2 - Internet Marketplaces – A Technical Perspective

Summary

Internet-based electronic marketplaces leverage information technology to match buyers and sellers with increased effectiveness and lower transaction costs, leading to more efficient, “friction-free” markets.

(Bakos, 1998)

This book analyzes a variety of market mechanisms for electronic marketplaces. “Electronic brokerage” is a metaphor for information systems facilitating the matching of buyers and suppliers in an electronic market; and, therefore, these mechanisms are key to the success of an electronic brokerage system. Before market mechanisms are analyzed, this chapter will give an overview of electronic brokerage systems on the Internet, and classify the various services being provided by electronic brokerages.

The Role of Electronic Brokers

The current state of Internet commerce is a far cry from what an electronic marketplace is envisioned to be. Although a growing number of suppliers, manufacturers and retailers offer their goods and services, in many markets there are no scalable and integrated methods for

• suppliers to reach customers

• customers to reach suppliers

• introducing new products, services, and offers efficiently

• negotiating, billing, and accounting

• creating limited, structured electronic marketplaces.

Electronic commerce depends on the emergence of capabilities that empower buyers to obtain all the product data they need to make informed purchase decisions quickly and easily.