Ch. 8 - E-Commerce Applications & Issues

Tonight, we learned about e-commerce trends and success factors, disintermediation and types of e-commerce marketplaces. Disintermediation means to get rid of the intermediaries, or to cut out the middle men. For example, say you buy a dress shirt from Macy's for $50. You can buy the exact same shirt directly from the manufacturer (online or otherwise), from the same brand, for a much cheaper price. Why? Because by purchasing directly from the manufacturer, you can cut several costs out of the supply chain including the costs charged by the distributor, warehouse, truck shipments and retailers (utilities, employee salaries). Disintermediation emphasizes direct sales over the Internet.

We also learned about five different types of e-commerce marketplaces:

• One to Many: sell-side marketplaces (one major supplier)
• Many to One: buy-side marketplaces (many suppliers)
• Some to Many: distribution marketplaces (unite major suppliers to attract more buyers)
• Many to Some: procurement marketplaces (unite major buyers to attract more suppliers)
• Many to Many: auction marketplaces (many buyers and sellers)