Chapter 2 E-Marketplaces: Mechanisms, Tools, and Impacts of E-Commerce

Electronic Commerce 2010 (Turban / Lee / King / Liang / Turban)
Chapter 2 E-Marketplaces: Mechanisms, Tools, and Impacts of E-Commerce
2.1 True/False
1) Eastern Mountain Sports used a successful multistep sales technique that included
recommending special socks using the RSS feed.
Answer: TRUE
Diff: 2 Page Ref: 49
AACSB Standard: Use of Information Technology
2) E-procurement is the process of distributing materials and supplies.

Answer: FALSE
3) E-marketplaces have resulted in lower purchasing and transactions costs

Answer: TRUE
AACSB Standard: Reflective Thinking
4) Private, public, and consortia are three types of e-marketplaces.

Answer: TRUE
5) Front end refers to the activities that support online order fulfillment, inventory management,
purchasing from suppliers, payment processing, packaging, and delivery.
Answer: FALSE
6) In marketing, an intermediary is a third party that operates between sellers and buyers.
Intermediaries of all kinds offer their services on the Web.
Answer: TRUE
7) Electronic storefronts, Internet malls, and exchanges are major B2B e-marketplaces.
Answer: FALSE
8) A portal is an information gateway that attempts to address information overload by enabling

people to search and access relevant information from disparate IT systems and the Internet,
using advanced search and indexing techniques, such as Google's desktop.
Answer: TRUE
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Copyright © 2010 Pearson Education, Inc.
9) Intermediaries play an important role in EC by providing value-added services such as making
payment arrangements to buyers and sellers.
Answer: TRUE
10) WebMD, which is the largest U.S. medical services company, is known mainly for its
webmd.com consumer portal, but its core business is being an e-intermediary.
Answer: TRUE
11) An electronic shopping cart is an order-processing technology that allows customers to

accumulate items they wish to buy while they continue to shop.
Answer: TRUE
12) Search engines not only "search and match," but also have capabilities that can be used to
perform routine tasks that require intelligence.
Answer: FALSE
13) Shopping carts for B2B are fairly simple, but a shopping cart for B2C may be more complex.
Answer: FALSE
14) An auction is a market mechanism that uses a competitive process by which a seller solicits
consecutive bids from buyers or a buyer solicits bids from sellers.
Answer: TRUE
15) Negotiation and bargaining are two types of auctions where prices are not fixed, but rather
are allowed to fluctuate as market supply and demand change.
Answer: FALSE
16) Reverse auctions are bidding or tendering systems in which the buyer places an item for bid
on a request for quote (RFQ) system; then potential suppliers bid on the job, with the price
reducing sequentially, and the lowest bid wins.
Answer: TRUE
2
17) E-auctions are becoming less important selling and buying channels for companies and
individuals.
Answer: FALSE
18) The major limitations of e-auctions are insufficient security, risk of fraud, and a limited pool
of participants.
Answer: TRUE
19) A limitation of e-bartering for businesses is that excess capacity items such as office space,
storage, factory space, idle facilities, and labor cannot be bartered.
Answer: FALSE
20) Online negotiation can be facilitated by computer technology for the negotiation process and
software agents for searches and comparisons.
Answer: TRUE
21) E-marketplaces, shopping carts, e-catalogs, and auctions are the major Web 2.0 mechanisms.
Answer: FALSE
22) Features that distinguish a blog from a regular Web page are trackbacks, blogrolls, pings, and
RSS feeds.
Answer: TRUE
23) Twitter is a free micro-blogging service that allows its users to send tweets up to 140
characters in length.
Answer: TRUE
24) A new service known as Pownce integrates micro-blogging with file sharing and event
invitations.
Answer: TRUE
3
25) Travelers using airline Web sites to book their flights directly without the use of travel agents
is resulting in the reintermediation of travel agents.
Answer: FALSE
2.2 Multiple Choice
1) Eastern Mountain Sports introduced ________ tools in order to increase collaboration,

information sharing, and communication among stores and their employees, suppliers, and
customers.
A) business intelligence
B) B2B
C) B2C
D) Web 2.0
Answer: D
2) Traditional and electronic markets have three main functions, which include each of the
following except:
A) matching buyers and sellers
B) facilitating the exchange, purchase or transfer of information, goods, services, and payments
associated with transactions
C) financing the transformation of raw materials into finished products
D) providing an institutional infrastructure, such as a legal and regulatory framework that
enables the efficient functioning of the market
Answer: C
3) The cost curves of digital products differ from the cost curves of physical products because in
digitization:
A) most costs are variable and fixed costs are low.
B) most costs are fixed and variable costs are very low.
C) most costs are fixed, but variable costs are high.
D) all costs are variable.
Answer: B
AACSB Standard: Analytic Skills
4
4) Because of their cost curve, digital products profits will:
A) remain constant regardless of volume, once the variable costs are paid.
B) decrease as volume increases, once labor costs are paid.
C) increase very rapidly as volume increases, once the fixed costs are paid.
D) increase rapidly as volume increases, once the fixed costs are paid.
Answer: C
AACSB Standard: Analytic Skills
5) The portion of an e-seller's business through which customers interact, including the seller's
portal, electronic catalogs, shopping cart, and payment gateway, is referred to as the ________ of
the business.
A) front end
B) back end
C) infrastructure
D) intermediary
Answer: A
6) Activities related to order fulfillment, inventory management, purchasing from suppliers,

