Marketspace=eMarketplace Marketspace Components (cont.

)
• Marketspace: A marketplace in which sellers and • Digital products: Goods that can be transformed to digital
buyers exchange goods and services for money (or for format and delivered over the Internet
other goods and services), but do so electronically. • Front end: The portion of an e-seller’s business
Components: processes through which customers interact, including
the seller’s portal, electronic catalogs, a shopping cart, a
search engine, and a payment gateway
• Customers • Back end • Back end: The activities that support online order-taking.
• Sellers • Intermediaries It includes fulfillment, inventory management, purchasing
from suppliers, payment processing, packaging, and
• Products • Other business delivery
• Infrastructure partners • Intermediary: A third party that operates between sellers
and buyers
• Front end • Support services

1 2

3 4
 Electronic Marketplaces Electronic Marketplaces (cont.)
• Three main functions of markets
• Markets play a central • Markets create 1. matching buyers and sellers
role in the economy economic value for: 2. facilitating the exchange of information, goods, services,
and payments associated with market transactions
facilitating the – buyers
3. providing an institutional infrastructure, such as a legal
exchange of: – sellers and regulatory framework, that enables the efficient
– information – market functioning of the market
– goods intermediaries • In recent years markets have seen a dramatic increase in the use
of IT—EC has:
– services – society at large
– increased market efficiencies by expediting or improving
– payments functions
– been able to significantly decrease the cost of executing
these functions

5 6

Types of Electronic Markets (cont.)

Types of Electronic Markets
• Electronic storefront: A single or company Web • e-mall (online mall): An online shopping center where many
stores are located
site where products and services are sold
– some are merely directories
• Mechanisms necessary for conducting the sale: – some provide shared services (e.g., choicemall.com).
– electronic catalogs – some are actually large click-and-mortar retailers
– search engine – some are virtual retailers (e.g., buy.com)
• Types of stores and malls
– e-auction facilities
– General stores/malls
– payment gateway – Specialized stores/malls
– shipment court – Regional versus global stores
– customer services – Pure online organizations versus click-and-mortar stores

7 8
 Types of Electronic Markets (cont.) Company-centric models
• e-marketplace:
An online market, usually B2B, in which buyers and sellers
exchange goods or services; the three types of e-marketplaces
are private, public, and consortia
• Private e-marketplaces:
Online markets owned by a single company; can be either sell-
side or buyside marketplaces
• Sell-side e-marketplace:
A private e-market in which a company sells either standard or
customized products to qualified companies
• Buy-side e-marketplace:
A private e-market in which a 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; also
known as exchanges
• Consortia:
E-marketplaces owned by a small group of large vendors,
usually in a single industry 9 10

Net Market Maker Solution Net Market Maker Solution

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11 12
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13 14

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15 16
 Net Market Maker Solution Sell-Side Marketplaces:One-to-Many(Sample)
• Virtual sellers—Bigboxx.com.hk of Hong Kong
Net Market Maker Solution – B2B office supply retailer services
Builder • Large corporate clients
Business Services Framework
• Medium corporate clients
Transaction Services
Bundled Services • Small offices
Buying Content Auction y Leverage infrastructure, connectivity and – Goal—sell products in various SE Asian countries
Services Services Services
integration services of GMP • Offers more than 10,000 items
y Real-time transaction processing
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Management
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Services
Services Global Trading Web (GTW) – Company portal attractive, easy to use
Add-In Services • Browse online catalogs
Provided by Global E-marketplace Partners
• Use search engines
as a service to the Net Market Maker • Payments
– Cash or check upon delivery
Transaction Services – Automatic payments
– Credit card
Connectivity Security Management
– Purchasing card
17 18

Sell-Side Marketplaces:One-to-Many (cont.)

Sell-Side Marketplaces:
• Virtual sellers—Bigboxx.com.hk of Hong
Kong (cont.)
One-to-Many (cont.)
– Delivery • Virtual sellers—Bigboxx.com.hk of Hong
• Owns trucks and warehouses Kong (cont.)
• Delivery scheduled online – Value-added services
– Same day (within an hour) • Track status of order
– Specifically scheduled time
• Check stock availability
• Ordering system integrated with SAP-based back-
office system • Promotions
• Customized prices
• Group accounts and central approval—for
businesses with multiple branches
• Standing orders automatically activated
19 • Large number of reports and data available 20
 Sell-Side Marketplaces: Sell-Side Marketplaces:
One-to-Many (cont.) One-to-Many
• Customer service Direct sales from catalogs
– General Electric Configuration and customization
• 20 million calls/year about appliances
Efficient customization for direct sales
• Reduced cost of each call from $5 to $0.20
Business customers
– Milacron, Inc. Customize products
• Site contains 55,000 products Receive price quote
– Easy to use
Submit order
– Securely handles selection, purchase, application
• Technical service—expanded to provide a higher Successful cases
• Dell • IBM
level of service than previously available at the site
• Intel • Cisco
21 22

