The electronic marketplace refers to the market economy where producers, intermediaries and buyers interact electronically over digital media. This marketplace is a virtual or online representation of a physical marketplace. The electronic marketplace is fundamental to the success of online business activities.
The image of the eMarketplace (monopoly-e-commerce, n.d.)
Goods and Services
The products traded over the emarketplace can be described as:
Businesses selling these products in the online marketplace generally outlay considerable amounts of money and time on marketing, raising brand awareness and technology. Initially many of these businesses (e.g. Amazon.com) concentrate upon expanding their customer numbers without regard for profitability by selling items below the cost price. They are prepared to lose money to gain market share and consumer loyalty. Rifkin (2001) noted that “markets are making way for networks”. Businesses work towards developing strong commercial relationships with their customers. Commercial success is seen to depend less on exchange of goods and services and more on establishing long term networks of commercial relationships. They do this by providing:
- an online environment which is easy to read and navigate
- trustworthy information
- competitive pricing strategies
- a reliable supply of products and services
- a trusted and secure transaction environment and
- strong customer service strategies which allow feedback to the business. ''Web 2.0 presented businesses. with new challenges but also new opportunities for getting and staying in touch with their markets, learning about the needs and opinions of their customers as well as interacting with them in a direct and personalised way'' (Constantinides & Fountain, 2008, p233).
In the United Stated Amazon offers 42 product categories. It is a global company with 42% of sales outside of the U.S.A. and 45% of sales from non-media products. The primary source of revenue for Amazon.com is the sale of products and services to customers.
The products offered include:
- merchandise and content purchased for resale
- products offered by third party sellers. Third party sellers are companies or sellers that trade through Amazon but the product is not held by or dispatched by Amazon.com. The customer goes through the same buying process as they would normally and are protected by Amazon for these purchases
- the Kindle e-Reader which is manufactured by Amazon.com.
The services offered include:
- Amazon Web Services which provide remote computing services
- co-branded credit cards
- fulfillment which refers to the process from sale to delivery of a product to the customer. Amazon stores, packs and delivers the products as part of its fulfillment process. The company offers fulfillment services to its seller coustomers.
- Online Advertising
You Tube Video Aksenov, 2009
Market Structures
Mahadevan (2000, p 6) identified three broad structures within the internet marketplace. These structures help describe the commercial relationship between the online business and their customers.
- Firstly, portals such as Yahoo build a network of consumers based upon providing information about goods and services. These portals greatly influence traffic by directing customer attention to targeted websites in a pre-defined manner.
- Secondly, the market makers such as e-Bay which facilitate business transactions between buyers and suppliers. These businesses provide in-depth knowledge about the products and also provide a secure environment for the transactions to occur.
- The last of the market structures are the product/service providers such as Amazon.com which deal directly with their customers when the transaction takes place. These businesses rely upon a network of customers to purchase the products on offer within the emarketplace.
Supply Chain
Within the emarketplace businesses rely upon their supply chain to ensure goods and services are available for customers on demand. The internet has made it possible for some businesses to '' shrink the supply chain by a process of disintermediation'' (Mahadevan, 2000, p 20). This process removes the intermediaries or middlemen. Business involved in the provision of information goods within the online market often gravitate towards disintermediation whereas businesses involved in the provision of physical goods often continue to rely upon intermediaries to supply inventory, provide secure transaction interfaces and deliver products. The main advantages of disintermediation for businesses include lower costs and better responsiveness within the marketplace. These improvements can lead to a price reduction when passed onto the consumer. A reliable supply chain is essential if the internet marketplace is to function effectively. ''Global supply-chain management depends upon the Internet and a break down or security breach could cause major economic damage'' (O.E.C.D., 2008, p1).
Amazon.com has invested heavily in warehouse, shipping and distribution systems. The company through its acquisition programs has captured much of its supply chain although it continues to rely upon established distributors for its product inventory.
Customers
Internet businesses operate in a global marketplace and are unrestrained by physical or political boundaries, time or space. Buyers need no longer be located in close proximity to the sellers and can access the e-commerce businesses at any time of the day or night from any location across the globe.
Amazon.com conducts business on an international scale and ships products to more than 122 countries. Amazon.com uses a "global trade management solution to provide customers in more than 40 countries details on the full cost of orders, including country-specific duties, taxes, tariffs and licenses" (Amazon.com, 2009, p30). Amazon also operates websites in U.S.A., Canada, France, U.K., Germany, Japan and China and each of these countries exports to other countries.
Amazon.com offers a diverse range of goods and services. Its customers include:
- Consumers who buy directly from the website
- Merchants who sell on amazon.com
- Developers who utilise the technology products e.g. Amazon Web Services and
- Authors who choose to publish with Amazon.com.
Amazon.com is a customer centric business. It achieves this by striving to offer the world’s best selection of products on the website and to do this Amazon.com allows merchants to trade on the Web Site and guarantees the transaction in the same manner as if the customer was purchasing directly from Amazon.com.
Customer Reviews enable customers to provide authentic feedback about a product to the business via the website. Reviewers must rate the product on a scale from one to five stars. The aim of the feedback is to provide product information with the aim to build customer trust.
Amazon.com strives to be perfect in operations to maintain customer trust and loyalty. This is achieved by ensuring that the customer order is taken accurately, transmitted to the fulfillment centre, packed and delivered quickly.
Amazon.com associates receive commissions for referring customers by placing links on their websites to Amazon.com. Associates may also access the Amazon catalogue directly through Web Services or can embed part of the catalogue into their website.
Competitors
- In the 2009 Annual Report (p4) Amazon.com listed potential competitors as:
- physical-world retailers, publishers, vendors, distributors, manufacturers, and producers of our products
- other online e-commerce and mobile e-commerce sites, including sites that sell or distribute digital content
- a number of indirect competitors, including media companies, web portals, comparison shopping websites, and web search engines, either directly or in collaboration with other retailers
- companies that provide e-commerce services, including website development, fulfillment, and customer service
- companies that provide infrastructure web services or other information storage or computing services or products; and
- companies that design, manufacture, market or sell digital media devices.
The three main competitors in the electronic marketplace are Barnes and Noble Inc (Online books, DVD, e-readers), e-Bay (marketplace and payments structure) and Wal-Mart Online. In recent months, Apple's release of the iPad has increased competition for the e-book and e-reader markets.
