Chapter's 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.
-Describe the major types of auctions and list their characteristics.
-Discuss the benefits, limitations, and impacts of auctions.
-Describe bartering and negotiating online.
-Define m-commerce and explain its role as a market mechanism.
-Discuss competition in the digital economy.
-Describe the impact of e-marketplaces on organizations and industries.
Intermediaries are an important issue on this chapter.
By definition :
intermediary is a third party that operates between sellers and buyers . There are generally two types of intermediaries: Brokers, and Infomediaries.
A Broker - is a company that facilitates transactions between buyers and sellers.
Infomediaries - are web sites that gather and organize large amounts of data and act as intermediaries between those who want the information and those who supply it.
An example for an intermediary that is a BROKER would be priceline.com http://www.priceline.com/
Priceline.com is a commercial website which helps users obtain discount rates for travel-related items such as airline tickets and hotel stays. The buyers are travellers, the sellers are hotels, airline companies, car rental agencies and other travel services providers. Priceline allows the client to :
- compare prices
- make a "name your own price" auction
- negociate
- find the best deal
- get the best value for money
Priceline gets a percentage of each sales from hotels, airline companies etc'.
Suppliers (hotels etc') would rather sell through priceline than not sell at all.
An example of an informediary would be http://www.pricegrabber.com/
It provides information about all kinds of goods and allows customers to compare prices without trying to promote any of the goods.
Intermediaries are an imporant factor in the EC world,
But how about Blue Nile Inc. ???
Blue Nile, a pure-play online e-tailer specializing in diamonds and jewelry, eliminated intermediaries and started selling jewelry and diamonds online, and became the eighth-largest specialty jewelry company in the United States.
Blue Nile managed to do so in an 10,000 sq ft warehouse with 115 employees, while a traditional store would normally have to maintain 200 stores and employ around 1800 employees.
The Blue Nile case definitely undercuts the traditional way of doing business.
http://www.bluenile.com/
So what is the impact of E-Commerce on the industry ?
E-commerce has a massive impact on organizations in a way that reshapes entire industries. It impacts competition and pushes organizations to make major changes in the way they conduct business (example: travel industry, health industry are all going through major changes). Ecommerce forces organizations to change their strategic business models, processes and relationships. It improves direct marketing by providing more sales channels, product promotion, direct savings ,improved customer service , reduced cycle time, customization and advertising and more.E-commerce also changes the nature of work and employment, and forces companies to quickly adapt new to new technologies.ECommerce also has an impact on manufacturing by changing mass production into a demand driven manufacturing.Other areas in which ECommerce impact industries are finance and accounting, human resources and management training.
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Interesting article related to e-commerce:
Amazon manages to do relatively well during the holiday season.
http://www.businessweek.com/the_thread/techbeat/archives/2008/01/looks_like_amaz.html?chan=top+news_top+news+index_businessweek+exclusives
This article, taken from business week, reports about a "better than expected" quarter for amazon.com.
According to CEO Jeff Bezos, Amazon has managed to do well this past quarter thanks to
on going improvements in the customer experience.
Providing better customer service has created an advantage for Amazon.
Conclusion: In such a competitive field, a company must create some kind of an advantage
in order to attract clients to buy from them and not turn to a competitor. It is not always
guarenteed that lowering prices will make clients proceed with a purchase; some clients would
rather pay a higher price for an identical product - just to guarentee it will be delivered
quickly and efficiently. In this case, Amazon delivered during the holidays, a fact that created
a competitive advantage and actually helped sales.
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