So, what should we do now?” I was sitting across from the CEO of a once-hot, now-struggling electronic marketplace. His office was surprisingly opulent, a legacy of happier times. The e-market, like most of its brethren, had spent aggressively, racing to become the industry leader. But it hadnt worked out that way. Participants were slow to join and suppliers even slower. Two well- funded industry consortia had arisen in its space, and most industry players expected them to dominate. And, most tellingly, the participants that had joined this CEOs independent marketplace were not experiencing the promised benefits.
In many industries, the conventional wisdom, initially dubious of consortia e-markets, has now declared them clear victors over the independent e-markets.
Consortium-based e-markets would certainly seem to enjoy some advantages. They start life with strong funding and ready access to a set of core industry players. But, even with those advantages, the consortia are running into the same problems as the independents. Many have burned through much of their original funding. More critically, their participants arent realizing the promised benefits, either.
To finally deliver on their potential to reduce costs, boost sales and streamline processes, e-markets of all sorts must radically revamp their business models and focus more sharply on creating bottom-line business value.
And its not just the marketplace operators that will need to retool. E-market participants will also need to rethink their strategies for joining, then make tough changes to realize the advantages. Buyers will need to re-engineer major aspects of their supply chains. Sellers will need to reorganize their demand chains. Successful marketplaces will need to expand their business models to supply consulting support for their participants making these difficult overhauls.
“So what should we do now?” the CEO repeated. My advice was simple: Forget about solving all the industrys problems. Focus on a distinct target market with an offering that creates clear business value. Make sure your customers have all the help they need to truly realize this business value. Good advice for all of us, actually.