Although e-marketplaces have been slow to take off, research has found that vertical markets are more successful than their horizontal counterparts, early adopters may be left to choke on the dust of those who spend time perfecting their business models, and yes, size of marketplace is directly related to the chances of profitability.
[VIDEO]These findings are the result of a PricewaterhouseCoopers (PwC) survey conducted across 31 of the world`s largest trade exchanges. Among other issues, the study focused on technology, security, and the equilibrium needed between buyers and suppliers in an e-marketplace.
Ernst Maritz, PwC director, operational and systems risk management, observed that current industry sentiment is that while the initial predictions for the take-up of e-markets is pessimistic, there are benefits to be gained nonetheless.
"It makes customer intimacy, product differentiation and volume trading possible, but the key advantage is operational efficiency."
The results indicate that "best movers" are succeeding where first movers have not. Maritz attributes this to these participants` strategy of relying on established business practices, and mapping out a thorough business plan before embarking on the e-market endeavour.
A key aspect of any strategy is the people behind the technology, says Maritz. The study identified major problems as a lack of qualified champions, few incentives to innovate and cultural differences when trading across borders.
Other findings point to a need for technology stabilisation. At present, technology is immature, and the main e-market issues are data quality, systems and process integration and security. There is an additional need for established industry standards.
One inhibitor to companies joining e-markets, Maritz notes, is fear among suppliers that such an action will squeeze down their prices and lead to brand dilution. There are also logistical shortfalls and legal and compliance issues to consider. Proactive marketing of e-markets is essential, he says.
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