EMarketplace eHub

1
E-Marketplace / e-Hub

• Online Business Model through which exchange is
  conducted
• Aims efficiency processes lower costs ease of
  finding new suppliers new channel for selling
  (particularly overstocked items) transparency
  ease of information search
• Problems trust development/ risk price wars
  competition issues revenue issues service
  expectations
• Different models MRO hubs Yield managers
  Exchanges Catalog hubs

2
Models

• Kaplan Sawhney 2000
• MRO maintenance, repairs operations
  transaction based hubs for in-direct supply
  mainly across industries revenue from number of
  transactions (80 of transactions/ 20 of value)
• Yield managers spot sourcing variable inputs
  such as energy supplies allow buyers to top
  up existing supplies when demand increases
  suddenly, volatile markets that are difficult to
  forecast

3

• Exchanges industry based direct goods
  existing relationships process efficiency
  information exchange high degree of
  collaboration RD projects often collaborated
  online community type models ownership issues
  (neutral/ consortia)
• Catalog Hubs transaction focused on direct
  goods sub-set of exchange model? automation of
  processes through the use of catalogues

4
One to many / Many to one Models

• Buy-side Supply-side models
• One powerful company within the industry develops
  their own hub
• Eg. Buy-side hub boeing.com boeing sells all
  their parts to their suppliers through their web
  site
• Eg. Supply-side hub IBM purchases all their
  products services online essential to have
  online capabilities to supply to ibm
• E-procurement / transaction based models but
  developing into more collaborative models.

5
Exchange Models

• Marketmaker business that develops and organises
  the e-marketplace of the exchange model
• Types of participants suppliers (all tiers)
  wholesalers customers logistics services IT
  services financial services governments
  information services (consulting content
  providers)
• Neutral market maker is not a participant in
  the supply chain
• Consortia market makers is a joint venture by
  current supply chain participants
• Industry Powerbroker One participant runs the
  exchange

6
Fragmentation

• Technology works particularly well in fragmented
  markets
• Aggregation models develop (see KS p. 100)
• Specialised high cost limited diverse
  suppliers/buyers
• Re-mediation the development of online
  middlemen who add efficiencies into the supply
  chain

7
Exchange Model Components

• Content Information presented that adds value to
  the transaction One source of multiple
  information content will vary according to
  seeker (engineering, quality, price,
  stock-levels etc) marketing tools for suppliers
  personalisation an issue
• Community business focus existing business
  relationships competitors usually also involved
  development of the industry
• Commerce transactions services offered

8
Revenue Sources

• Transaction fees of value commission type fee
• Fee for service add-on services offered by
  market maker
• Membership fees Fees to join the site
• Advertisement fees fees for seller to advertise
  on the site

9
Keys to Success

• Consortia becoming survivors customers become
  owners
• Value generated through industry knowledge
• Vertical / Industry marketplaces on the rise
• Win/win no price wars, value through services
• Collaboration where value added
• Information competitive advantage
• Liquidity / Revenue Issues
• Data available
• Integration of marketplaces

10
Possible Legal Issues

• Competition Policy in relation to consortia
• Competition policy in relation to aggregation
• Mandating the use of electronic hubs by powerful
  suppliers/ buyers
• Possible one hub per industry- they will have a
  lot of market power information control etc
• e-hubs are global how can countries enforce laws