INFORMATION TECHNOLOGY COURSEWORK

Information Technology Coursework

Information Technology Coursework

Online Marketplace

The term, online marketplace, has been continuously refined toward more business model concepts. At the first stage of conceptualization, an online marketplace was regarded as all types of electronic marketplaces including Electronic Data Exchange (EDI).

As the Internet age emerged, the Internet became the key aspect of an online marketplace. However, Varadarajan and Manjit (2002) argued that an online marketplace not only allows sellers and buyers to exchange information about prices and product offerings but also facilitates the transactions and other activities related to before/during/after transactions. In addition, they insisted that an online marketplace is not limited to an inter-organizational information system but a networked information system or virtual space any sellers and buyers can participate in and join.

So, they re-defined an online marketplace as a networked information system that serves as an enabling infrastructure for buyers and sellers to exchange information, transact, and perform other activities related to the transaction before, during, and after the transaction.

Technically, an online marketplace can accommodate and serve all types of exchange from 'Business to Business (B2B)' exchanges, 'Business to Consumer (B2C)' exchanges, and 'Consumer to Consumer (C2C) exchanges'. However, nowadays, C2C is similarly dealt with B2C, because an individual consumer engaging in selling activities can be regarded as a seller engaging in retailing (eBay 2005). Considering the context of this study is online retailing, the focus is on B2C/C2C online marketplace.

A B2C/C2C online marketplace is a networked information system of third party merchant agents (sometimes categorized as 'consumer information providers'), online mall operators, or online auction providers. Even though there are slight differences, both of them do not merchandise or sell by themselves directly to consumers.

Instead, they connect an organizational retailer or an individual seller to a consumer by providing product/price information for the retailer's merchandise, retailer's information, reputation of the retailer (evaluated opinions on quality of the retailer by experienced customers), and a hyperlink to the website of the retailer.

For example, eBay, the largest B2C/C2C online marketplace in the world in terms of both transaction volume and the number of registered users, provides the online space (i.e., information systems) where buyers and sellers can exchange or transact with each other rather than selling its own merchandise.

An online marketplace also provides various value-added functions facilitating the transactions between retailers and consumers.

Electronically enabled 'Many to Many 'exchange/communications

Unlike the independent online front-store of a company, an online marketplace facilitates both numerous sellers and consumers (buyers) to participate in transactions (exchanges) or in other value-added activities related to transactions. In addition, unlike the traditional markets, there is little physical barrier for participants (both sellers and consumers) to participate in transactions. Thus, a consumer's alternatives for choice are broader than in any other form of market.

Furthermore, as seen on eBay, a consumer is able to play the role of a seller whenever he/she wants to sell his/her goods. For these reasons, online marketplaces contribute to a dramatic increase in the number of retailers and the sales volume of transactions ...