Purchasing on the Net - The New Opportunities for Electronic Commerce

sufficient, these could conceivably provide a reference for derivatives. Realistically, however, this is some way in the future. Undoubtedly an active derivatives market, should it develop, would have a beneficial impact on the spot market. For the industry as a whole, the existence of an active derivatives market would provide a means of financial hedging against price risk, and. a market established prediction of expected future pricing trends. OR OFFER IS A COMMODITY!" So said a forthright customer of Band-X recently. Although minutes are not of a homogenous quality, they are similar enough to be traded like a commodity, as much as varying qualities of iron ore are traded. Provided the parties to a trade both understand the quality issues involved, then establishing a price is achievable. A greater obstacle than quality to commoditisation is that the change of ownership continues to happen over an extended period of time rather than being a change of ownership that occurs at a single moment. Curiously, commercial wrangling is more complex and time consuming than agreeing the increasingly straightforward technical interconnection. The managed bandwidth trades executed by Band-X to date have been less complex to execute than the switched minutes trades. Payment is normally agreed for a year or longer and does not have the complication of call data and billing data records. So whilst it is a commodity with similarities to many others, it is difficult to view a minute as just a minute, and it would be truer to say that a bit per second is just a bit per second. It is therefore likely that bandwidth trading will become generally accepted as a commodity faster than minutes. Importantly both are now possible on Band-X. ONLINE ECONOMICS: THE NEW VALUE CHAINS While a growing number of retailers have successfully implemented electronic commerce solutions, the experience of these early adopters provides valuable insights into how new value chains are constructed. The electronic commerce model requires a very different approach to customer acquisition, promotion, merchandising, and distribution. In the conventional retail model, the transaction chain uses established midd-lemen-retailers, dealers and agents-to handle service, support and fulfilment. Advertising campaigns and instore promotions are employed to create awareness of products and services, and support the activities of the middlemen. The traditional retail model is characterised by a differentiated product offer by a large number of manufacturers, to a mass market of consumers, via a range …