Summary:
The video introduces electronic markets with a specific focus on the Retail Industry. Especially, the video highlights what an electronic market is, what business models are prevalent and how the technology has disrupted and will continue to disrupt the retail industry. Essentially, electronic markets and auctions enable firms to integrate advertising, product ordering, delivery of digitizable products and payment systems (Strader, 1999).
One prevalent business model within online markets are online marketplaces. Horizontal marketplaces like Amazon sell many types of products and are considered a one-stop shopping platform. Such companies also take advantage of supply chain and scale advantages. On the other hand, vertical marketplaces like Coolblue sell the same type of product from various sources and are considered specialists in their field. Coolblue is an example of a firm who, through specialization, are able to engineer the user-experience by highlighting key features of the product category. In addition to online marketplaces, other business models includes: e-shops, third-party marketplaces, collaboration platforms (Kestenbaum, 2017).
Amazon and Coolblue serve as examples of firms utilizing online market business models within the retail industry. The industry includes the sale of products from vendors to an end-customer for goods and services including, groceries, books and clothing, to name a few. The popularity of online markets has also seens a surge from the consumers perspective. For instance, 51% of Americans indicated their preference to shop online (BigCommerce,2017). On the one hand, Online markets offer several advantages to consumers, including: greater transparency, convenience, larger product variety and lower prices. On the other hand, advantages also exist for the retailers as they can benefit from cost reductions. Setting up an online store entails lower costs compared to a physical store. Centralization of products to a warehouse also imply cost savings. Moreover, retailers are able to reach a wider range of customers and better observe customer activity via their online behaviour and data collection.
However, several consideration have to be made in order to exploit the advantages of online markets. The readiness for joining the online market, available resources, types of offered products and services as well as strategic factors like omni-channel approach. Furthermore, an ideal pricing strategy to maximize revenue as well as the product delivery strategies also need to be considered. This does not mean that brick and mortar stores will disappear completely (Turner, 2017). Companies shall find the perfect balance of online and offline shopping, which will bring to the table the distinguishable winning attributes for a firm (Prevett, 2017).
Looking at the future of online marketplaces, innovative technologies like 3D modeling, augmented reality, big data and data analytics and IoT will change and shape online as well as offline markets. Examples such inventions include 3D models of clothes, which allow you to watch your virtual self showcase clothing on a virtual runway. Another example is virtual reality goggle, which allow you to check out different car models.
References (The reference list applies for our summary as well as the content of our video):
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Authors:
Romane Geraci (405610)
Nina Feuerstein (409839)
Mihai Buca (371721)
Sarisa Nuboer (407414)
