What is meant by buy-side, sell-side and marketplace based e-commerce? (2024)

written 6.9 years ago byteamques10 ★ 51k

1.Introduction:

• “E-commerce is the exchange of information across electronic networks, at any stage in the supply chain, whether within an organization, between businesses and consumers, or between the private and public sector, whether paid or unpaid.”
• When evaluating the strategic impact of e-commerce on an organisation, it is useful to identify the opportunities for buy side and sell side e-commerce transactions.

2.Diagram:

3.Types of e-commerce:

The two types of e-commerce are as follows:

i. Buy side e-commerce:

• Buy side e- commerce refers to transactions to procure resources needed by an organisation from its suppliers.
• They basically indicate using communications technology to support the upstream supply chain from procurement to inbound logistics.
• They are e-commerce transactions between a purchasing organization and it suppliers, possibly through intermediaries.

• Example:E-business application developed by Shell Chemicals is an excellent example for buy side e-commerce. Prior to the development of this application, there was a danger that Shell’s customers might run out of an essential chemical and eventually revenues would be lost.Hence, this application helped them to manage their customer’s inventory based on data shared by its customers about their usage and forecast demand for chemicals. Advantages of using this application include:

  • Reduces the need for excess inventory storage.
  • Quick availability of product when required
  • Transaction costs like invoices and data entry is reduced.
  • Order processing overhead is reduced.

ii.Sell side e-commerce:

• Sell side e-commerce refers to transactions involved with selling products to an organisations customer.
• They doesn’t only involve selling products such as books and CD’s online, but also involves using internet technologies to market services using a range of techniques.
• It is useful to consider the four main types of online presence for sell side e-commerce which are as follows:
  • Transactional e-commerce sites: These enable purchase of product online. The main business contribution of the site is through sale of these products.
  • Services-oriented relationship-building websites: Provide information to stimulate and build relationship. Products are not available for purchase online. Information is provided through website and e-newsletters to inform purchase decisions. The main business contribution is through encouraging offline sales and generating enquiries or leads from potential customers.
  • Brand-building sites: Provide an experience to support the brand. Products are not typically available for online purchase. Their main focus is to support the brand by developing an online experience of the brand.
  • Portal or Media sites: Provide information or news about a range of topics. Portal refers to gateway of information. This is information both on the site and through links to other sites.
  • Example: Example of sell side e-commerce include Retail sites (like Amazon), online banking services (like HSBC), Portals (like Yahoo) etc.

iii.Marketplace based e-commerce:

• An online marketplace (or online e-commerce marketplace) is a type of e-commerce site where product and inventory information is provided by multiple third parties, whereas transactions are processed by the marketplace operator.
• Typically, they are intermediaries that are part of reintermediation. (Please refer the concept of reintermediation from chapter 2 Q6).
• Example of marketplace based e-commerce includes Chemdex, VerticalNet etc.
• Advantages of this type of e-commerce to buyers include:
  • Simplicity
  • Choice of suppliers, products and prices are wide.
  • Terms and conditions are often unified.
  • Whereas disadvantages include:
  • Difficult to select between vertical and horizontal market place.
  • Poor purchase controls.
  • Uncertainty on service levels from unfamiliar suppliers.
  • Integration with ERP is poor/
  • Some marketplaces may go beyond procurement to offer a range of services that integrate the supply chain. These market places are called metamediaries