accounting and finance, packaging, and delivery are done in what is termed the ________ of the
business.
A) front end
B) back end
C) infrastructure
D) intermediary
Answer: B
7) The major ________ e-marketplaces are storefronts and Internet malls.

A) B2B
B) C2B
C) B2B2C
D) B2C
Answer: D
8) An electronic storefront includes several mechanisms to help sales and sales transactions. The
most common mechanisms include all of the following except:
A) electronic catalog
B) search engine
C) supply chain
D) payment gateway
Answer: C
5
9) Online markets that are owned and operated by a single company and that are either sell-side
or buy-side are known as ________.
A) private e-marketplaces
B) commercial portals
C) e-malls
D) B2B marketplaces
Answer: A
10) Insurance companies and hotels sell services through storefronts called ________.
A) RSS
B) browsers
C) portals
D) wikis
Answer: C
11) Employees may waste time trying to find relevant and accurate information if they have to
access multiple information systems. The best solution to this problem is the use of ________.
A) Web portals
B) intermediaries
C) browsers
D) intranets
Answer: A
12) A type of broker that helps consumers compare different stores is a ________.
A) remediator
B) search engine
C) shopping facilitator
D) virtual mall
Answer: C
13) Human or electronic intermediaries attempt to reduce each of the following limitations of
direct interaction except:
A) search costs
B) lack of privacy
C) contract risk
D) product distribution
Answer: D
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14) Customized catalogs are especially useful in B2B e-commerce for each of the following
reasons except:
A) E-catalogs can be designed to show only the items that the employees in a specific
organization are allowed to purchase.
B) Intranets, in particular, can deliver customized catalogs to different business customers.
C) E-catalogs can show the buyer's ID number for the item, model, or SKU number rather than
the seller's ID numbers.
D) E-catalogs can be customized to show the same item to different customers at different prices,
reflecting discounts or purchase-contract agreements.
Answer: B
15) E-catalogs have several common characteristics. Which of the following is not a
characteristic of e-catalogs?
A) easy to create without advanced information technology
B) easy to update product information
C) easy to customize
D) good search and comparison capabilities
Answer: A
16) The major challenge faced by ________ is the need to index documents from a variety of
sources, such as file systems, intranets, document management systems, e-mail, and databases,
and then present a consolidated list of relevance-ranked documents.
A) mobile portals
B) intelligent engines
C) enterprise searches
D) knowledge portals
Answer: C
17) Which is not a popular search engine?

A) Google
B) Linux
C) AltaVista
D) Lycos
Answer: B
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18) A(n) ________ is an order-processing technology that allows customers to accumulate items
they wish to buy while they continue to shop
A) intelligent agent
B) e-fulfillment agent
C) electronic shopping cart
D) mobile portal
Answer: C
19) When prices are negotiated or discounted, as in auctions or stock markets, that pricing mode
is called ________.
A) dynamic pricing
B) commodity pricing
C) pre-shopping
D) negotiation
Answer: A
20) The most common and traditional form of auctions in which one seller entertains bids from
many buyers is referred to as ________.
A) forward auctions
B) reverse auctions
C) bidding auction system
D) tendering system
Answer: A
21) An auction in which there is one buyer and many potential sellers or in which a buyer places
an item for bid on an RFQ system and the lowest bid wins is referred to as all of the following
except:
A) forward auctions
B) reverse auctions
C) bidding auction system
D) tendering system
Answer: B
22) What is a benefit of e-auctions to the sellers?

A) anonymity
B) convenience of bidding anywhere and any time
C) lack of differentiation
D) optimal price determined by the market
Answer: D
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23) All of the following are benefits of e-auctions to buyers except:
A) can liquidate large quantities quickly
B) convenience of bidding anywhere and any time
C) opportunity to bargain
D) opportunities to find unique items
Answer: A
24) Which of the following statements does not describe bartering?

A) It is the oldest method of trade.
B) It is primarily done between private parties.
C) The problem with bartering is that it is difficult to find trading partners.
D) Intermediaries can be helpful, but they are expensive and very slow.
Answer: B
25) Which of the following is a Web 2.0 application?

