European e-markets outlook dismal
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The outlook for European e-marketplaces is gloomy. According to a recent survey conducted by market research company Forrester Research, 88% of European e-marketplaces are not yet profitable.
The outlook for European e-marketplaces is gloomy. According to a recent survey conducted by market research company Forrester Research, 88% of European e-marketplaces are not yet profitable. Nor are they likely to achieve profitability unless they substantially change their offerings, says the report.
After two years of development, Europe's e-marketplaces have only a "trickling cash flow", and provide only a limited range of services, due to a combination of factors, primarily a lack of customer demand for more sophisticated functions and technology barriers that have stymied the operators' original plans, says Forrester analyst David Metcalfe.
For users, says Metcalfe, this has meant unstable fee structures and unfocused product offerings. For example, 60% of the e-marketplaces surveyed have changed their fee structure in the last six months.
To succeed over 2002 and beyond, Metcalfe advises European e-marketplaces to focus on data exchange and integration between members, before they attempt to provide more sophisticated hosted applications services. Current integration leaders in Europe are chemical industry e-marketplace Elemica, high-tech industry e-marketplace E2open, and telecoms bandwidth exchange Band-X, according to Metcalfe.
Only when an e-marketplace has proven its ability to provide members with effective and robust integration services, says Metcalfe, should it begin to offer applications. But, he warns, it is a mistake for e-markets to offer hosted versions of enterprise applications. Instead, they should partner with vendors of so-called extended relationship management (XRM) applications, which are Internet-based and cover several tiers of the supply chain, from vendors such as supply chain visibility specialist Saltare and collaborative design software supplier Oculus.
