I’d like to tell you a few reasons why a buyer might want to be part of an industry consortium marketplace rather than setting up its own private company marketplace but first I must tell what industry consortium marketplace and a private company marketplace are.
A Quick Business Lesson…
For those who are new to business, the world isn’t full of companies making product just for customers, for instance: McDonalds doesn’t grow, wash, cut the potatoes they have a whole string of companies that they buy from for their famous fries. The company that sells part of the final product to another company is called supplier. The company that puts the materials from all the suppliers together and mass produces the final product is call the manufacturer. The company that sells the final product to customers like you and me are called vendors, (sometimes the manufacturer is also the vendor).
An industry consortium marketplace and private company marketplace are types of business to business marketplace, where suppliers and manufacturers/vendors can find and make proposals, quotes, negotiations, tender, and transactions. For this blog I will mainly talk about business to business (B2B) eMarketplaces, aka online electronic marketplaces or web portals.
What is a web portal?
A few examples are iGoogle, AOL, Yahoo!, MSN, and my favorite New Grounds. In short, a web portal is a website that puts together and displays information and media from a bunch other resources. When a user signs in a portal they can change some of the content and apps displayed on home page. Portals have features like a search engine, email, news, info, forums, video, pictures, audio, corporate databases, etc., things that would have been different entities all on their own.
There are actually 5 types of B2B marketplaces, seen in the image below.
One reason a buyer would want to be part of an industry consortia marketplace instead of setting up its own private company marketplace is that the buyer would attract more sellers in an industry consortium marketplace. Secondly, the main advantage of companies to join an industry consortium marketplace is to pool resources together to reduce costs, save time and effort. The costs can be very high for a company building their own private marketplace. And Thirdly, a company would have to be well known, have a good reputation, and be doing pretty well to have their own private marketplace otherwise they would get no traffic from sellers for bids. So for a business that’s, medium, small, or just starting out doing a private company marketplace would not be the way to go.
For more real life examples of eMarketplaces see links below…
Aerospace: 13 airlines worldwide
Exostar: Worldwide defense companies: BAE SYSTEMS, boeing, Lockheed Martin, Raytheon and Rolls-Royce
Quadrem: Worldwide Mining companies: Alcan Inc, Alcoa Inc, Anglo American plc, Barrick Gold Corporation, BHP Billiton, Companhia Vale do Rio Doce (CVRD), Corporacion Nacional del Cobre de Chile (Codelco), De Beers Consolidated Mines Ltd, Glencore International AG, Imerys, Inco Limited, Newmont Mining Corporation, Noranda Inc, Penoles, Phelps Dodge Corporation, Rio Tinto, Votorantim Group, WMC Limited
Agentrix: Worldwide Retail, the merger of GNX and WWRE
Worldwide steel
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