A) auctions
B) blogs
C) shopping carts
D) e-catalogs
Answer: B
26) Which is not one of the seven principles for building effective blogs?
A) Set up the blog so that each post gets its own permanent URL.
B) Blog frequently and create at least half a dozen posts every weekday.
C) Focus on a broad topic to appeal to a large audience.
D) Make friends with other bloggers, online and off.
Answer: C
27) ________ are audio files that enable companies to deliver audio-specific content, including
music, speeches, radio-style presentations, and more.
A) Blogs
B) Mashups
C) Podcasts
D) Wikis
Answer: C
9
28) Commercial uses of blogs include all of the following except:
A) to allow everyone to participate as a peer
B) to communicate with customers and other third parties
C) to enhance employee communication with one another
D) to supplement corporate public relations and press releases with personal from the heart talk
Answer: A
29) The elimination of various types of agents that mediate between buyers and sellers, such as
travel and insurance agents, is referred to as ________.
A) automation
B) disintermediation
C) remediation
D) e-distribution
Answer: B
30) ________ provides customers with exactly what they want, when and where they want it.
Effective communication between the supply chain and the factory floor is needed to make it
happen.
A) Build-to-order manufacturing
B) Demand-driven manufacturing
C) Real-time manufacturing
D) Virtual manufacturing
Answer: B
2.3 Fill in the Blank
1) A(n)________ is a virtual marketplace in which sellers and buyers meet and conduct different
types of transactions.
Answer: e-marketplace
2) All of the activities related to order fulfillment, inventory management, payment processing,
packaging, and delivery are done in what is called the ________ of the business.
Answer: back end
3) In a(n) ________ e-marketplace, a company purchases from many suppliers. This type of
purchasing arrangement is considered to be many-to-one.
Answer: buy-side
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4) An online shopping center where many online stores are located is called a(n) ________.
Answer: e-mall (online mall)
5) A(n) ________ is a single point of access through a Web browser to critical business
information located inside and outside of an organization.
Answer: information portal
6) ________ are electronic intermediaries that provide and/or control information flow in
cyberspace, often bundling information and then selling it to others.
Answer: Infomediaries
7) In a(n) ________ catalog, information is presented in motion pictures or animation and

information can be presented or changed in real-time, as with stock prices.
Answer: dynamic
8) The major challenge faced by enterprise search is the need to ________ documents from a
variety of sources, such as file systems, intranets, document management systems, and e-mail.
Answer: index
9) WebMD is the largest medical information services company in the United States. Although
the company is known mainly for its consumer portal, webmd.com, its core business is being an
electronic ________.
Answer: intermediary
10) ________ refers to prices that are not fixed, but that are allowed to fluctuate as supply and
demand in a market exchange.
Answer: Dynamic pricing
11) An auction in which a seller takes bids from buyers is called a(n) ________ auction.
Answer: forward
12) Priceline.com pioneered the ________ model. In this model, a potential buyer specifies the
price that he or she is willing to pay to any seller who will sell at that price.
Answer: name-your-own price
11
13) ________ tools are social networking tools used by organizations.
Answer: Enterprise 2.0
14) Trackbacks, pings, and RSS feeds are some of the features that distinguish ________ from
regular Web pages.
Answer: blogs
15) ________ is a free micro-blogging service that allows its users to send and read other users'
short text messages, which are up to 140 characters in length.
Answer: Twitter
16) Blogs and wikis are ________ applications.

Answer: Web 2.0
17) ________ have become more and more active in politics.

Answer: Bloggers
18) A(n) ________ is a type of social network that allows everyone to participate as a peer
enabling anyone to add, delete, or change content.
Answer: wiki
19) ________ are animated computer representations of humanlike movements and behaviors in
a
computer-generated 3-dimensional world.
Answer: Avatars
20) Companies are using Second Life, which is an example of a(n) ________, to bolster their
physical businesses.
Answer: virtual world
21) The Internet economy has ________ barriers to entry.

