Electronic Marketplace Research Articles

Recommender System Rethink: Implications for an Electronic Marketplace with Competing Manufacturers

Recommender systems that inform consumers about their likely ideal products have become the cornerstone of e-commerce platforms that sell products from competing manufacturers. Using a model of an electronic marketplace in which two competing manufacturers sell their products through a common retail platform, we study the effect of recommender systems on the retail platform, manufacturers, consumer surplus, and social welfare. In our setting, consumers are differentiated with respect to their preference for the two products (locational differentiation) and awareness about the two products (informational differentiation). A recommender system selects the recommendation based on a recommendation score, which is a weighted sum of expected retailer profit and expected consumer value. We find that the recommender system may benefit or hurt the retailer and the manufacturers depending on the signs and magnitudes of the substitution effect and demand effect of the recommender system. The substitution effect of the recommender system either intensifies or softens the price competition between two manufacturers through two forces—its direct influence alters the informational differentiation of consumers (which affects the markup that manufacturers can charge), and its strategic influence motivates the manufacturers to use price as a lever to attract more recommendations in their favor. The demand effect of the recommender system increases overall consumer awareness, but, depending on the substitution effect, may increase or decrease the demand. The recommendation strategy, namely, the relative weight assigned to retailer profit vis-á-vis consumer value in computing the recommendation score, along with recommender system precision and the relative sizes of segments of consumers with different awareness levels, determines whether the retailer benefits from the recommender system and by how much. We find that the retailer’s optimal recommendation strategy is mildly profit oriented in the sense that it assigns a larger, but not too large, weight to retailer profit compared to consumer value, and that under the optimal strategy, the price competition is less intense and the retailer profit is higher compared to when there is no recommender system. Furthermore, an increase in either the recommender system precision or the fraction of consumers that are aware of at least one product induces the retailer to adopt a more profit-oriented recommendation strategy. The e-companion is available at https://doi.org/10.1287/isre.2017.0765 .

B2B eMarketplace Announcements and Shareholder Wealth

In the business-to-business (B2B) sector, new supply-chain models within electronic marketplaces (eMarketplaces) offer firms significantly lower procurement costs, increased operating efficiencies, and expanded market opportunities. Using event-study methodology to look at the period July 1999-March 2000, Andrew Chen and Thomas Siems find that investors reacted favorably to B2B eMarketplace announcements, with slightly higher abnormal returns associated with vertical than with horizontal eMarketplaces. They also find significant positive abnormal returns for e-commerce technology providers that partnered with computer industry giants or with competitors in B2B e-commerce initiatives. The abnormal returns are more than three times greater than returns from creating a B2B eMarketplace alone or with Old Economy leaders. These results suggest that, at least for the period studied, shareholders valued alliances between B2B eMarketplace developers more than firms developing e-commerce strategies on their own or with an Old Economy partner.

A privacy-aware decentralized and personalized reputation system

Reputation systems enable consumers to evaluate the trustworthiness of business entities (retailers, sellers) over the marketplace. In electronic marketplaces, the reputation of an business entity (retailer, seller) is computed by aggregating the “trust-scores” assigned to her by the parties who have had transactions with her. Most reputation systems designed for online marketplaces use all the available trust-scores to compute the reputation of business entity. However, in some scenarios, the consumer may wish to compute the reputation of a business entity by considering the trust-scores from a set of trustworthy participants, however, she does not want to disclose the identities of the users she trusts. There are two privacy protection challenges in the design of this kind of personalized reputation system: 1) protecting the set of trusted users of participants, and 2) protecting the trust-scores assigned by the participants in the trusted set. In this paper, we present a novel framework for computing the personalized global reputation of a business entity by considering the trust-scores from a set of trusted participants without disclosing identities of participants in the trusted set and their trust-scores. To this extent, the participants share cryptograms of their trust-scores for the business entity to the decentralized public bulletin board or tally center. These encrypted trust-scores are then used by the requester to compute the personalized reputation score of the business entity without leaking private information of participants in the system. We have analyzed the security and privacy properties of the scheme for the malicious adversarial model. The protocol has a linear message complexity, which proves that the system can be deployed in a real setup where such personalized recommendations may be required in practice. Furthermore, the system ensures correctness, privacy and security of trust-scores of participants in the trusted set under the malicious adversarial model.

