AN APPROACH TO REDUCING E-COMMERCE COORDINATION COSTS IN EVOLVING MARKETS USING

Attending the rapid growth of B2B e-commerce is an equally rapid fragmentation of what was once— and still is, in many quarters—conceived of as a global marketplace. Indeed, the most successful examples of B2B ecommerce have taken place in niche markets with specialized vocabularies andprocesses. Relative to the ideal of a universally accessible global marketplace, specialized marketsrepresent significant coordination inefficiencies. We propose that electronic markets are open systemsin the general systems theory sense of the term, and that any electronic commerce architecture mustdeal with open system semantics to avoid progressive segmentation into isolated sub-markets.Reducing buyer search costs represents a special but important case of reducing coordination costs toimprove market efficiency and decrease the pressure for fragmentation. We analyze the components ofbuyer search cost to identify core issues that must be handled by any electronic commerce architectureintended for evolving markets. The rapid growth of the Internet and its ability to support commercialtransactions has sustained intense interest in electronic commerce. The architecture presented in this paper is in many ways an intermediate approach to the research and commercial systems discussed above. It is less susceptible to market fragmentation than architectures assuming fixed semantics (closed systems) but sacrifices some of the advanced processing capability of the intentional approaches in return for a pragmatic base in existing technologies. It is slightly less flexible than the most sophisticated semantic Web enabled approaches, but it can be implemented now, with current technologies. Finally, though all of the architectures, protocols or initiatives described above focus on the transactions (services) that occur after buyer and seller have discovered each other our approach specifically targets an area of considerable friction in e-commerce, buyer search costs, and presents a pro-active protocol for linking buyer and seller. In summary then, the objective of this research is to determine a B2B message exchange protocol that substantially reduces search costs and maximizes vendor response, while operating flexibly and robustly in an open system environment, and to explore its implementation feasibility by utilizing predominantly proven, existing techniques.

Keywords:

E-Commerce , Coordination Costs , Evolving Markets , Semantic Routing Protocol