E-Commerce Market Mechanism

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http://vdict.com/?autotranslation E-Commerce Market Mechanism According to Bakos , markets play a central role in the economy,facilitating the exchange of information , goods , services ,and payments.In the process,they create economic value for buyers,sellers,market intermediaries,and for society at large Markets (electronic or otherwise have tree main functions! . matching buyers and sellers #. facilitating the exchange of information , goods , services ,and payments associated with market tr
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   http://vdict.com/?autotranslation E-Commerce Market Mechanism According to Bakos , markets play a central role in the economy,facilitating the exchange of information , goods , services ,and payments.In the process,they create economic value for buyers,sellers,market intermediaries,and for society at largeMarkets (electronic or otherwise have tree main functions! .matching buyers and sellers#.facilitating the exchange of information , goods , services ,and payments associated with market transactions$.providing an institutional infrastructure,such as a legal and regulatory framework,that enables the efficient functioning of the market.In recent years,markets have seen a dramatic increase in the use of I% and &' (%urban et al. ##.&' has increased market efficiencies by expediting or improving the functions listed in &xhibit #. . )urthermore,&' has been able to significantly decrease the cost of executing these functions.%he emergence of electronic marketsplaces,also called marketspaces,especially Internet* based marketspaces,changed several of processes used in trading and in supply chains.%hese changes,driven by I%,resulted in even greater economic efficiencies.&' leverages I% with increased effectiveness and lower transaction and distribution costs , leading to more efficient ,+friction*free+ markets.An example of such efficiency can be seen in the %& case (&' Application 'ase #. .Another example is provided in the -eal*orld 'ase at the end of this chapter.  EXHIBIT 2.1 Function of a market /Matching of buyers and sellers! 0determination of product offerings 1roduct features offered by sellers Aggregation of different products 02earch ( of buyers for sellers and of sellers for buyers 1rice and product information 3rgani4ing bids and bartering Matching seller offerings with buyer preferences  01rice discovery 1rocess and outcome in determination of prices &nabling price comparisons/)acilitation of transactions! 05ogistics 6elivery of information,goods,or services to buyers 02ettlement %ransfer of payments to sellers 0%rust   'redit system,reputations,rating agencies like 'onsumer -eports and BBB.2pecial escrow and trust online agencies/Institutional Infrastructure! 05egal 'ommerce code ,contract law,dispute resolution ,intellectual property protection &xport and import law 0-egulatory -ules and regulations,monitoring ,enforcement  EC Application case 2.1 Interorganization and collaoration!TE e ens t#e load %he hauling industry is not very efficient.%hough trucks are likely to be full on outbound  7ourneys,they are often empty on the way back.(about 89 of the trucks on Ameriaca:s roads at any one time are not full.ational %ransportation &xchange (%& is attempting to solve this problem. %& (nte.com uses the Internet to connect shippers who have loads they want to move cheaply with fleet managers who have space to fill.%& helps create what is called a spot market ( a very short*term market by setting daily prices based on information from several hundred fleet mangers about the destinations of their vehicles and the amount of space they have available.It also gets information from shippers about their needs and flexibility in dates .%& then works out the best deals is agreed upon,%& issues the contract and handles payments .%he entire process takes only a few minutes .%& collects a commission based on the value of each deal,the fleet manager gets extra revenue that they would otherwise have missed out on ,and the shipper gets a bargain  price,at the cost of some loss of flexibility.hen %& was first set up in ;;8,it used a proprietary network that was expensive and limited the number of buyers and sellers who could connect through it.By using the Internet ,%& has been able to extend its reach down to the level of individual truck drivers and provide a much wider range of services.%oday,drivers can use wireless Internet access devices to connect to the %& ebsite on the road.In # ,%& expanded its services to improve inventory managerment,schelduling,and vendor compliance along the entire supply chain.%&:s software is integrated with its customers <operrations and systems.%&:s business is currently limited to ground transportation within the =2.In >ong ?ong, arena.com.hk provides similar port services. $arketspace components 2imilar to a marketplace,in a marketspace sellers and buyers exchange goods and services for money ( o for other goods and ser ices  if bartering is used  ,but they do it electronically.A marketspace includes electronic transactions that bring about a new distribution of goods and services.the ma7or components and players of a marketspace are customers,sellers,goods ( 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 tens of millions of people worldwide that surf the eb are potential  buyers of the goods and services offered or advertised on the Internet.