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Hi Everyone,

Here's an update and summary of the recent Ad-Marketing discussions about Net Market Makers or B2B e-Marketplaces. The contents of this report include the following items:

A. Events: What's New or Planned?
B. B2B e-Marketplace Info Sites; Resource Guide is up!
C. Online Reports
D. Introduction to B2B e-Marketplaces
E. Summary of List Discussions:
- About Marketing Strategy
About Associations vs. B2B e-Marketplaces


A. Events: What's New or Planned?

June 19, 6:00 to 9:00 pm - B2B "Community of Interest" event hosted by CIT in Herndon, featuring a panel discussion with WebMethods, Extricity, ObjectSpace, and CommerceQuest.You are invited to attend an exciting networking event for B2B professionals of the Virginia, Maryland, and Washington DC region. These important B2B technology leaders will present a spirited panel discussion about B2B e-Marketplaces and B2B technology, solutions, and business strategy. Responding to the boom in B2B Internet commerce, a new, grass roots organization will be meeting for the third time at this event. For more information and registration, please email:

B. B2B e-Marketplace Info Sites, B2B e-Marketplace Resource Guide!

Mitch and I have put together an Ad-Marketing B2B e-Marketplace Resource Guide. This guide is a work in progress. Please send additions for the guide to Mitch at: Scroll down to the next section for definitions and an introduction to B2B e-Marketplaces, or go directly to these sites. - Jupiter, probably the best & longest list of B2B e-Marketplaces; subscription services - collection of excellent reports; see Morgan Stanley DW, April 2000 - comprehensive content site on B2B & B2B e-Marketplaces - B2B e-Marketplace list - vert/horiz/geog/value added service categorized B2B e-Marketplace list - B2B news and resources - B2B research center - B2B e-Marketplace list, major sites - B2B resources - B2B e-Marketplace list - B2B e-Marketplace list; registry for industry participants

Thanks George Gardner for pointing me to and!

C. Online Reports

There are several recent reports on this subject. Many of these reports can be found on the site. A couple of these reports are worth highlighting:

D. Introduction to B2B e-Marketplaces

Call them Net Market Makers (NMM) - Net Markets - B2B e-Marketplaces -
Independent Trading Exchanges - B2B Infomediaries - B2B Metamediaries: These are all different names for about the same thing. A NMM or B2B e-Marketplace is neutral third party that deploys the commerce infrastructure and creates the value proposition to attract large numbers of buyers and sellers to the marketplace, usually in a narrow vertical market. (others types exist) Think of a farmer's market in your favorite town, or think of the "marketplace" in the central plaza of a German city in the 1600's - the marketplace takes on a vibrancy and life [liquidity] because shoppers know they can go there and buy what they need and producers know they can go there and find buyers for what they produce [commerce]. Service providers go there to sell shoe repair services, legal assistance, brokering, etc. [value added services] The marketplace is a meeting place [community] where people have fun talking with their neighbors and exchanging useful or valuable information.

B2B e-Marketplaces are just that. The marketplace host creates a marketplace with compelling value propositions for B2B commerce, compelling value added services, and a compelling community. Some add compelling, expensive content to the mix. In this case a for-profit business invests in technology and marketing to create the B2B e-Marketplace, attracting large numbers of buyers and sellers. Unlike B2C sites that are all about lower prices and delightful consumer shopping experience, the B2B e-Marketplaces are all about creating true business value for suppliers and buyers. Marketplace success or liquidity is also dependent on the host providing efficient commerce infrastructure for a more complicated business-to-business procurement arena. The marketplace must provide the tools and energy for a compelling community to emerge. And clearly valuable, related services must be provided by partnering service providers. 

In December, '98, there were about 20 B2B e-Marketplaces. You've heard of and , etc. But have you seen , , , , , , , ...? There are 800+ B2B e-Marketplaces today. CSC Consulting predicts there will be 10,000+ Net Marketplaces within a few years. Gartner predicts that the value of the transactions for physical goods flowing through them will be $2.6 Trillion in 2004. eSteel has emerged as a "best practices" for some analysts. Today eSteel, built by CSC, I believe to be the world leader in building major B2B e-Marketplaces, has 1100 participants in 63 countries. The eSteel annualized run rate exceeds $420 million. AMR Research ranks Altranet, the global energy exchange, as number one across all verticals. Transactions through Altranet, launched in '98, are now in the $Billions, having 6000 plus users worldwide. B2B e-Marketplaces are categorized by many analysts in a myriad of vertical industry focus, geographic region focus, "horizontal" product (as in maintenance, repair and operations (MRO) products, and value added service or business process functionality. 

