Re-Thinking the E-Marketplace

To succeed in the future, companies must understand how today’s e-marketplaces
are quickly evolving into four distinct categories and they must reassess
their current strategies to capitalize on these opportunities, says a new
report.

In fact, the current definitions used to describe B2B e-marketplaces “do not
accurately reflect the opportunities or risks companies face in pursuing
these new business
ecosystems,” says the report from research firm Summit Strategies Inc.

“Contrary to industry hype, all e-marketplaces are not created equal,” said
Marilyn Muller, author of the report, entitled Operating and Delivery
Philosophies for
E-Marketplaces – A New Perspective.

“Companies anchoring their e-marketplaces into one or more applications can
streamline an entire B2B business process, making it more convenient and
transparent to users,” she said. “These embedded e-marketplaces will have a
distinct advantage over the stand-alone e-marketplaces prevalent today, with
the biggest payoff from reducing total
administrative overhead.”

The report found two categories of operating model:

The laissez-faire model, in which the e-marketplace acts as a lead source for
sellers and as a venue in which buyers can comparison shop. The marketplace
itself plays no role in negotiating on behalf of either buyer or seller.

The mediated operating model is one in which the e-marketplace acts as an
active intermediary, negotiating or aggregating deals on behalf of buyers or
suppliers. Transactions occur through the e-marketplace.

The two delivery models are:

The stand-alone model, in which the marketplace is an independent entity that
is not part of an application. The marketplace may exist within a portal, but
data is not tied directly into any other aspect of the portal. Users access
the e-marketplace directly. Transactions may or may not occur online.

The embedded delivery model, in which the e-marketplace is embedded within an
application or set of applications. Users can conveniently buy or sell
products
and services within the context of the application and may take advantage of
integrated features between the e-marketplace and the application.
Transactions must occur online.

Based on interviews with more than 40 e-marketplace operators, the report
also predicts that a forthcoming squeeze on transaction-related revenues will
force most e-marketplace vendors to re-evaluate their business strategies.

“E-marketplace operators cannot succeed by relying on individual features,
functionality or a transaction-based strategy,” said Muller. “Creating a
sustainable advantage will require e-marketplace operators to clearly define
their place in this new business ecosystem and understand how their business
model must evolve in the near future.”

E-marketplaces referenced in the report include: Commerce One’s MarketSite
Global Trading Portal, Chemdex, EDS’s CoNext, Demandline.com, i2’s
TradeMatrix network, EqualFooting.com, TradeOut.com, BizBuyer.com, Bidcom and
HoustonStreet.com.

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