Demand effects of consumers’ stated and revealed preferences

Knowledge of how consumers react to different signals is fundamental to understanding how markets work. The modern electronic marketplace has revolutionized the possibilities for consumers to gather detailed information about products and services before purchase. Specifically, a consumer can easily – through a host of online forums and evaluation sites – estimate a product’s quality based on either (i) what other users say about the product (stated preferences) or (ii) how many other users that have bought the product (revealed preferences). In this paper, we compare the causal effects on demand from these two signals based on data from the biggest marketplace for Android apps, Google play. This data consists of daily information, for 42 consecutive days, of more than 500,000 apps from the US version of Google play. Our main result is that consumers are much more responsive to other consumers’ revealed preferences, compared to others’ stated preferences. A 10 percentile increase in displayed average rating only increases downloads by about 3%, while a 10 percentile increase in displayed number of downloads increases downloads by about 25%.

Reducing consumer risk in electronic marketplaces: The signaling role of product and seller information

Existing studies offer very limited insight into how sellers may reduce consumers' perceived risk in order to make consumer-to-consumer electronic marketplaces more successful. Contrary to these studies, the empirical investigation reported in this article acknowledges the role of sellers in enabling these computer-mediated transaction platforms. The study focuses on how information provided by sellers about themselves (i.e., seller information) and about their products (i.e., product information) can function as risk reduction signals and how these affect a buyer's inclination to purchase. Combining signaling theory with perceived risk theory, the authors present a research model that they test using structural equation modeling with data collected in two different electronic marketplaces, including eBay.nl. The results indicate that while product and seller information are indeed important risk reduction signals, and as such can play an important role in stimulating purchasing, the risk reduction potential of these forms of information differs across the studied risk types. This article discusses these findings and explains how they contribute to signaling theory and perceived risk theory. Based on the findings, several practical implications for sellers active in electronic marketplaces and for the intermediaries operating these transaction systems are described.

An incentive mechanism to promote honesty among seller agents in electronic marketplaces

With the rapid development of online shopping, usually, sellers and buyers have virtual identities, which are not verified beforehand. As a result, establishing trust between sellers and buyers is much harder than before where sellers and buyers would meet face to face before making any transaction. In this work, we propose a method for the marketplace management under anonymous buyers and sellers which makes the honest behavior the most profiting action for rational sellers. In this method, the market operator adopts an honesty promoting mechanism based on direct reward and punishment in which being honest is the most profitable action. In most online marketplaces, a fee or commission is deducted from every payment before settling the account up with the seller. As such, with the dynamic adjustment of the fee, it is possible to reward or punish the seller. The correctness of this method is proven using mathematical models. The apparatus, processes, and algorithms for the marketplace are elaborated in detail so that market operators can easily apply the method in their existing marketplaces.

Innovative Business Model for Realization of Sustainable Supply Chain at the Outsourcing Examination of Logistics Services

The issue of sustainability is becoming more and more important because of the increase in the human population and the extraction of non-renewable natural resources. We can make decisive steps towards sustainability in the fields of logistics services by improvement of logistics processes and/or application of new environment-friendly technologies. These steps are very important for companies because they have a significant effect on competitiveness. Nowadays significant changes are taking place in applied methods and technologies in the fields of logistics services as part of the 4th Industrial Revolution. Most companies are not able to keep pace with these changes in addition to carrying out their main activities by using own resources; consequently, in many cases logistics services are outsourced in the interest of maintaining or increasing competitiveness. The currently applied outsourcing examination process contains numerous shortcomings. We have elaborated a new business model to eliminate these shortcomings, namely the basic concept for an outsourcing investigation system integrated in the electronic marketplace. The paper introduces the current process of logistics service outsourcing examination and the elaborated business model concept.