Sell-Side Marketplaces:
Sell-Side Marketplaces:
One-to-Many (cont.)
One-to-Many (cont.)
• Direct sales from catalogs (cont.)
• Direct sales from catalogs – Limitations
– Benefits • Channel conflicts with distribution systems
• Reduces costs (to buyers and sellers) and errors • High cost when traditional EDI used
during the process
• Large number of business partners is needed to
• Speeds up order cycle justify system
• Ability to customize products
• Offer different prices to different customers

23 24
 Selling Side: Auctions and Other Models Selling Side:Auctions and Other Models (cont.)
• Forward auctions—quick disposal of items
– Revenue generation
• Billing and collection
– Increased page views – Automatic calculation of shipping weights and
– Member acquisition and retention—bidding transactions result in additional
registered members charges
• Selling from own site when:
– Payment—encrypted credit card data
– Large companies that conduct auctions frequently don’t benefit from using
intermediaries – Billing information—easily downloaded into
– E-marketplace already in use, cost of adding auction not too high
• Using intermediaries when:
existing systems
– No resources required – Successful if:
– Own and control auction information
– Fast time to market • Sufficient number of loyal customers
• Searching and reporting • Products well known
– Search and report all auction activities
– Standard reports available • Price not major purchasing criteria
– Additional analysis of complex information

25 26

Buy Side: One-from-Many,E-Procurement

A Traditional Purchasing Process • Purchasing agents (buyers)
– Direct purchasing
Flow • Use of material is scheduled
• Not a shelf item
– Indirect purchasing
• MROs
• Nonproduction materials
• Inefficiencies in procurement management of indirect materials
• Innovative procurement management
– Innovative purchasing as strategic approach to increase profit
margins
– Web facilitation includes:
• Electronic tendering
• Volume purchasing
• Aggregating supplier catalogs at buyer’s site
Source: ariba.com, February 2001. • Group purchasing
• Others

27 28
Buy Side: One-from-Many,E-Procurement (cont.) Buy Side: Reverse Auctions
• Pre-Internet Reverse auction process
• Goals of procurement reengineering – Prepare description of product to be produced
– Increase purchasing agent productivity – Announce project via ads, mail, telephone
– Lower purchasing prices of items – Send detailed information to interested vendors
– Improve information flow and management – Vendors prepare proposals
– Minimize maverick (unplanned) buying – Bidders submit document proposals
– Improve payment process – Proposals evaluated
– Streamline purchasing process to make it: - Simple - Fast – Problems: Laws – Expensive - Errors
– Reduce administrative processing cost per order • Web-based reverse auction process
– Find new suppliers and vendors to provide faster/cheaper goods and services – Buyers prepare bidding project information
– Integrate procurement process with budgetary control in an efficient and – Buyers post project on portal
effective way
– Identify potential suppliers
– Minimize human errors in buying or shipping process
– Invite suppliers to bid
• Direct vs. indirect sourcing
– Suppliers download project information
– Tools to automate purchasing goods
– Suppliers submit electronic bid
• Direct or mission critical
– 80% of manufacturer’s expenditure
– Reverse auction in real-time, or it can take a few days
– Long-term relationship with vendor of known quality goods
– Buyers evaluate and award contract
– Tight integration with suppliers along supply chain – Benefits:
• Electronic process is faster
• Indirect—use of public exchanges for indirect sourcing
29 • Administratively much less expensive 30
• Enables location of cheapest possible products

Factors in B2B EC Planning: Factors in B2B EC Planning:

