Grow your business using B2B Emarketplace - Part I.
By Nowshade Kabir ©Rusbiz.com
If
you are a small to medium size company and selling or planning to sell products
and services over the Net and still did not try out emarketplaces, you are simply
loosing a great opportunity!
Research firm eMarketer predicts that worldwide B2B ecommerce revenues will
surpass US$ 1.4 trillion by the end of 2003. In the United States alone revenues
will total US$ 721 billion. By 2004, the US B2B ecommerce revenues are expected
to reach US$ 1.01 trillion and studies show that a significant portion of these
transactions will be conducted through emarketplaces.
What is an Emarketplace?
In a broader sense, business to business emarketplace is an online platform
where buyers and sellers come to communicate, collaborate and make business
transactions. Emarketplace caters a large number of participant companies as
a community. The main objective of an emarketplace is to create a venue, filled
with features that allow members to efficiently conduct significant portion
of business processes on the Net. Emarketplaces are also known as B2B exchanges.
Types of Emarketplaces
There are varieties of emarketplaces available on the Internet to suit your
company's specific need.
Public: These emarketplaces are open to all companies. Virtually,
anybody can become a member and conduct business through these marketplaces.
Private: Membership is restricted and owners of the marketplace
decide according to which criteria they will select participants. For example:
a large trading company can have its own emarketplace limited to its buyers
or suppliers only.
Horizontal: If the emarketplace works with a large numbers
of products and services from different industries, it is called a horizontal
marketplace.
Vertical: Industry specific emarketplaces are called vertical
markets. An emarketplace, working solely with suppliers and buyers of cars is
an example of this kind of marketplace.
Can your company benefit from an Emarketplace?
Whether you are primarily a buyer or a supplier, participation in emarketplace
can generate enormous benefits to your company - both in cost savings and productivity
increase.
Benefits that you can have as a buyer
Automate the purchasing procedure
Emarketplaces allow you to send request for quotes to a prospective supplier,
receive quotes, send purchase orders and receive invoices within the marketplace
system. You can virtually consolidate all your procurement processes in one
single place. This process of automation brings significant efficiency to you
and saves your transaction processing cost. According to Aberdeen Group, a research
company, thanks to B2B procurement systems, businesses can reduce these processing
costs up to 70%.
Comparison shopping at its best
Since you can see all the suppliers of a particular product, that you are planning
to buy, in one place, it is easy for you to see which one among the suppliers
suits you best in terms of quality, delivery time, geographical location, costs
etc.
Reduce sourcing time cycle
Most emarketplaces allow you to select multiple offers from different suppliers
and create purchase orders in one shot and send. Since you handle all your procurement
related correspondence from a consolidated working page, you can see right away
answers to requests for quote, invoices, etc. This helps you react instantly
and reduce you time in document processing.
Community participation
You can receive valuable feedbacks from other fellow buyers, receive industry-related
information, build new partnerships and use the networking ability of a community.
Real time access to current product information
Current information of a product is vital for an accurate buying decision. 24
hours access to supplier's catalog helps you getting most up-to-date information
any time you need it.
Control rogue spending
Consolidated and automated procurement and approval method stops maverick buying
in a company.
Benefit that you can have as a seller
New sales channel
By becoming a member of an emarketplace, you open a low cost, highly functional
and easy-to-use sales channel for your company. You expose your company to a
new targeted audience that otherwise would have been untapped to you.
Low customer acquisition cost
Your mere presence in the emarketplace might bring you new customers. Since
the buyers come to emarketplace themselves your cost of getting customers through
this channel is relatively low in comparison to other traditional channels.
Improve customer service
Ability to have constant interaction through the emarketplace allows you to
serve your customers better. You can track the whole ordering process from payment
to delivery and bring greater efficiency in customer service.
Efficient information sharing method
When needed, you can instantly update your catalog and inform your customers
about changes. Whether you are launching a new product or having a web seminar,
through emarketplace you can share the information more efficiently.
Reduce supply chain cost
According to eMarketer, automated supply chain process through emarketplaces
can reduce your overhead costs 20% to 40%.
You may ask, if participation in an emarketplace is so beneficial, why companies
are not flocking to emarketplaces.
The slower adoption can be blamed on various inadvertent factors:
Many companies had fall short to generate significant sales from their own websites
and look at emarketplaces with a dose of skepticism. But as studies show ecommerce
endeavors fail, mainly, due to lack of proper planning and marketing, as many
site managers take the attitude that build-it-and- they- will-come.
• Many conservative suppliers claim that their business depends on close relationship
with local buyers. In reality, you can also get access to local untapped market
through emarketplaces. Another aspect - you can bring efficiency to your business
by co-adopting an emarketplace along with your buyers.
• Many elderly executives are not very tech-savvy and afraid of adopting new
technologies considering them too complex. In reality, e-business is virtual
implementation of real life business processes and not very difficult to embrace.
• Fear of price shopping by buyers is another factor, why suppliers are reluctant
to use emarketplaces. The ability of emarketplace to emphasize all characteristics
of the product in product content and demonstrate buyer-specific pricing should
eliminate this fear.
• Many, mistakenly, consider that participation cost in emarketplace is very
high and will hurt their bottom line. The expenses related to emarketplace membership
are, usually, a mere fraction of what you can save from the use of its different
features.
What to look in an Emarketplace?
As an online venue, where participants expect to conduct substantial part of
their business processes, emarketplace has a large range of useful features:
• Product catalog based on an industry-standard classification system
• Product search capability within the marketplace and e-catalog
• Buyers and sellers search capabilities
• Supply chain process, i.e. request for quote, quotation, purchase order, billing
system, etc.
• Directory of members
• Shipment tracking
• Simple system of adding and editing products
• Simple offer posting system
• Ability to promote products with special offers, sales, and discount
Apart from these, some emarketplaces boast other interesting features like
auction and reverse auction, new product listing notification, business forum,
XML interface, Internal messaging system. Naturally, implementation of these
features may vary significantly emarketplace to emarketplace.
Where to look for Emarketplace?
The best place to find an extensive list of emarketplaces is the B2B directory
site: http://www.bocat.com.
The open directory project DMOZ has a good list of emarketplaces. However,
not all listings in both of these places are, in reality, emarketplaces. Some
of them are simple trade boards. This list is located at http://dmoz.org/Business/E-Commerce/Marketplaces/
Yahoo! directory is not organized well enough to locate emarketplaces. They
are scattered under the subcategories: Vertical marketplace builders, Trade
directories and even Trade.
Forbes magazine has a quality list of many B2B companies including some emarketplaces.
You will find the list at: http://www.forbes.com/bow/b2b/main.jhtml
To be continued in next issue: Selecting the right Emarketplace.
