Brokerage Model

Unit 5-1-1

Managing the Digital Enterprise

By Professor Michael Rappa

Brokerage Model Brokers are market-makers

They bring buyers and sellers together and facilitate transactions

Brokers play a frequent role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets A broker charges a fee or commission for each

transaction it The formula for fees can vary

Category of Brokerage Models

Marketplace exchange Buy/sell fulfillment Demand collection

system Auction broker

Transaction broker Distributor Search agent Virtual marketplace

Marketplace Exchange Offers a full range of services covering the transacti

on process, from market assessment to negotiation and fulfillment

Exchanges operate independently or are backed by an industry consortium Orbitz

a leading online travel company that enables travelers to search for and purchase a broad array of travel products, including airline tickets, lodging, rental cars, cruises and vacation packages

ChemConnect a leader in helping customers optimize their purchasing and

sales processes for chemicals, plastics, and related products through a unique combination of market information, industry expertise, e-commerce solutions, and an active network of trading partners

Buy/sell Fulfillment Takes customer orders to buy or sell a produ

ct or service, including terms like price and delivery CarsDirect

The leading multi-brand online car buying service, providing new and pre-owned automobiles and related products and services

CarsDirect.com has become the natural choice for consumers who demand objectivity, selection and upfront pricing, and for dealers who want to leverage the Internet for cost-effective incremental sales and revenue.

Demand Collection System

The patented "name-your-price" model pioneered by Priceline.com

Prospective buyer makes a final (binding) bid for a specified good or service, and the broker arranges fulfillment Priceline.com

Offers products for sale in two categories: a travel service that offers leisure airline tickets, hotel rooms, rental cars, packaged vacations and cruises; and a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee

Auction Broker

Conducts auctions for sellers (individuals or merchants). Broker charges the seller a listing fee and commission scaled with the value of the transaction

Auctions vary widely in terms of the offering and bidding rules. eBay

A powerful platform for the sale of goods and services by a passionate community of individuals and businesses

Transaction Broker Provides a third-party payment mechanism fo

r buyers and sellers to settle a transaction PayPal

Enables any individual or business with an email address to send and receive payments online securely, easily and quickly.

PayPal's service builds on the existing financial infrastructure of bank accounts and credit cards and uses the world's most advanced proprietary fraud prevention systems to create a safe, global, real-time payment solution

Distributor

Distributor is a catalog operation that connects a large number of product manufacturers with volume and retail buyers

Broker facilitates business transactions between franchised distributors and their trading partners

Search Agent A software agent or "robot" used to search-ou

t the price and availability for a good or service specified by the buyer, or to locate hard to find information MySimon

The premier comparison shopping destination, helps people make more informed purchase decisions whenever they shop

Uses Virtual Agent™ technology to create "intelligent agents" trained by the company's team of shopping experts to collect information from virtually every online store

Virtual Marketplace A hosting service for online merchants that ch

arges setup, monthly listing, and/or transaction fees

May also provide automated transaction and relationship marketing services Amazon.com

seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices