An exciting area of growth in the world of E-Commerce has been the rapid rise of the Peer-to-Peer (P2P) architecture. While popular, as witnessed by the widespread use of file sharing programs such as KaZaa and Morpheus, this architecture has not yet been leveraged into a profitable business model. This paper proposes a new architecture for Consumer-to-Consumer E-Commerce that combines the flexibility of the P2P architecture, with the more stable web-centric architecture. These two architectures are analyzed from the perspectives of their relative information usefulness and mercantile activities they will support. After a discussion of the tradeoffs of each architecture, a C2C business model that takes advantage of the relative strengths of a hybrid P2P and Web-Centric architecture is presented.
This paper analyzes the tradeoffs between a distributed peer-to-peer (P2P) architecture and a web-centric architecture (the dominant e-commerce architecture) for consumer-to-consumer (C2C) online market makers. The analysis is used to compare the relative utility of both P2P and Web-centric architectures to support C2C transactions from information usefulness and mercantile activities perspectives. The paper then suggests a potential C2C business model based on a hybrid P2P and Web-Centric architecture.
The analysis of architecture and its fit to business processes is important because the alignment of architecture with user processes is relevant to the success of organizational goals (Carleton, 2002; Eisenmann 2002). Since C2C mercantile interactions are fundamentally the transfer of information, goods and services, and payments between consumer peers, it makes sense that P2P based information architectures be considered for C2C interactions and business models.
This paper addresses online market makers - electronic intermediaries that provide market services to participants by providing an infrastructure and place to trade along with rules to govern trading. Specifically, we address the online market maker business model for P2P C2C.
There are numerous business models supporting online market makers that can be categorized by product focus, transaction type, and affiliation as outlined in Table 1 (Eisenmann, 2002). The last column of Table 1 categorizes the scope of this paper.
As shown in Table 1, this paper addresses the market for C2C participants, standardized, horizontal, and indirect products, catalog transactions, with a neutral affiliation. A good example of this type of market is the traditional newspaper classified consumer advertisements for well understood products such as cars or appliances. The classified section of the newspaper provides a forum for catalog information for sellers for a fee. This same type of consumer classified market is available online for web-centric architectures. For example, see Figure 1.
[FIGURE 1 OMITTED]
We chose this market segment because it is less complex than many other markets and it is essentially P2P once the buyer and seller find one another. In other markets, a variety of complex services may be necessary to accompany the transactions. For example, in auction markets, bidding must be tracked over time using relatively complex rules. In B2B markets, a variety of more exotic business support services can be required, such as request for information (RFI) document generation, requisition and routing approval, financial settlement of orders, controls over who can see information, assurance that transactions are in accordance with regulations, laws, and pre-negotiated contracts, etc. (Katerattanakul, 2002; Smaros, 2001).
For our tradeoff analysis, we assume that the P2P architecture is not centrally controlled or managed whereas the Web-centric architecture institutes centralized control over user information and activities. We also assume that C2C sellers have …