Analysis of B2B marketplaces
During the early 2000’s B2B marketplaces were a rage but they soon became a thing of the past. Most conservatives attached it to the bust in IT sector. However, analysts later realized that there were numerous factors responsible for the slowdown of this phenomenal business model. Here’s a look at what was responsible for this.
When buyers and suppliers met up in online marketplaces for cheap procurement of final products, B2B platforms were a great help. However, when the same buyers and suppliers considered factors like quality, performance and service in such marketplaces, there was no guarantee.
The B2B marketplaces in lieu to change the market dynamics threatened the intermediation of middlemen. Since there weren’t people for accountability of transactions, questions were raised about the supplier’s integrity. In the earlier phase of B2B marketplaces it was also difficult to build the trust and long standing personal-corporate relationships in the value chain.
Insufficient liquidity that rose out of non-participation of traditional suppliers in the online marketplaces was another challenge for the B2B marketplaces. Along with non-participators there were also suppliers who backed out from auctions given the lack of product/service propositions, thereby making the transaction conditions in B2B marketplaces difficult.
Also, these marketplaces lacked integration of order fulfilment, transportation and claim settlement applications. Moreover as compared to private and consortia marketplaces where the process was much more organized B2B was lagging behind.
Ownership and governance of B2B marketplaces was another challenge in its growth. Cut-throat competition amongst owners made decision making and strategy implementation a challenge.
Revenue generation in such marketplaces was another definite question that came in the mind of many people. There was no definite way of payment earlier. Sometimes, exchanges assessed transaction fees, at other times there was an annual subscription fee or percentage. This indefinite model of payment made suppliers all the more reluctant in payment and as a result the marketplaces to slowdown.
There might have been other reasons but another peculiar cause of B2B marketplace slowdown was over anticipation of the market scenario. There was no growth in actual demand during the 2000’s as the investors had envisaged and the result was a bust B2B marketplace.
To overcome this situation, the easiest yet most significant change is the integration of middle men who would not only bargain on the cost but also assure better proposition in quality and service.
Over the years, there has been a significant change in the mode of payments as well. Ownership has been streamlined and payment modules have become simpler with online banking becoming easier. Revenue generation for B2B marketplaces has thus become faster and much more convenient.
There is however still an urgent need to understand the market opportunities in the supply chain sector. Even the technological advancements have made b2b transactions easier. Personal-corporate relationships and dynamics between the buyer and supplier are still strong, given the century old ties. However, with better profit margins rising out of organized auctions online and mediators vouching for other propositions; B2B options have revived in popularity again and even seem to portray a brighter future.
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