Suppliers Navigate the Complex World of Net Marketplaces

As Rick Holden, CEO of J. L. Hammett Co., anticipates a significant portion of his business will come through Internet marketplaces, he seeks a standardized solution to connect with various Net markets. This highlights the challenges faced by suppliers in navigating the proliferation of Net marketplaces, where they must affordably connect with multiple buying hubs and determine which marketplaces are profitable. New technology, such as sell-side exchanges and platforms that calculate per-minute profit, is emerging to help suppliers make a more measured leap into Net marketplaces.

Key Takeaways:

• Suppliers face significant challenges in connecting with and evaluating multiple Net marketplaces, including high setup costs and the need to determine which marketplaces are profitable.
• Sell-side exchanges, such as Ironside Network, are emerging to help suppliers easily connect to and evaluate multiple buying hubs.
• Companies like Ariba and Commerce One charge sellers transaction-based pricing models on the buy side of the exchange equation.
• Haht Software Inc. and Maxager Technology Inc. are developing software to help sellers integrate with Net marketplaces and determine profitability.
• Maxager's patented pricing technology calculates per-minute profit on products, taking into account a wide variety of supply chain information.
• Suppliers fear that Net marketplaces will squish their margins and minimize their strategic relationships.
• Analysts see a bright future for sell-side exchanges and other supplier-centric tools, as companies will need to participate in multiple exchanges and will be looking for off-the-shelf solutions to help suppliers work with exchanges.

Statistics:

• 50 marketplaces are launching every week. (Source: Ironside Technologies Inc.)
• Suppliers are looking at around 10 or so markets in their industry, but are unsure how to deal with the growth of marketplaces. (Source: Derek Smyth, Chief Operating Officer, Ironside Technologies Inc.)
• About 3 out of 4 business aggregators believe that supply-chain integration is a key attribute of successful e-markets. (Source: Forrester Research)
• The transaction-based pricing model charges sellers $500 per month per each exchange they integrate with, plus $1 per supplier transaction that flows through the exchange. (Source: Ironside Technologies Inc.)
• 75% of companies are expected to participate in multiple e-marketplaces within the next three years. (Source: Meta Group)

Sources:

• "CEOs Say e-Market Standards No. 1 Priority for 1998" by Bob Parker, e-commerce analyst, AMR Research.
• Ironside Technologies Inc.
• Haht Software Inc.
• Maxager Technology Inc.
• "Does One Exchange Win Over All?" by Dan Sholler, analyst, Meta Group.