The Cultivation of Information Infrastructures for International Trade: Stakeholder Challenges and Engagement Reasons

The development of information infrastructures for international trade to improve supply chain visibility and security has gained momentum due to technological advances. An information infrastructure is a shared, open, and evolving assemblage of interlinked information systems providing distinct information technology capabilities. Examples of information infrastructures are the internet, electronic market places and music platforms. Information infrastructures can be highly beneficial as shown by the aforementioned examples, yet often fail to deliver expected benefits. This research focuses on the cultivation of information infrastructures which refers to a softer, less disruptive design approach compared to traditional design approaches in which systems are defined through specified functional requirements within strict boundaries. Drawing on different stakeholder views within a European Union project for international trade, this research provides a taxonomy of twelve cultivation challenges and four engagement reasons one can expect in the design phase of information infrastructures. Organizational theory is used to discuss underlying explanations. The paper concludes that the cultivation of an information infrastructure for international trade could be highly rewarding, yet is a challenging and long-lasting endeavor which requires multi-disciplinary expertise. Practitioners can use the insights provided by this research to increase their understanding of information infrastructure cultivation to ultimately increase adoption rates.

Internet Marketing as a Business Necessity

The pace at which marketing discipline evolves each year is challenging for both individual marketing experts and companies as systems, which are permanently competing for global consumers. With the development of the Internet as the main channel and best opportunity for the implementation of the optimal one-to-one marketing model, Internet marketing as a new area of marketing theory and practice has emerged and is constantly improving. On the other side, the power and attractiveness of online surrounding have also transformed the way consumers behave, creating new patterns and lifestyle that have to be taken into account when creating appropriate Internet marketing strategies, far different from the traditional ones. Thus, the aim of this article is to examine fundamentals of Internet-based marketing, and to analyse challenges and opportunities that should be addressed by modern companies in their Internet marketing strategies, together with possible limitations and risks that emerged in the electronic marketplace. The method used in the article is secondary research, and implies a detailed analysis of researches and studies in the given field.

A Tale of Two Taxes: Clean Energy Act 2011 (Cth) v Renewable Energy (Electricity) Act 2000 (Cth)

Firstly, this paper defines a tax to establish a definition of a carbon tax and then examines the Clean Energy Act 2011 (Cth) (CE Act), which is considered to be a carbon tax. Secondly, it examines the Australian Renewable Energy (Electricity) Act 2000 (Cth) (REE Act) to ascertain if it functions as a tax on greenhouse gas emissions and is therefore also a carbon tax. It examines both pieces of legislation to compare and contrast them to establish the view that the REE Act is not a quota based system to limit greenhouse gas emissions (a ‘cap and trade’ system) but rather it is a carbon tax system. To do that the paper investigates various definitions of tax. It compares those definitions with the legislative intent and functions of the REE Act to answer the question – is the REE Act a carbon tax system? It concludes that the provisions of the REE Act function as a form of carbon tax. It also concludes that tax revenue, sourced from an excise on fossil fuel generated electricity, is specifically directed by government to a particular purpose – the revenue is hypothecated to support the burgeoning renewable energy industry in Australia. The REE Act taxing system functions by the creation of renewable energy certificates (RECs) by the operators of registered renewable energy generation installations. The RECs are intended to be surrendered as ‘tax tokens’ or coupons by the suppliers of fossil fueled generated electricity. The RECs are subsequently traded on a market to any party registered to trade on a government supervised electronic market place – the Australian rec-registry. They can be, and often are, traded as a form of commodity speculation prior to surrender. However they are ultimately purchased by suppliers of fossil fueled generated electricity to be surrendered to government agencies. Surrendering RECs is the only means by which the suppliers of fossil fueled generated electricity can meet their commitments under the provisions of the REE Act. A fiscal penalty is applied for any shortfall or non-compliance in the number of RECs surrendered and no payment is made by government agencies for the surrendered RECs. A REC, purchased at a variable market value dependent on the economic forces of supply and demand, becomes a token or coupon for the payment of tax. The supply of RECs is dependent on the volume of electricity generated by registered renewable energy generation installations. The demand for RECs is created by the level of the renewable energy target as set annually by the Parliament of Australia. As operators of renewable energy generation installations are the only parties which can create RECs, and suppliers of fossil fueled generated electricity are obliged to purchase RECs to meet their tax commitments the transfer of RECs subsidises Australia’s burgeoning renewable energy industry.

