What makes an e-Marketplace different from others?
What makes an e-Marketplace different from others?
By Zatni Arbi
Have you ever thought about how many hospitals, clinics,
medical centers, community health centers and private clinics
there are in Jakarta alone? Or of how many pharmaceutical
companies, plus importers and traders of medical equipment and
supplies there are? Think of how big the medical supplies
business can be: disinfectants, latex gloves, blood collection
needles, disposable syringes, rubbing alcohol, cotton swabs,
surgical masks, test kits, disposable plastic glasses, transfer
pipettes, specimen transport bags, petroleum jelly, you name it.
These are goods that will always be needed. We may not have the
data, but it is easy to imagine how huge the volumes are.
Suppose you are an Internet entrepreneur and you are thinking
of starting an Internet business in Indonesia. Here is an idea of
what you can do: Get all the hospitals, clinics, importers and
sellers of medical supplies, etc. online and provide them with
all the necessary infrastructure and support, including a B2B e-
commerce site, so that the buyers and sellers can meet, request
quotations, bid, negotiate, place orders, make payments and track
orders online, then you'll be building the country's first
medical supplies e-Marketplace in Indonesia.
Your medical supplies e-Marketplace will be a boon to both the
health institutions and the suppliers. The hospitals can compare
prices offered by the suppliers, and the suppliers can compete
fairly in offering their products. The buyers review the sellers'
capabilities, while the sellers obtain much better exposure in
the market. You collect the transaction fees and become rich.
Everybody is a winner.
A more common scenario would involve an e-commerce site run by
a company that belongs to the same group as one of the hospitals.
Today, in the new economic era, courting one's traditional
competitors to form a business venture is no longer an alien
idea. A bank with an expansive ATM network, for example, may
invite its competitors to use the network. By so doing, the ATM
owner will be able to maximize utilization of its network
infrastructure and share operational costs with the other
participating banks. The guest banks also benefit from the
arrangement, as they can now extend the reach of their own
banking services without having to make humongous investment in
their own ATM machines, secured kiosks and ATM infrastructure.
Similarly, it would not be strange for a hospital to invite other
hospitals to join forces to build a B2B e-commerce. In today's
business world, a win-win solution is what counts. Hence the term
"coopetition", which combines the words "cooperation" and
"competition". A paradox, maybe, but reality nonetheless.
However, when one of the participants controls ownership of
the infrastructure, the others may sometimes feel that they are
not exactly standing on a level playing field. There may be some
features that are available only to the owner, and the others may
not even be aware they exist.
What separates e-Marketplaces from ordinary e-commerce sites
is exactly that. In an e-Marketplace, such as the SciQuest
(www.sciquest.com), the keyword is neutrality. An e-Marketplace
is a set of Web-based services offered by a completely neutral
party. As IDC puts it, "e-Marketplaces by definition offer
advantage to no particular party and should grow because of their
open criteria for entry." Thus, a true medical supplies e-
Marketplace cannot be set up by a hospital or a medical supplies
vendor, it has to be built by a totally independent provider.
Like the "market" in the conventional sense, an e-Marketplace
is neutral to everybody that takes part in the activities that go
on in there. In a traditional marketplace, for example, buyers
can go to any of the stores to buy whatever they need. The stores
can sell to any buyer that come to them. It is unlike intercity
bus terminals like Pulogadung or Kampung Rambutan, where agents
and scalpers drag passengers -- sometimes almost by force -- to
certain ticket counters where the bus companies have promised to
give them the biggest commission for every passenger they bring
in. In an e-Marketplace, there is no agent.
Research firm International Data Corporation (IDC), which is
often quoted by IT industry players as the reference for their
business directions, believes that e-Marketplaces have been
gaining momentum and are ready for takeoff. While this year e-
Marketplace accounts for only 7.5 percent of the total B2B e-
commerce value, IDC expects that, by 2004, the share of e-
Marketplace in B2B e-commerce worldwide will grow rapidly to 56
percent. "E-Marketplaces, the headline grabbing dot-coms of B2B,
will eventually take the lead position as a number of them manage
to establish themselves as de facto marketplaces in specific
industries," says a recent report from this firm.
Let us take a brief look at SciQuest, an e-Marketplace that
has been built using IBM's solutions and now lets laboratories
and vendors of lab equipment and supplies utilize the site. Any
time a lab needs some kind of reagent (chemical, cell biology,
molecular biology, etc.), image analysis equipment or
microscopes, even used or refurbished lab equipment, it can check
the website, enter the marketplace, find what it wants, compare
the prices and place orders.
There is added value, as well. The site also provides a
library of resources and late-breaking news in the world of lab
research. Buyers can also request to be notified if there is a
special deal from one of the vendors that may happen to have
excess inventory that it would like to get rid off. There is also
an auction site, which allows interested buyers to participate in
auctions.
GartnerGroup, another IT industry research firm, believes that
around 600 e-Marketplaces have emerged in the past year. Other
real-world e-Marketplace examples include FreeMarkets
(www.freemarkets.com) and SuppliersMarket
(www.suppliermarket.com) for industrial goods, as well as GoCargo
(www.gocargo.com) and QuoteShip (www.quoteship.com) for logistics
services. However, one of the most visible e-Marketplaces was
formed when the three automaker giants -- Ford, GM and
DaimlerChrysler -- decided to forge an alliance and build a B2B
site, with Commerce One and Oracle as the technology partners.
The B2B exchange for automotive parts, which is now known as
Covisint, unites the three automakers with part suppliers,
enabling the three giants to cut down the cost of parts and the
procurement process. The site is now being scrutinized, however,
for the possibility of having violated the antitrust law. Others,
managed by totally independent providers, should have no such
problem.
Another way of looking at e-Marketplace is that it is the
natural evolution from a one-to-many e-commerce site. From the
seller's point of view, it is the next step from being a lone
seller selling to many customers -- just like amazon.com -- to a
marketplace. From the buyer's point of view, it is also a natural
evolution from a one-to-many, e-purchasing type of B2B commerce
to many-to-many involving multiple buyers and multiple sellers.
Who are the biggest players in the e-Marketplace arena? Two
names come to mind immediately. The first is the one that has
just been mentioned, Commerce One, a US$5.6 billion company based
in Pleasanton, California. The other is Ariba, a $13 billion
company with headquarters in Mountain View, California. The two
contenders have been fighting like crazy to get the biggest chunk
of the e-Marketplace market. The difference is perhaps the fact
that Commerce One strives to build a global trading community
involving big names while Ariba aims at customers from the entire
range.
What drives these two companies as they try to beat each other
to death? As they provide the tools, they get paid for the
licenses. In addition, as the service providers, they resemble
our toll free operators. They collect a fee for each transaction
that passes through their infrastructure. GartnerGroup, another
IT research firm, predicts that this year, as much as $403
billion worth of B2B transactions will flow through the e-
Marketplaces alone. Clearly the potential return is tremendous,
because, like our motorists who take the toll roads to avoid
traffic congestion, buyers and sellers choose to transact in the
e-Marketplace because of features such as convenience, simplicity
and huge cost savings.
Thus, if you're interested in establishing a medical supplies
e-Marketplace for Indonesia, you can go to either of these
leading e-commerce service providers. Just remember: The keyword
is "neutrality".