A Study on Ecommerce : Gmarket

5477 words 22 pages
table of contents

Executive Summary

1. Introduction 1

2. Competitive environment Analysis 1
2.1 Threat of new entrants 1
2.2 Bargaining Power of Buyers 2
2.3 Bargaining Power of Suppliers 2
2.4 Threat of Substitutes 3
2.5 rivalry among existing competitors 3

3. Value-Chain Analysis 4
3.1 Business Model 4
3.2 Primary Activities – Creation of actual product/service 5
I. Operation/Processes 5
II. Services 5
III. Outbound Logistics 6
IV. Customers/Marketing & Sales 6
3.3 Support ACTIVITIES - The Technology behind GMarket 7
I. Gmarket’s Primary Technology (Web-Based Transactions) 7
II. Gmarket’s Security Technology (Web-Based Transactions) 8
III. A Complementary Platform: M-Commerce 8
IV. Gaccount: Digital Payment System 9
V. Gmarket Sales
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Furthermore, customer switching costs are low due to the short-term fluid nature of online relationships – customers rarely commit to one seller and enjoy jump-shopping with low search costs and information asymmetry. This invite new entrants to enter the market.
However, although there is easy entry, consumers’ trust and confidence in the retailer plays a significant role. Therefore, even though barriers are low and the threat of entrants high, new players may enter but not pose great threats to well-established and trusted incumbents like Gmarket.

2.2 Bargaining Power of Buyers

Bargaining power of buyers appears low on a few factors. Firstly, buyer to firm concentration ratio is very high, with many individuals buying as end consumers and thus in small volumes. As such, no one buyer is particularly dominant and hence, buyers’ power remain low. Secondly, products are often not standardized, with each retailer selling unique items that vary widely within each category.
However, this is one industry where the threat of buyers’ backward integration is very high, given the ease of setting up one’s own online store. Furthermore, with widespread buyer information available and near zero search costs, buyers are price sensitive and can easily boycott sites that offer high unjustifiable prices. In conclusion, buyer power is medium