higher-

profit-margin transactions Consumer

characteristics Impulse buyers Patient buyers Analytical buyers

Contributors to e-market success

Electronic Catalogs

Electronic catalogs The presentation of product information in an

electronic form; the backbone of most e-selling sites

Evolution of electronic catalogs Merchants—advertise and promote Customers—source of information and price comparisons Consist of product database, directory and search capability

and presentation function Replication of text that appears in paper catalogs More dynamic, customized, and integrated

Classifications of E-catalogs

Dynamics of information presentation Static or dynamic

Degree of customization Ready-made or customized

E-catalogs allow integration of: Order taking and fulfillment Electronic payment Intranet workflow Inventory and accounting system Suppliers’ extranet Relationship to paper catalogs

Customized Catalogs

Assembled specifically for: A company An individual shopper

Customization systems can: Create branded, value-added capabilities Allows user to compose order May include individualized prices, products, and

display formats Automatically identify the characteristics of

customers based on the transaction records

Search Engines

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

Search Engines, Intelligent Agentsand Shopping Carts

E-commerce users use both search engines and intelligent agents Search engines find products or services Software agents conduct other tasks

(comparisons)Electronic shopping cart An order-processing technology that allows

customers to accumulate items they wish to buy while they continue to shop

Auctions

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

Auctions deal with products and services for which conventional marketing channels are ineffective or inefficient

Limitations of Traditional Auctions

Traditional auctions are generally a rapid process

It may be difficult for sellers to move goods to the auction site

Commissions are fairly high

Electronic Auctions

Electronic auctions (e-auctions) Auctions conducted online Host sites on the Internet serve as brokers

offering:• Services for sellers to post their goods for sale• Allowing buyers to bid on those items

Many sites have certain etiquette rules that must be adhered to in order to conduct fair business

E-auctions [2]

Major online auctions offer: Consumer products Electronic parts Artwork Vacation packages Airline tickets Collectibles Excess supplies and inventories being

auctioned off by B2B marketers

Dynamic Pricing

Dynamic pricing Prices that change based on supply and

demand relationships at any given timeThe four major categories of dynamic

pricing are based on the number of buyers and sellers involved: One buyer, one seller One seller, many potential buyers One buyer, many potential sellers Many sellers, many buyers

Types of Dynamic Pricing

Dynamic Pricing [2]

One buyer, one seller uses Negotiation Bargaining Bartering

Price will be determined by: Each party’s bargaining power Supply and demand in the item’s market Possibly business environment factors

Dynamic Pricing [3]

One seller, many potential buyers Forward auction

• An auction in which a seller entertains bids from buyers

English auction• An auction in buyers bid on an item in sequence

and the price increases with time Yankee auction

• An auction of multiple identical items in which bidders can bid for any number of the items offered, and the highest bid wins

Dynamic Pricing [4]

Dutch auction• Auction of multiple identical items, with prices

starting at a very high level and declining as the auction time passes

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

English Auction, Ascending Price

Dynamic Pricing [5]

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 price reducing sequentially

• the lowest bid wins• primarily a B2B or G2B mechanism

The Reverse Auction Process

Dynamic Pricing [6]

One buyer, many potential sellers [2] ”Name-your-own-price” model Consumer-to-business (C2B) model

Many sellers, many buyers Double Auction

• Buyers and their bidding prices and sellers and their asking prices are matched, considering the quantities on both sides

Limitations of E-auctions

Possibility of fraud defective goods or receive goods/services

without payingLimited participation invitation only or Open to dealers only

Lack of security C2C auctions sometimes not done in an

unencrypted environmentLimited software only a few “complete”or “off-the-shelf” market-

enabling solutions

Impacts of Auctions

Coordination mechanismSocial mechanism to determine a priceHighly visible distribution mechanismA component in e-commerce

Bartering Online

Bartering An exchange of goods and services

• Bartering exchanges– Give your offer to intermediary– Intermediary asses value of your product or service

in ”points” – Use “points” to buy what you need

• Bartering sites must be financially secure• Alternative to bartering is to auction surplus and

then use the money collected to buy items needed

Bartering Online [2]

