Page 63 - Introduction to Electronic Commerce and Social Commerce

2.3 Customer Shopping Mechanisms: Webstores, Malls, and Portals 41

In order to sell $480 million in jewelry in 1 year, a tradi- Private E-Marketplaces
tional retail chain needs over 300 stores and over 3000
employees. Blue Nile does it with one 10,000-square-foot Private e-marketplaces are those owned and operated by a
warehouse and 301 employees. The company also bypasses single company. Starbucks.com, dell.com, target.com, and
the industry’s complex supply chain, in which a diamond united.com sell from their websites. Private markets are
may pass through five or more middlemen before reaching a either sell-side or buy-side. In a sell-side e-marketplace, a
retailer. Because they are a large buyer, they can deal directly company (e.g., net-a-porter.com or cisco.com) will sell
with original suppliers. either standard or customized products to individuals (B2C)
As a result, some 465 small jewelry stores closed in 2003 or to businesses (B2B); this type of selling is considered to
alone. The survivors specialize in custom-crafted pieces. be one-to-many. In a buy-side e-marketplace, a company
Large traditional companies compete with Blue Nile by purchases from many potential suppliers; this type of pur-
offering online merchandise, becoming click-and-brick mul- chasing is considered to be many-to-one, and it is a B2B
tichannel organizations, and by streamlining their supply activity. For example, some hotels buy their supplies from
chain and customer service. Note: While Blue Nile impacted approved vendors that come to its e-market. Walmart
negatively small jewelry stores, it was not much of a threat to (walmart.com) buys goods from thousands of suppliers.
large ones (e.g., Tiffany’s). Private marketplaces can be open only to selected members
The future seems to be clear, as can be seen in Bloomberg and are not publicly regulated.
(2004), in the case of Roger Thompson, a small jeweler in
Lambertville, New Jersey, who said, “Anyone with half a Public E-Marketplaces
brain who wants a diamond engagement ring will go to the
Internet.” In the meantime, grooms who propose with Blue Public e-marketplaces often are owned by a third party (not
Nile rings can save $3000–$5000. a seller or a buyer) or by a small group of buying or selling
Note that the competition in the jewelry business is very companies, and they serve many sellers and many buyers.
intense, not only from jewelry retailers (both off-line and They are open to the public and sometimes are regulated by
online, e.g., bidz.com) but also from general e-tailers such as the government.
overstock.com and amazon.com.
Sources: Based on Rivlin (2007), Bloomberg (2004), en.
wikipedia.org/wiki/Blue_Nile_(company), and bluenile. SECTION 2.2 REVIEW QUESTIONS
com/inside-blue-nile (both accessed March 2016).
1. Define e-marketplace and describe its attributes.
Questions 2. What is the difference between a physical marketplace
1. Using the classification of EC (Section 1.2, Chapter 1), and an e-marketplace (marketspace)?
how would you classify the Blue Nile’s business? 3. List the components of a marketspace.
2. In what ways is the company changing its industry? 4. Define a digital product and provide five examples.
3. What are the critical success factors of the company? 5. Describe private versus public e-markets.
4. Research Blue Nile’s affiliate marketing programs. Write
a report. Include how this program helps Blue Nile.
5. Competition between Blue Nile and Amazon.com will 2.3 CUSTOMER SHOPPING
continue to increase. In your opinion, which one will MECHANISMS: WEBSTORES,
win? (Visit their websites and see how they sell jewelry.) MALLS, AND PORTALS
6. Compare the following three sites: diamond.com, ice.
com, and bluenile.com. Several kinds of interactions exist among sellers, buyers, and
7. Follow the performance of Blue Nile’s stock since 2003 e-marketplaces. The major B2C mechanisms are webstores
(symbol: NILE, go to money.cnn.com). Compare it to (storefronts) and Internet malls. Let us elaborate on these, as
the performance of the total market and the averages of well as on the gateways to e-marketplaces—portals.
the industry. What is your conclusion?
8. Find the payment options at Blue Nile when you shop there.
Webstores

Types of E-Marketplaces A webstore (or storefront) refers to a single company’s (or
individual seller’s) website where products and services are
The term marketplace differs once it referred to on the Web. It sold.
is sometimes referred to as e-marketplace or marketspace. We Webstores may target an industry, a location, or a niche
distinguish two types of e-marketplaces: private and public. market (e.g., cattoys.com). The webstore may belong to a