ES/U3 Topic 8 E-Marketplaces
E-market place is a virtual online market platform where companies can register as buyers and sellers to conduct business to business transactions over the internet. The use of the internet has helped remove intermediaries in a transaction. It is a web based information system which provides opportunities for both suppliers and buyers.
It enables the buyers to compare various products and services by different measures like performance, quality, price etc. Buyers get access to a broader range of products and services. On the other hand the sellers can reach the customers more conveniently and affordably. Sellers gets to enter new markets, find new buyers and increase sales by generating more value for the buyers.
Types of the E-marketplace
Electronic marketplaces are generally classified into 4 types
- Independent E-marketplace
The basic motive of this model is to generate revenue. A B2B platform which is managed by a third party and is open to buyers and sellers from a particular industry. When a party registers on an independent e-marketplace it gets quotations or bids in a particular sector.
- Buyer-oriented marketplace
A bunch of people with similar business interests come together to create an efficient purchase environment. This helps a party get sufficient bargaining power to purchase at a desired price from the supplier. A supplier can also benefit from this marketplace as it gives them a customer base with which they can share their catalogue.
- Supplier-oriented marketplace
This type of marketplace is also known as supplier’s directory. It provides a platform for the seller to improve their visibility through different mediums of communication. The suppliers can target the large number of potential buyers.
Example – Ebay
- Horizontal and vertical marketplace
Horizontal marketplace- The buyers and supplier from different industries or regions can come together to make a transaction.
Vertical marketplace- It provides access over the internet to various segments of a particular industry up and down the hierarchy.
- The cost of the customers is reduced significantly as they can access the information about various alternatives and choose the best that suits their needs.
- It can impose higher switching cost on the buyers and sellers.
- It provides economies of scale and scope.
- Different buyers and suppliers can work in collaboration to reap larger benefits from each other.