DEVELOPMENT FACTORS FOR CROSS-BORDER B2C E-COMMERCE IN THE WORLD AND IN POLAND

The study attempted to identify the factors determining the development of CBEC B2C e-commerce in the world and in Poland. The level of CBEC development in selected countries has been shown. CBEC is a dynamically developing trading sector in the world. Countries differ in terms of CBEC development, which is due to the varying levels of selection of the products in their internal markets and the economic development of a particular country. CBEC’s worldwide development is also largely due to the international B2C electronic marketplaces. The barriers to the development of CBEC in the world include inadequate regulations to CBEC specificity, problems and costs of logistics and difficulties in conducting online marketing on foreign markets.

Decentralized blockchain-based electronic marketplaces

In a decentralized marketplace, buyers and sellers transact directly, without manipulation by intermediary platforms.

Research on Retailer's Optimal Order Strategy in B2B Electronic Trading Market Environment

B2B electronic marketplaces have provided the participants a variety of services, such as spot trade, capacity options, providing retailers a new avenue to do their business, and thus has changed supply chain structures. This paper investigates the retailer’s optimal ordering strategies in a B2B electronic marketplace, where market demand and market prices of commodities are uncertain. The study shows that the options in B2B electronic marketplaces provide a new chance for retailers to reduce risk of market uncertainty. These findings also have significant meaning for buyers, suppliers and the third-party B2B electronic marketplaces in supply chain.

THE DEVELOPMENT OF A FRAMEWORK FOR THE CLASSIFICATION OF TYPES OF B2B EC STRATEGIES

Many prior studies have only investigated one or two kinds of business to business (B2B) electronic commerce (EC), and did not develop or suggest a framework for the classification of forms of B2B EC. This study focused on B2B EC with suppliers. Based on the degrees of information sharing between buyers and sellers as well as the levels of suppliers' power, we suggested a framework that is useful for classifying types of B2B EC strategies. According to this framework, four kinds of B2B EC strategies were proposed: electronic marketplace, electronic procurement, electronic partnerships and electronic distribution. With a cluster analysis, we empirically confirmed these four kinds of B2B EC strategies, and demonstrated the usefulness of a framework for the classification of types of B2B EC. The framework constructed in this study can be utilized in various ways. Specifically, when a firm wants to introduce B2B EC with suppliers, this framework can help a firm to decide and select an appropriate kind of B2B EC. This framework can also be applied to evaluate whether the proper form of B2B EC has been adopted or not.Keywords: Electronic Commerce; Information Sharing; Suppliers’ Power; Resource-Based View;Transaction Cost Theory.

Designated market makers still matter: Evidence from two natural experiments

Independent technological glitches forced two separate trading halts on different U.S. exchanges during the week of July 6, 2015. During each halt, all other exchanges remained open. We exploit exogenous variation provided by this unprecedented coincidence, in conjunction with a proprietary data set, to identify the causal impact of Designated Market Maker (DMM) participation on liquidity. When the voluntary liquidity providers on one exchange were removed, liquidity remained unchanged; when DMMs were removed, liquidity decreased market-wide. We find evidence consistent with the idea that these DMMs, despite facing only mild formal obligations, significantly improve liquidity in the modern electronic marketplace.

Do local consumers behave differently from visitors? An exploratory study in online group buying

Abstract With the rapid increase in Groupon-like online daily deals, the behavior of consumers within online group buying has become a popular research topic. In addition, the increase of smart phone group buying has led merchants to consider increasing numbers of visitors beyond local consumers. The effects of the period, price, discount rate, and product category on sales are examined in the context of local consumers and visitors purchasing restaurant coupons in the group-buying electronic marketplace. Using linear and non-linear regressions and conjoint analysis as method, the actual transactional data sets of Dianping.com—one of Asia’s largest online group-buying businesses—is studied. The results show that there is a clear discrepancy between the preferences of the two consumer groups. Local consumers tend to think highly of discounts, while visitors are likely to care more about the product category. In addition, the behavior of the two groups differs in terms of product attribute selections. The findings could be useful to businesses in terms of understanding consumers’ purchasing and product designs.

