B2B e-marketplaces: how to succeed

B2B digital e-marketplaces have advantages over traditional marketplaces in two key areas: market intelligence and supply chain integration.

But, as with trade fairs, for these to take effect a critical mass of suppliers and customers must participate. The authors argue that industry consortia are best positioned to be successful and discuss the hurdles they face.

As with traditional B2B marketplaces, before any company starts using a B2B e-marketplace, it needs to make sure it will create value and therefore revenue for both buyers and sellers. In this article, we first analyse how a B2B e-marketplace can create value and compare the different potential sources of revenue.

We then discuss who is best positioned to attract buyers and suppliers to its B2B e-marketplace: the private marketplaces of established bricks-andmortar companies, marketplaces created by dotcoms (pure plays), or marketplaces created by industry consortia of bricks-and-mortar companies (also known as industry-sponsored exchanges). We believe that industry consortia are generically best-placed to succeed. In the last section we identify the hurdles they will have to overcome if they are to convert their potential into success.

Can e-marketplaces generate real value for an industry?

Three types of products are particularly amenable to e-marketplace transactions:

• Standard maintenance, repair and operating (MRO) products
• Commodities
• Strategic products. MRO: Typically, MRO contracts are spot buys, where the buyer selects the best supplier based on price, quality, and other metrics. Many B2B e-marketplaces have evolved around comparable products, such as MRO.com (for MROs). All offer one or more (traditional) pricing models such as spot purchasing and/or auctions.

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