Answer: low
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22) ________ tools are used to tailor a product, service, or Web content to specific user
preferences.
Answer: Personalization
23) Porter divided the impacts of the Internet into either positive or negative impacts for the
industry. According to his model, most of the impacts are ________.
Answer: negative
24) ________ is a method that enables manufacturers to create specific products for each
customer based on the customer's exact needs.
Answer: Mass customization
25) One of the major changes in the supply chain of e-markets is to transfer some activities to
customers and/or employees through ________.
Answer: self-service
2.4 Essay
1) List and briefly describe three ways in which electronic marketplaces have changed the
processes used in trading and supply chains.
Answer:
Greater information richness of the transactional and relational environment.
Lower information search costs for buyers.
Diminished information asymmetry between sellers and buyers.
Less time between purchase and time of possession of physical products purchased in the e-
marketplace.
Greater temporal proximity between time of purchase and time of possession of digital products
purchased in the e-marketplace.
The ability of buyers, sellers, and virtual markets to be in different locations.
The ability for EC to leverage capabilities with increased effectiveness and lower transaction and
distribution costs, leading to more efficient friction-free markets.
13
2) Identify and briefly discuss the roles and value of intermediaries in e-marketplaces.
Answer: Intermediaries (brokers) play an important role in commerce by providing value-added
activities and services to buyers and sellers. Web sites that gather and organize large amounts of
data and act as intermediaries between those who want the information and those who supply the
information are one type of infomediary. One type offers consumers a place to gather
information about specific products and companies before they make purchasing decisions. It is a
third-party provider of unbiased information; it does not promote or try to sell specific products
in preference over other products or act on behalf of any vendors
There are many types of intermediaries. In cyberspace, there are intermediaries that provide
and/or control information flow. These electronic intermediaries are known as infomediaries. The
information flows to and from buyers and sellers via infomediaries. Frequently, intermediaries
aggregate information and sell it to others. Online intermediaries are companies that facilitate
transactions between buyers and sellers and receive a percentage of the transaction's value.
3) Describe the major characteristic of dynamic pricing in electronic auctions (e-auctions).

Identify a benefit and a limitation of e-auctions to sellers involved in B2B.
Answer: With dynamic pricing, prices change based on the supply and demand relationships at
any given time.
Benefits of e-auctions to B2B sellers are:
- Sellers can liquidate large quantities of products quickly.
- Can improve customer relationship and loyalty.
- Can sell globally.
- Can gain more customer dollars by offering items directly to business customers.
Limitation of e-auctions to B2B sellers are:
- Minimal security
- Possibility of fraud.
14
4) Describe the commercial uses of blogs. Identify the potential risks of blogs. Describe blog
management methods to reduce those risks.
Answer: Many organizations have deployed blogs to promote collaboration, advertise products
and services, and obtain feedback from customers. External, or facing out, blogs are used to
communicate with customers and other third parties, build trust-based relationships, polish
corporate reputations, promote social causes, and support CRM.
Blogs can supplement corporate public relations, press releases, and brochures with more
personal communication.
Two potential risks are revealing trade secrets (in corporate-related blogs) and making statements
that are or that could be construed as libel or defamation.
Blog management methods to reduce risk are:
- Establish comprehensive, written rules and policies -- and make sure that employees understand
that they apply regardless of whether employees are blogging at the office or from home.
- Educate employees about blog-related risks, rules, and regulations.
- Enforce blog policy with disciplinary action and technology.
- Have corporate lawyers review the contents of blogs to verify that they don't put the company
at risk.
Diff: 3 Page Ref: 71, 74
AACSB Standard: Ethical Reasoning
5) Explain competition in the Internet ecosystems. Explain how lower search costs for buyers has
intensified EC competition.
Answer: The Internet economy has low barriers to entry and a worldwide market, which has
significantly increased competition.
E-markets reduce the cost of searching for product information (e.g., sellers, models, prices),
frequently close to zero. This can significantly impact competition, enabling customers to find
less expensive (or better) products and forcing sellers, in turn, to reduce prices or improve
customer service. Sellers who provide information to buyers can exploit the Internet to gain a
larger market share.
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Electronic Commerce 2010 (Turban / Lee / King / Liang / Turban)

Chapter 2 E-Marketplaces: Mechanisms, Tools, and Impacts of E-Commerce

2) E-procurement is the process of distributing materials and supplies.

3) E-marketplaces have resulted in lower purchasing and transactions costs

4) Private, public, and consortia are three types of e-marketplaces.

8) A portal is an information gateway that attempts to address information overload by enabling

11) An electronic shopping cart is an order-processing technology that allows customers to

2.2 Multiple Choice

1) Eastern Mountain Sports introduced ________ tools in order to increase collaboration,

6) Activities related to order fulfillment, inventory management, purchasing from suppliers,

7) The major ________ e-marketplaces are storefronts and Internet malls.

17) Which is not a popular search engine?

22) What is a benefit of e-auctions to the sellers?

24) Which of the following statements does not describe bartering?

25) Which of the following is a Web 2.0 application?

2.3 Fill in the Blank

7) In a(n) ________ catalog, information is presented in motion pictures or animation and

16) Blogs and wikis are ________ applications.

17) ________ have become more and more active in politics.

21) The Internet economy has ________ barriers to entry.

3) Describe the major characteristic of dynamic pricing in electronic auctions (e-auctions).

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