E-bartering bartering conducted online, usually by a

bartering exchangeBartering exchange a marketplace in which an intermediary

arranges barter transactions

Online Negotiating

Online negotiation Electronic negotiation Usually done by software (intelligent) agents that

perform searches and comparisons Improves bundling and customization of products and

servicesDynamic prices can be determined by

negotiationNegotiated prices result from interactions

and bargaining among sellers and buyers Expensive items like cars and real estate Deal with nonpricing terms like payment method and

credit

Online Negotiating [2]

Three factors that facilitate negotiated prices Intelligent agents that perform searches and

comparisons Computer technology that facilitates

negotiation process Products and services that are bundled and

customized

Web 2.0 Mechanisms and Tools

Weblogging (blogging) Technology for personal publishing on the

InternetBlog A personal Web site that is open to the public

to read and to interact with Often dedicated to specific topics or issues

Wikilog (wikiblog or wiki) A blog that allows everyone to participate as a

peer; anyone can add, delete, or change content

Podcast A media file that is distributed over the

Internet using syndication feeds for playback on mobile devices and personal computers As with the term radio, it can mean both the

content and the method of syndicationMashup A Web site that combines content data from

more than one source to create a new user experience

Web 2.0 Mechanisms and Tools [2]

Mobile Commerce (M-commerce)

Mobile computing permits real-time access to information, applications, and tools that, until recently, were accessible only from a desktop computer

Mobile commerce (m-commerce) e-commerce conducted via wireless devices

M-business the broadest definition of m-commerce, in

which e-business is conducted in a wireless environment

The Promise of M-Commerce

Mobility significantly changes the manner in which people and customers: Interact Communicate Collaborate

Mobile applications are expected to change the way we: Live Play Do business

The Promise of M-Commerce [2]

The PC-based Internet culture may change to one based on mobile devices

M-commerce creates new business models for EC, notably location-based applications

Many large corporations with huge marketing presence are transforming their businesses to include m-commerce-based products and services Microsoft AT&T Intel AOL-Time-Warner Sony

Impacts of E-Markets on Business Processes & Organizations

Product promotionNew sales channelDirect savingsReduced cycle timeCustomer service

Brand or corporate image

CustomizationAdvertisingOrdering systemsMarket operations

Impacts of e-markets on B2C direct marketing:

Analysis-of-Impacts Framework

Transforming Organizations

Technology and organizational learning To survive, companies will have to learn and

adapt quickly to the new technologies Corporate change must be planned and

managed New technologies will require new organizational

structures and approaches

Transforming Organizations [2]

The changing nature of work 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 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

Transforming Organizations [3]

Digital-Age workers will have to be very flexible—truly secure jobs will be few, many will work from home 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

Redefining Organizations

New and improved product capabilities E-markets allow for new products to be created

and/or for existing products to be customized in innovative ways Customer profiles and data on customer

preferences—source of information for improving products or designing new ones Mass customization enables manufacturers to

create specific products for each customer, based on the customer’s exact needs

Redefining Organizations [2]

New business models E-markets affect individual companies,

products, entire industriesImproving the supply chain

Changes in the Supply Chain [1]

Changes in the Supply Chain [2]

Redefining Organizations [3]

Impacts on Manufacturing Manufacturing systems changing from mass

production lines to demand-driven, just-in-time manufacturing Virtual manufacturing enables global manufacturing

plants to run as though they were one in location Build-to-Order—the biggest change in

manufacturing will be the move to build-to-order systems

• Manufacturing or assembly will start only after an order is received

• Will change not only the production planning and control, but also the entire supply chain

Redefining Organizations [4]

Impacts on finance and accounting E-markets require special finance and

accounting systems—most are electronic payment systems complicated by legal issues and international standards Executing an electronic order triggers back-

office transactions These activities must be efficient, synchronized,

and fast so the electronic trade will not be slowed down

Redefining Organizations [5]

Impact on human resource management and training EC is changing how people are recruited,

evaluated, promoted, and developed EC also is changing the way training and

education are offered to employees• Online distance learning and virtual courses are

exploding• Companies are cutting training costs by 50 percent or

more New e-learning systems offer two-way video, on-

the-fly interaction, application sharing

Summary

A marketspace or e-marketplace is a virtual market that doesn’s suffer from limitations of space, time or borders

Types of B2C e-markets are storefronts and e-malls

Types of B2B e-markets are private and public e-marketplaces, which can be vertical (by industry) or horizontal

Auctions can be divided into forward and reverse auction

Exercise

How are mashups helpful to users?List and explain some of the benefits to

sellers or buyers of auctions!