Integration is the new business model
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Software sales are not the only option for a failing e-market. Recently several e-marketplaces have been re-positioning as supply chain integration providers.
Struggling e-marketplaces that have stretched themselves too thin across different industries – or just not managed to sign up enough members – are desperately trying to re-invent themselves as business-to-business (B2B) software vendors.
It is a process that has been gathering pace for several months. Marine industry exchange, Marex, and collaborative software vendor NexPrise (formerly Ventro), were two of the early trend-setters, launching software sales strategies in late 2001. Since then Verticalnet has announced the divestiture of 59 vertical focused marketplaces so that it can focus on ebusiness software sales, and SciQuest, an e-marketplace for the life sciences industry, has scrapped its exchange in favour of software sales after acquiring Textco, a genetic research software company.
However, software sales are not the only option for a floundering e-market. Several e-marketplaces have begun re-positioning themselves as providers of supply chain integration services. For example, seven horizontal e-marketplace operators have linked their platforms together to form the Global Interoperability Group (GIG). Founder members include French horizontal e-marketplace Hubwoo; British Telecom's Internet services subsidiary BT Ignite; US-based e-marketplace service provider eScout; Scandinavian e-marketplace IBX; Spanish e-marketplace Opciona; pan-Asian e-marketplace SESAMi; and Deutsche Telekom's Internet services unit T-Systems.
The alliance will benefit members of all of these exchanges by integrating more than 10,000 buyers with 1,000 suppliers and 3.5 million catalogue items globally, it says. However, the move also highlights the increasing commoditisation and consolidation of horizontal e-marketplaces, most of which provide low margin indirect goods such as office supplies and stationary.
