E-marketplaces find their niche

E-marketplaces find their niche


After a period of drastic consolidation following the collapse of the dotcom bubble, e-business marketplaces appear to have finally come of age and found economically sustainable footing.

One e-marketplace currently thriving is Quadrem, an organization that initially started with a focus on the mining and metals industry, but now also serves customers in the consumer packaged goods and oil and gas industries.

The firm's clients include Rio Tinto and BOC Gases Australia.

While conceding many e-marketplaces have faded away over the last four years, Quadrem Australasia regional vice president Allan Poezyn says he is happy to be counted as one of the survivors and has a positive balance sheet to prove it.

"Only the strongest with a solid track record of execution backed by a sustainable business model survive today," Poezyn said.

"People drastically underestimated the time and effort it would take to improve supply chain processes by applying Internet technologies, so unrealistic expectations resulted in e-marketplaces being established that had little chance of success."

However, Poezyn believes this is all about to change with mega-vendors now interested.

"Over the last year or so we've seen a lot of the struggling consortia backed e-marketplaces sell to or merge with stronger players, like TradeRanger, Covisint, Pantellos and CPGMarket," Poezyn said.

"SAP and Accenture are both entering the space because it is growing and they recognize there's significant business opportunity. This consolidation will likely continue to occur leaving fewer and stronger providers," he said.

Adding weight to Poezyn's views is analyst firm the Aberdeen Group, which released a report in December 2004 recommending that enterprises take a second look at e-marketplaces and e-procurement strategies.

The report states hype over e-procurement has long been muted, but the value of using such marketplaces continues to rise, with enterprises today using e-procurement to manage more requisitions, spend categories and suppliers than ever before.

However Frost & Sullivan senior industry analyst technology practice Foad Fadaghi, claims e-marketplaces continue to underperform as a solution.

"[E-marketplaces] anticipated some sort of collective buying power, but this idea just didn't reflect the real world. There are very few of the original e-marketplaces left," Fadaghi said, adding many enterprises often want to keep their buying methods quiet.

"One thing that turns people off these e-marketplaces is the transparency of some of these exchanges, because people don't like others to know what they're paying," Fadaghi said.

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