Technology of the Week: Electronic Markets and Auctions Group 60

11

October

2017

5/5 (1)

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):

 

Bain, M. (2016). Amazon is developing a 3D modeling system to solve online clothes shopping’s biggest problem. [online] Quartz. Available at: https://qz.com/730986/amazon-may-be-developing-a-3d-modeling-system-to-solve-online-clothes-shoppings-biggest-problem/ [Accessed 8 Oct. 2017].

Bhargava, V. (2016). 5 Reasons Why People Love Shopping Online (And How You Can Make The Most Of It. [online] Exit Bee Blog. Available at: http://blog.exitbee.com/5-reasons-why-people-love-shopping-online-and-how-you-can-make-the-most-of-it/ [Accessed 8 Oct. 2017].

Dimoka A. and Hong Y. and Pavlou P. (2011) On Product Uncertainty in Online Markets: Theory and Evidence. MIS Quarterly, Vol. 36.

Gandhi, V. (2017). Future of the Online Retail Industry and the role of Big Data Analytics. [online] Linkedin. Available at: https://www.linkedin.com/pulse/future-online-retail-industry-role-big-data-analytics-vibhuti-gandhi/ [Accessed 8 Oct. 2017].

Kestenbaum, R. (2017). What Are Online Marketplaces And What Is Their Future? [online] Forbes.com. Available at: https://www.forbes.com/sites/richardkestenbaum/2017/04/26/what-are-online-marketplaces-and-what-is-their-future/#39c124b83284 [Accessed 8 Oct. 2017].

Khurana, A. (2017). Should You Compete With Amazon or Rule a Niche? [online] The Balance. Available at: https://www.thebalance.com/horizontal-vs-vertical-ecommerce-1141751 [Accessed 8 Oct. 2017].

Wallace, T. (2017). Ecommerce Trends: 147 Stats Revealing How Modern Customers Shop in 2017

[online] Bigcommerce.com. Available at: https://www.bigcommerce.com/blog/ecommerce-trends/#cmtoc_anchor_id_0 [Accessed 8 Oct. 2017].

Prevett, R. (2017). Can IoT Breathe New Life Into Bricks and Mortar Retail? – Disruption Hub. [online] Disruption Hub. Available at: https://disruptionhub.com/can-iot-breathe-new-life-bricks-mortar-retail/ [Accessed 11 Oct. 2017].

Rafi, M. (2017). How Retailers Should Think About Online Versus In-Store Pricing. [online] Harvard Business Review. Available at: https://hbr.org/2017/01/how-retailers-should-think-about-online-versus-in-store-pricing [Accessed 8 Oct. 2017].

Strader T. and Shaw M. (1999) Electronic Markets: Impact and Implications. Handbook on electronic commerce. pp 77-98 Available at: https://link.springer.com/chapter/10.1007%2F978-3-642-58327-8_4 [Accessed 8 Oct. 2017].

Timmers, P. (1998). Business Models for Electronic Markets. Electronic Markets, 8(2), pp.3-8.

Turner M. (2017). Is Brick-And-Mortar Obsolete? [online] Forbes.com. Available at: https://www.forbes.com/sites/marciaturner/2017/01/31/is-brick-and-mortar-obsolete/#1838cb7337ce [Accessed 11 Oct. 2017].

YouTube. (2016). Vroom: Virtual Reality Showroom Teaser. [online] Available at: https://www.youtube.com/watch?v=XbLb4EA2bmA [Accessed 8 Oct. 2017].

YouTube. (2016). FIFA 17 All National Team Kits. [online] Available at: https://www.youtube.com/watch?v=uoCle8rRsVQ [Accessed 8 Oct. 2017].

 

Authors:

Romane Geraci (405610)

Nina Feuerstein (409839)

Mihai Buca (371721)

Sarisa Nuboer (407414)

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Two-Side Platform Markets

2

October

2017

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Platforms are considered products or services that bring together users in two-sided networks (Eisenmann et al.,2006). As Eisenmann et al. (2006) argues, such platforms differ from traditional markets. Where a traditional markets sees cost on one side and revenue on the other; a two-sided network market sees costs and revenues on both sides as a result of two user groups.

To better understand two-sided platform markets, a common example used, also by Eisenmann et al. (2006) is the idea of the video gaming industry. Taking Playstation as an example, the platform provider, Playstation ultimately acts as a middle man between the end-users (gamers) and game providers (developers). When developers are informed and identify that Playstation has a large customer base and network of users, they would be more willing to develop games compatible to PlayStation. Similarly, with credit-card platform providers like VISA and American Express, vendors would be more likely to pay a fee to accept VISA or American Express if there is a large customer base using one of the two cards as their preferred choice.

