What are Electronic Marketplaces?
Electronic Marketplaces are electronically supported institutions.
They build the framework in which processes take place to exchange services and products. In other words they are a virtual, online environment that allows individuals or firms to conduct business whether it is B-2-B or B-2-C.
From an entrepreneurial point of view electronic market places function as electronically disposals (electronic commerce) and on the other hand as electronically purchases (electronic procurement). So we can say that electronic marketplaces are trading facilities within E-Business. The electronic transactions are based von IT-systems which support, integrate or even automate every single stage in the buying process. There are no physical stores, no insurances, or infrastructure investment.
What kind of Advantages do Electronic Marketplaces have?
Obviously electronic marketplaces profit from its computer and information techniques. Real markets are identified by local and temporal restrictions whereas electronic marketplaces have an unlimited access for trading.
Providers and demanders do not meet each other personally because they use graphical applications to conclude their transaction within the World Wide Web (WWW). Through a simple “mouse click” each of the participants is able to access the data net easily. From any place and any time the electronic marketplace is steadily available.
Moreover electronic marketplaces are cost effective. For instance you have to pay a higher amount on transaction charges in a bank than in any electronic process. Furthermore a customer can look at online catalogues for free instead of buying them for a higher amount.
Moreover it provides better and quicker customer service which is a very important aspect. Without a efficient service business companies will not build a long term relationship with the customer.
For instance, electronic marketplaces offer special package delivery service, where tracking numbers allow customers to check the whereabouts of a package online, is one good example. This is a competitive advantage.
What kind of Disadvantages do Electronic Marketplaces have?
Security is one of the major problems on electronic market places. Both, providers and customers have to feel confident about the integrity of the payment process before they commit to the purchase. More and more criminal organizations try to interfere illegally into the processes.
As in any other business field, companies who offer electronic markets suffer from a high degree of rivalry. Thus, competetion is very important in order to keep the markets flexible and attractive small retailers that go head–to–head with e–commerce giants are fighting losing battle.The problem is that they simply can not compete on price or product offering.
Customer Relations Problems
On the one hand, as mentioned above, customer relationship is an advantage of electronic markets. But on the other hand it is a disadvantage, too. Customers are getting used to customized markets with a personal account. They are used to get the best service available. Smaller companies do not have enough resources (financial, personnel or equipment) to compete successfully. That is why customers prefer highly recognized markets (e.g. ebay or amazon) instead of smaller companies.
Summary and Future Trends
We are fully justified in saying that electronic marketplaces dominate the global economy. Without doing business based on the www we would suffer from communication lacks and unsatisfied needs. The development of these markets are very interesting. The amount of users rose steadily and will definetly play a big role in the nearer and further future.