Page 61 - Introduction to Electronic Commerce and Social Commerce

2.2 E-Marketplaces 39

The major mechanisms that support this process are The Components and Participants
described in Sections 2.7 and 2.9 of this chapter. The place in E-Marketplaces
where buying and selling occurs is called an e-marketplace,
which we introduce next. The major components and players in a marketspace are cus-
tomers, sellers, products and services (physical or digital),
infrastructure, front-end and back-end mechanisms, interme-
SECTION 2.1 REVIEW QUESTIONS diaries and other business partners, and support services
such as security and payments. A brief description of each
1. List the major EC activities. follows:
2. List the major EC mechanisms.
3. Describe the online purchasing process.

• Customers. Several billions of Internet users world-
2.2 E-MARKETPLACES wide are potential buyers of goods and services
offered on the Internet. These consumers are look-
Markets (electronic or otherwise) have four major functions: ing for bargains, customized items, collectors’ items,
(1) enabling transactions to occur by providing a meeting entertainment, socialization, and more. The social
place for buyers and sellers; (2) enabling the flow of relevant customers have more power than regular customers.
information; (3) providing services associated with market They can search for detailed information, compare
transactions, such as payments and escrow; and (4) provid- prices, bid, and sometimes negotiate. Buying orga-
ing auxiliary services such as legal, auditing, and security. nizations are also customers, accounting for more
than 85% of EC volume and value activities.
• Sellers. Millions of webstores are advertising and
Electronic Markets offering a huge variety of items. These stores are
owned by companies, government agencies, or
The electronic market is the major venue for conducting EC individuals. Every day it is possible to find new
transactions. An e-marketplace (also called e-market, vir- offerings of products and services. Sellers can
tual market, or marketspace) is an electronic space where sell directly from their websites or from public
sellers and buyers meet and conduct different types of e-marketplaces.
transactions. Customers receive goods and services for • Products and services. One of the major differ-
money (or for other goods and services, if bartering is used). ences between the marketplace and the marketspace
The functions of an e-market are the same as those of a phys- is the possible digitization of products and services
ical marketplace; however, computerized systems tend to in a marketspace. Although both types of markets
make electronic markets much more efficient by providing can sell physical products, they can also sell digital
more updated information and various support services, such products, which are goods that can be transformed
as rapid and smooth executions of transactions. into a digital format. However, in marketspaces,
The emergence of electronic marketplaces, especially buyers can buy digitized products online, anytime
Web-based ones, has changed several of the processes used and from any place in seconds, and receive the pur-
in trading and supply chains. In many cases, these changes, chased goods instantly. In addition to the digitiza-
driven by technology, have frequently resulted in: tion of software, music, and airline tickets, it is
possible to digitize dozens of other products and
services, as shown in Online File W2.2.
• Lowering the search time for information and cost • Infrastructure. The marketspace infrastructure
to buyers includes electronic networks, databases, hardware,
• Reduced information misunderstanding between software, and more.
sellers and buyers • Front end. Customers interact with a marketspace
• Possible reduction in the time gap between purchase via a front end. The major components of the front
and possession of physical products purchased end can include the seller’s portal, electronic cata-
online (especially if the product can be digitized) logs, a shopping cart, a search engine, an auction
• The ability of market participants to be in different engine, a payment gateway, and all other activities
locations while trading online related to placing orders.
• The ability to conduct transactions at any time • Back end. All the activities that are related to order
(24/7) from any place aggregation and fulfillment, inventory management,