As suggested by Zhu and Furr (2016), several current platform providers began their journey as product providers. For instance, taking Google as an example, the company began as a search engine and today has transformed into a platform allowing Advertisers to promote their ads to end-users. Considering the examples above, what other markets do you think have the potential to evolve into platform markets?

Interestingly, whilst writing this entry, a thought developed. Marketplaces such as Amazon were a common example of two-sided platform markets. This seems fairly obvious when we, as customers, go on Amazon to search for an item, and vendors from all over the world provide their goods through Amazon as the intermediary. However, Amazon also produces own-labeled goods,  from batteries to baby wipes which are indeed bringing positive returns for the company (Rao, 2016). So what would the implications be for the two-sided platform business model of some of Amazons product categories if the company are able to gain control and save costs from selling their own goods, rather than those of a vendor? In a sense wouldn’t this eliminate the need for Amazon enable vendors and return the model into a traditional one-sided market (at least for some items)?

 

References

Eisenmann, T., Parker, T. and W.Van Alystne, M. (2006), Strategies for Two-Sided Markets, Harvard Business Review, [Accessed 2/10/2017]

Zhu, F. and Furr N., (2016), Products to Platforms: Making the Leap, Harvard Business Review, [online] Available at: https://hbr.org/2016/04/products-to-platforms-making-the-leap [Accessed 2/10/2017]

Rao, L. (2016), Amazon’s Private Label Brands Are On Fire, Fortune, Available at: http://fortune.com/2016/11/04/amazons-private-label-brands/ [Accessed 2/20/2017]

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The Power of Duolingo

18

September

2017

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Sharing from personal experience, many of us know Duolingo as a language application. One can pick a language they would like to learn starting at the most basic level and making improvements through practice. All of this, free of charge. However, today, arguably, six years late, I became aware of Duolingo’s greater purpose which has intrigued me to share my opinion.

In 2011, Luis Von Ahn, in his Ted Talk “Massive-Scale Online Collaboration” talked about how we, as end-users of the Internet, are aiding Digitization. For instance, making books electronic is not necessarily a challenge for new editions. However, as Von Ahn explains, the older editions which are harder to read, are being digitized with our help. How? Well, when on an online application process, we often have to verify we are humans by entering a string of text we see on-screen. These string of text happen to be scans of text from older books. With millions of individuals filling out the text string each time, the phrase becomes validated and ultimately results in a digitized book.

What Von Ahn further brought to light in 2011, was the introduction of the App Duolingo. He explained that Duolingo would help individuals learn languages meanwhile translating the Web. Ultimately, language learners begin by translating simple phrases which get more difficult as they progress. Whilst millions of users are doing this, this ultimately enables the translation of phrases across the web.

 

I believe what I find most intriguing about Duolingo are two things:

  1. The idea of an individual doing something they are willing and motivated to achieve meanwhile serving another purpose – I reckon not many of us have the desire to translate the web, yet, if you’re using Duolingo, you are in fact doing so! Though Duolingo was introduced in 2012, I believe this new business model is even more relevant in the current age. I wonder how many firms have adopted this model.  And, which other areas could we adapt this business model to? Where else would this be an effective means to achieve a goal?
  1. Von Ahn, through Duolingo is addressing a key societal challenges, namely, reducing poverty through education. As he explains, many language courses are only available to a percentage of our population that can afford it (Link). Von Ahn has exploited mobile technology, which is becoming more readily available in rural regions as a means to help reduce poverty by enabling less-privileged individuals an opportunity to learn. I can imagine that purchasing a mobile and installing Duolingo is cheaper than following a large number of language courses. It is genuinely exciting to see how technology is being used as a means to address and overcome societal challenges in ways that are not necessarily obvious.

 

Reference List:

Von Ahn, L. (2011). Massive-Scale Online Collaboration. Ted Talk Available at: https://www.ted.com/talks/luis_von_ahn_massive_scale_online_collaboration?utm_campaign=tedspread–a&utm_medium=referral&utm_source=tedcomshare [Accessed 18 Sep. 2017].

The Guardian. (2017). Luis von Ahn: the Duolingo entrepreneur teaching languages for free. [online] Available at: https://www.theguardian.com/personal-investments/ng-interactive/2016/sep/15/luis-duolingo-teaching-languages-english-free-poverty [Accessed 18 Sep. 2017].

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