Not long ago, industry pundits were touting B2B marketplaces or exchanges as Internet era panacea for productivity and cost-cutting problems of corporate world. Buoyed by excessive investor interest and driven by a desire to cash in on
enormous dot-com valuations of late 90s, marketplaces were sprouting like autumn mushrooms. With collapse of stock market, it did not take much time for burgeoning B2B marketplaces to come to a screeching halt!When in 2001 high profile marketplaces like Chemdex, a life science marketplace started to tumble down, and most of marketplaces started to show sign of disappointing growth rate, it became clear that something is wrong with prevailing business model of b2b e-marketplaces.
Optimists claim nothing is wrong with B2B e-marketplaces, as a new technology, it is merely going through normal evolutionary stages. Others feel that business processes are way too complex an issue, substantially based on human behavior and intricate relationships; and this complexity will prevent wide spread implementation of online supply chain mechanisms through B2B exchanges.
But, truth is probably somewhere in between! There is no doubt that any business, irrelevant to its size, is able to create some sorts of value if they use B2B marketplace effectively. As far as B2B E-commerce is concerned, most agree, that eventually businesses have to do significant part of their transactions online. The only thing is - it might take a bit more time for widespread adoption, than initially expected.
Slow implementation of B2B e-marketplaces is a natural consequence of some inadvertent stumbling blocks.
1. The investment in B2B sector started to dry up at end of 2001 as unrealistic expectations of many investors and funds did not materialize. As a result of this, many exchanges were forced to close down; and much needed transformation in technology process slowed down in existing ones due to liquidity challenges.
2. Many early marketplaces were built in a hurry to exploit prevailing at that time budding stock market. For these marketplaces, value creation for participants was not a priority. By time they realized that members need something more than comparison shopping and product display ability, it was a bit too late for quite a few of them.
3. Contrary to popular believe, buyers did not start flocking on to e-marketplaces as expected. As it became clear, buyers require real incentives in order to go through complex process of online dealing. In most cases, in order to get integrated to an e-marketplace, buyers are ready to learn, hire professionals, and invest on technology if they know that most of their offline suppliers are available on a particular exchange. But, until then, they prefer to refrain from changing their way of doing business.