E-Marketplace Perspectives E-Marketplace Perspectives (II)
• Ownership of e-Marketplace
• Direction of Integration
– Independent, Consortia, Private
– Vertical (Direct Purchase), Horizontal (MRO)
– Public, Private (or Proprietary)
• Who keeps the data • Pricing Scheme
– Third party, Buyers, Sellers – Posted price, Negotiation, Auction, Reverse
• Role of e-Hub Auction
– Exchange, SCM, ASP • Disintermediation and Channel Portfolio
– Commerce, Collaboration, Communication, – Skip the intermediary, Online re-intermediary
Community – Direct Marketing and Channel Conflict
• Number of Buyers and Sellers – Pure-click; Click-and-Mortal
– Small Buyers: Buyer-Centric • Standardization of Products
– Small Sellers: Seller-Centric – Commodity, Custom-made
– Many-to-Many: Neutral
31 – Standard E-Catalog, Configured Specification 32
 Factors in B2B EC Planning: Procurement Revolution at GE
• TPN at GE Lighting Division
Buyer’s Perspective – Purchasing was inefficient—too many administrative transactions
• Process for each requisition took 7 days
• Products to buy • Complex and time-consuming
– Direct Goods, Indirect Goods; Large, Small Amount • Could only send out bids for 2 or 3 suppliers
– Trading Process Network (TPN)—electronic bids
• Purchase Channels • Entire process takes 7 days (for suppliers to bid)
– Online, Offline, On+Offline • 2 hours to send information to suppliers
• Purchase Partnership • Evaluate and award bids same day
• Benefits to GE
– Partners(Contract), Spot Buy – Involvement in procurement process
• Role of e-Marketplace and/or Supply Chain Management • Labor declined 30%
– Efficiency with existing suppliers, Discovering new suppliers • Material costs declined 5%-20%--wider base of suppliers online
– Redeployment
• Strategic Thrust • 60% of the staff
– Price down, Inventory reduction • Sourcing department concentrates on strategic activities instead of
paperwork, etc.
• Integration Strategy
– Time to identify suppliers, prepare a request for bid, negotiate a price, and
– Inside-out, Outside-in award the contract
• Origin of Implementation Solutions • Was 18-23 days - Now 9-11 days
– Invoices automatically reconciled reflecting modifications
– Join e-MP, ERP, SCM, CRM 33 – GE procurement departments share information about their best suppliers 34
across the world

Procurement Revolution at GE (cont.)

• Benefits to buyers
– Worldwide supplier partnerships Aggregating Catalogs
– Current business partners
• Strengthen relationships
• Streamline sourcing process
– Rapid distribution of information • Aggregating suppliers’ catalogs: an
– Transmit electronic drawings to multiple suppliers
– Decrease sourcing cycle time
internal marketplace
– Quick receipt and comparison of pricing bids – Maverick buying to save time leads to high
• Benefits to suppliers
– Increased sales volume prices
– Expanded market reach, finding new buyers
– Lowered administration costs for sales and marketing activities
– Aggregating all approved suppliers’ catalogs
– Shortened requisition cycle time in one place
– Improved sales staff productivity
– Streamlined bidding process • Reduced number of suppliers
• Deployment strategies
– Start EC in one division and slowly go to all divisions
– Buyers at multiple corporate locations
– Use the site as public bidding marketplace to generate commission income to • Fewer and remote suppliers
GE 35 36
• Larger quantity/lower costs
 What is e-Tendering?
Group Purchasing e-Tendering solutions enable the tendering process to be conducted via the
Internet.
This process can include:

• Group purchasing—orders from several

buyers are aggregated
– Internal aggregation
• Economy of scale
• Reduced transaction processing cost
– External aggregation
• Aggregating demand online
• Putting together orders from multiple buyers to
make large volumes/lower costs
37 38

e-Tendering software solutions provide: e-Tendering & Procurement Good Practice

• Document management Use of an e-tendering solution promotes recognised procurement
• Maintenance of approved or potential good practice.
supplier lists
• suppliers early warning of opportunities Component of procurement good practice & e-Tendering:
• Contract management functionality • Modernising business processes
• Centralised procurement
• Collaboration with other Authorities or partnerships
• Collaboration between departments
• Demand aggregation
• Supplier rationalisation
• Transparency and fairness
• Contract management

39 40
 Intangible Benefits:
Tangible Benefits:
1- Process Efficiencies 1-Management of the tendering process:
1-1- Time Savings: e-Tendering solutions automate or eliminate 1-1-Co-ordination of tendering solution requirements
some of the repetitive routine administrative tasks such as: 1-2-Document repository
• • General administration; 1-3-Collaboration
• • Alert for imminent tenders; 1-4-Response evaluation
• • Document preparation; 1-5-Management information
• • Document distribution;
2-Increased transparency
• • Assessment / evaluation / online comparison;
• • Supplier enquiries / correspondence; 3-Reduced potential for disputes
• • Gather market / supplier details; 4-Supplier Benefits:
• • Gain necessary approvals;
• • Award / notify suppliers of success / failure; 4-1-Improved communication
• • Conversion of Request for Quotation into a Purchase Requisition. 4-2-Instant receipt
4-3-Supplier Inclusion
2- Reduction in overhead costs

41 42

Identification of Benefit Approach

Type of Benefit Key Performance Indicators (KPI)

Time Savings Reduction in time spent to tender

Advertising Reduction in advertising costs

Cost Savings

Overhead Cost Reduction in total overhead costs

Savings

Process % of tenders through the eTendering system

compliance
43