%hese consumers are looking for bargain,customi4ed items,collectors:items,entertainment and more .they are in the driver:s seat.%hey can search for detailed information , compare ,bid , and sometimes negotiate.3rgani4ations are the ma7or consumers,accounting for over @89 of &' activities.  %ellers .>undred of thousands of storefronts are on the eb,advertising and offering millions of items . &veryday it is possible to fins new offering of products and services .2ellers can sell direct from their ebsite or from marketspaces.  &roducts .3ne of the ma7or differences between the marketplace and the marketspace is the possible digiti4ation of 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 delivered over the Internet.In addition to digiti4ation of software and music,it is possible to digiti4e do4ens of other products and services ,as shown in &xhibit #.# . A2 described in chapter , digital products have different cost curves than those of regular products.In digiti4ation,most of the costs are fixed and the variable cost is very small.thus,profit will increase very rapidly a volume increases once the fixed costs are paid for.this is one of the ma7or potentials of electronic markets.  Infrastructure . An electronic market infrastructure includes hardware , software , and networks .  Front end. 'ustomers interact with a marketspace via a front end.the business  processes in the front end include the seller:s portal ,electronic catalogs,a shopping cart ,a search engine ,and a payment gateway.  Back end . All the activities that are related to order aggregation and fulfillment , inventory management,purchasing from suppliers,payment processing,packaging , and delivery,are done in what is termed the back end of the business.  Intermediaries . In marketing ,an intermediary typically is a third party that operates between sellers and buyers. Intermediaries of all kinds offer their services on the eb. %he role of these electronic intermediaries ,a s will be seen throughout the text and especially in 'hapter $, and  ,is different from that of regular intermediaries ( such as holesalers .3nline intermediaries create and manage the online markets ( such as in the %& case  .%hey help match buyers and sellers ,provide some infrastructure services ,and help customers andor sellers to institute and complete transactions. Most of these online intermediaries are computeri4ed systems.  't#er usiness partners . In addition to intermediaries ,there are several types of  partners ,such as shippers ,that collaborate on the Internet,mostly along the supply chain.  %upport ser ices . Many different support services are available , ranging from certification and trust services , which ensure security , to knowledge providers. %hese services are created to address implementation issues%hese components are available in different types of e*markets. &C>IBI% #.# &xamples of 6igital products /Information and entertainment products !  *paper*based documents ! books,newspaper ,maga4ines,7ournals,store coupons,marketing brochures , newsletter,research papers,and training materials*product information ! product specifications, catalogs,user manuals,sales training manuals*graphic! photographs , postcards,calendars ,maps , posters,x*rays*audio! music recordings , speeches ,lectures,industrial voice*video! movies ,television programs,video clips*software! programs,games,development tools /2ymbols , tokens ,and concepts *tickets and reservations! airlines, hotels ,concerts, sports events ,transportation *financial instruments! checks, electronic currencies , credit cards , securities , letters of credit /process and services*government services ! forms , benefits , welfare payments , licenses*electronic messaging ! letters , faxes , telephone calls*business* value*creation processes ! ordering , bookkeeping , inventorying , contracting*auctions , bidding , bartering*remote education , telemedicine and other interactive services *cybercafDs , interactive entertainment , virtual communities . #.# %ypes of electronic markets! from storefront to portals %here are several types of e*marketplace . In B#' the ma7or e*marketplaces are storefronts and Internet malls. In B#B we observe private sell*side ( one seller*many  buyers  , and buy*side ( one buyer*many sellers  , e*marketplaces and public exchanges. 5et:s elaborate on these as well as on the gateways to the e*marketplaces E the portals.  Electronic storefronts An electronic or eb storefronts refers to a single company:s ebsite where products and services are sold. It is an electronic store. %he storefronts may belong to a manufacturer ( e.g, geapplicances.com  ,to a retailer ( e.g, walmart.com ,to individuals selling from their home ,or to another type of business.A storefronts includes several mechanism that are necessary for conducting the sale . %he most common features are ! * &lectronic catalogs * A search engine that helps the consumer to find products in the catalog * An electronic cart for holding items until check*out * &*auction facilities * A payment gateway where payment arrangements can be made * A shipment court where shipping arrangement are made * 'ustomers services, including product information and a register for warranties
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