Opinions vary widely over the future for these marketplaces. When will consolidation occur? Can there rationally be 10,000 marketplaces? When will high profile failures occur? Will large corporate buyers create their own procurement portals with their competitors, a la the automotive industry? The B2B e-Marketplace links above will provide you with a wealth of information.

E. Summary of List Discussions

- Summary of List Discussion About Marketing Strategy

Will B2B e-Marketplaces offer group buying services, offering access to
volume discounts to small buyers, as a strategy for attracting and retaining large numbers of buyers? Are any B2B e-Marketplaces offering analytical CRM (Customer Relationship Management) to suppliers as a strategy to differentiate and to attract & retain suppliers?, a startup that presented at Venture One Premier a few weeks ago, plans to be an ASP (applications service provider) offering virtual group buying services to B2B e-Marketplaces. Their web-accessed software will enable the marketplace host to offer anonymous aggregation of small procurements for large volume discounts as a value added marketplace service.

 One mature e-Marketplace has a strategy to contract with certain e-commerce enabled suppliers to offer discounts to member. The objective is to build value added service for members, both to attract new buyers, and secondly to retain present members. 

Aggregation of small orders for volume discounts will only work where the served vertical market has a great deal of commonality of products purchased by the small buyers, and large volumes of transactions. Where that occurs, the strategy makes sense. 

Many e-Marketplaces are racing to build a database identifying the buying behaviors of the marketplace buyers. Analytical CRM is essential to the success of the marketplace. Attracting large numbers of buyers and compiling valuable information about their behaviors is the critical strategy to attract the critical mass of suppliers to the marketplace. The marketplace must reach a critical mass of both buyers and suppliers. 

Community building by the e-Marketplace host is another critical factor in the success of the e-Marketplace. Communications amongst participants and information sharing are as important, long term, as the commerce transaction technology. Bulletin boards, chat rooms, other community building features, and relevant published content add value and provide a means for businesses to communicate their requirements and unmet needs. 

Some e-Marketplaces have pursued a different strategy of first contracting with the dominant distributor in their vertical, thus locking in the critical mass of suppliers. has pursued this strategy. 

Data is very limited because most e-Marketplaces are very young. It would be dangerous to make any generalizations about B2B e-Marketplace strategies today. 

Andy Brock and Jim Kennedy contributed significant and extensive insight in a series of posts.

- Summary of List Discussion About Associations vs. B2B e-Marketplaces

Whose demise, NMMs or trade association? If a strong trade association in the vertical targeted by a new NMM launches its own e-Marketplace, who will win? Potential for partnering? 

This question prompted some spirited discussion from many people with extensive association experience. 

A few pioneering industry trade associations today are building a B2B e-Marketplace for their vertical industry. Most, however, do not view this as their core competency and have no plans to do so. 

There are a large number of factors that determine whether a given association could, should, or would be a partner with a new NMM, compete with the NMM, or defer to the NMM. Relative size and strength of the association, nature of the membership - individuals vs. strictly corporate, American vs. global, market nature of member companies, relative importance of lobbying efforts, technology sophistication, etc., are some of them. 

Some associations have an outstanding lobbying organization and have to continually deal in the political environment. It is not likely that these association will be challenged by a new NMM, although there are examples of a NMM assuming a lobbying role. 

In a vertical where the associations are relatively weak, a new B2B e-Marketplace with strong community and value added services could replace the associations for all but lobbying purposes. A few industries, however, have very strong national trade associations that have the industry power to attract the critical mass of players to a B2B e-Marketplace should they launch one. This latter situation seems to be ideal for a strategic alliance with a new e-Marketplace. Timing and the perceived strength of the association are probably important variables in the mix. 

Associations strengths are their identity or brand, their database of members, and intellectual capital. Building a B2B e-Marketplace is far from their core competency. They probably would under estimate the financial and human resource investment needed to build the marketplace. 

To net out the comments, opinions seem to indicate that the new NMM should be very aware of the relevant associations and attempt to exploit the strengths of that association through strategic partnering. Some association will view the NMM as a threat. The NMM that successfully builds critical mass probably has nothing to worry about from the associations. 

Tony Byrne insightfully points out that the major publisher for the vertical industry is another important player that the NMM should not ignore. Tony suggests that partnering with the publishers and associations can dramatically reduce the NMM's investment requirements for content and community. 

Posts from Tony Byrne, Jonathan Trenn, Mike Diegel, Andy Brock, Peter Kirsch, and Ross Stapleton-Gray offered excellent insight.

Best regards to all, Bill


William G. Brickley
Senior Director, e-Business Strategy
Virginia's Center for Innovative Technology
CIT Tower, Suite 600
2214 Rock Hill Road
Herndon, VA 20170-4200


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