E-BUSINESS CLINIC: The market is changing

E-BUSINESS CLINIC: The market is changing

Don't write off e-marketplaces just yet, even though their original business model has proven to be shaky, at best. As the hype subsides, e-marketplaces will have an important role to play in e-business -- it just won't be the role they started out to fulfill.

Only a few, perhaps 10 per cent, of e-marketplaces that offer trading services will see worthwhile profits. The rest of the surviving e-marketplaces will become service aggregators and will offer services that are well outside the scope of a traditional trading environment. As service aggregators, e-marketplaces will have strong influence over buyers and sellers. Specifically, e-marketplaces will aggregate services in several categories:

Trading services. These services relate to the sourcing and procurement of goods and services and include things such as electronic request for quotation, auctions and reverse auctions, and catalogue commerce (in which catalogues from a number of suppliers are aggregated into one). These services formed the foundation for many e-marketplaces, and will continue to be part of the picture.

Community services. Most e-marketplaces have an industry focus. Even those that offer services across industry sectors generally target a specific market segment. To attract and maintain the interest of buyers and sellers in a target market, e-marketplaces will strive to make their sites interesting by adding things such as targeted media (news and video clips), community chat, industry yellow pages and online trade shows. Some e-marketplaces will enter the real-world conference and trade-show business using their subscriber mailing list to market the in-person events.

IT services. As e-marketplaces establish themselves in a particular market, they will begin to develop IT service offerings. These services may include application hosting, systems integration, IT consulting and IT outsourcing. Existing e-marketplaces are just starting to dabble in this space, but more of them will jump on board.

Business services. Perhaps the area of greatest potential for e-marketplaces is in the development and delivery of business services. This loose term can include business-process engineering, supply-chain collaboration, forecasting and planning, logistics and fulfillment, product design and management consulting.

As e-marketplaces establish their brands and build trust, they will seek to exploit customer loyalty any way they can. Increasingly, e-marketplaces' struggle to generate revenue will mean a movement away from trading services and an expansion into many other types of services. They won't be the only ones offering these types of services on the Web. But well-managed e-marketplaces -- by virtue of their depth of funding are well-positioned to morph into service aggregators.

Barb Gomolski is a research director at Gartner. Send her e-mail at

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