Complex event recognition in the big data era

The concept of event processing is established as a generic computational paradigm in various application fields, ranging from data processing in Web environments, over maritime and transport, to finance and medicine. Events report on state changes of a system and its environment. Complex Event Recognition (CER) in turn, refers to the identification of complex/composite events of interest, which are collections of simple events that satisfy some pattern, thereby providing the opportunity for reactive and proactive measures. Examples include the recognition of attacks in computer network nodes, human activities on video content, emerging stories and trends on the Social Web, traffic and transport incidents in smart cities, fraud in electronic marketplaces, cardiac arrhythmias, and epidemic spread. In each scenario, CER allows to make sense of Big event Data streams and react accordingly. The goal of this tutorial is to provide a step-by-step guide for realizing CER in the Big Data era. To do so, it elaborates on major challenges and describes algorithmic toolkits for optimized manipulation of event streams characterized by high volume, velocity and/or lack of veracity, placing emphasis on distributed CER over potentially heterogeneous (data variety) event sources. Finally, we highlight future research directions in the field.

The Classification of Types of Business-to-Business Electronic Commerce

Based on the degree of information sharing between buyers and suppliers as well as the level of supplier power, we suggested a framework that can be useful for classifying types of business to business (B2B) electronic commerce (EC) in the manufacturing firms. According to this framework, four kinds of B2B EC were theoretically proposed, classified, and empirically confirmed. These four are: an electronic marketplace, electronic procurement, electronic partnerships, and electronic distribution. Many prior studies have investigated and proposed some kinds of B2B EC. However, these studies focused mostly on one or two types of B2B EC, and did not develop or suggest a framework for the classification of forms of B2B EC. The framework constructed in this research can be utilized variously. Specifically, when a firm wants to initiate B2B EC with its suppliers, this framework can help a firm to decide and select an appropriate kind of B2B EC. This framework can also be applied to evaluate whether the proper form of B2B EC has been adopted or not.

Nudging to prevent the purchase of incompatible digital products online: An experimental study.

Ensuring safe and satisfactory online shopping activity, especially among vulnerable consumers such as elderly and less educated citizens, is part of a larger set of consumer policy objectives seeking to strengthen trust in the electronic marketplace. This article contributes to that goal by testing the effectiveness of nudges intended to prevent the purchase of 'incompatible' digital products (i.e., those which cannot be used with the devices owned by consumers or the systems they operate). We ran a computerised lab experiment (n = 626) examining three types of nudges, the effects of age and education, and interaction effects between these variables and the nudges. Results show that emotive warning messages and placing incompatibility information at the checkout page rather than earlier in the purchasing process were effective in reducing the purchase of incompatible goods. Age was also a relevant factor: older participants were more likely to purchase incompatible goods. In addition, there was an interaction effect between all nudges and age: two nudges exacerbated the effect of age, while another mitigated it. These results suggest nudges can be an effective policy tool, confirm a generational gap in online behaviour, and highlight how nudges can moderate the effect of socio-demographic variables.

Assessing customer retention in B2C electronic commerce: an empirical study

In the challenging environment of the transparent electronic marketplace in which competitors are only a click away, Web retailers are particularly vulnerable to customer attrition. Central to business growth and survival, customer retention is an important issue that every business strives to understand and harness. While some studies have attempted to determine the factors that influence customer retention, few measure it quantitatively. However, businesses have long been eager to have quantitative information concerning their customer base: How many of their customers they can consider retained at any given time? What time lapse should trigger an alert that the customer may have defected? Based on real purchasing data from a Web retailer, and using 80 percentage of assurance as an example, this paper proposes a customer retention assessment method by calculating the aggregate 80th percentile of maximum inter-purchase times and confirms the validity of this method by showing that the assessment successfully sets apart valuable customers, in terms of number of orders, average spending per order, and total spending. This research not only enables researchers to undertake longitudinal studies of customer re-patronage behavior, but also helps practitioners monitor customer retention effectively.