Grow Your Business Using B2B Emarketplace - Part I
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 termsof 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