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B2B marketplaces can be described as a virtual online market where buyers, suppliers, distributors and sellers find and exchange information, conduct trade, and collaborate with each other via an aggregation of information portals, trading exchanges and collaboration tools.

Facts and Figures

B2B e-marketplaces emerged first in the mid/late 1990s. Their number increased considerably during the dot.com boom of 1999-2001, from 300 e-marketplaces world-wide in 1999 to over 1.500 in their height in 2001. Since then, however, the number has decreased again and a consolidation can be noticed. Berlecon Research recently counted 381 B2B marketplaces in Europe and 669 in North America.

In the mid-term – so the prognosis of experts – only maximal two to three electronic marketplace platforms per sector will survive. For an overview of the most important B2B e-marketplaces per industry sector check Marketplaces: main industry sector B2B e-marketplaces at a glance.

There are a number of ways to differentiate B2B e-marketplaces. Four main distinctions that can be made are:

• according to their ownership structure. It is possible to identify three types of e-marketplaces according to their ownership structure: third-party e-markets – i.e. e-markets which are run as neutral communities of many sellers and many buyers, consortia e-markets - i.e. communities founded by a few large participants joining forces to face their market inefficiencies, and private exchanges – i.e. communities where one large player establishes one-to-many connections to ensure in depth integration and tight relationship with its buyers / sellers.

• according to their industry orientation. A distinction can be drawn between horizontal and vertical services. Vertical e-marketplaces focus on the needs of a specific industry, horizontal e-marketplaces on processes and functions that are common to a wide range of industries, e.g. buying Maintenance Repair and Operation products.

• according to the transaction mechanism they offer, e.g. catalogue aggregation, buyer aggregation, auctions,  Real time exchange and collaboration platform.

• according to the technology approach. A distinction can be made between centralized e-marketplace models supporting many-to many processes, and peer-to-peer technology based electronic marketplaces which do not require a centralized server but are based on P2P partners operating independently.

Which e-marketplace type will dominate the particular industry depends on the industry level of concentration and the relative market power of buyers and suppliers, as well as on the type of the product traded and the complexity of the business processes involved in its production. For more information and case studies check our B2B marketplaces report.

Revenue Models

How do B2B marketplaces make money ? The most significant sources of revenue are:

• Transaction fees

• Subscription and membership fees

• Advertising fees

• Software sales and licenses

• Professional service charges

• Referral fees

• Gain sharing

For more information and practical examples check our B2B marketplaces report.

Trends

According to the Forrester study "E-Marketplaces: Rebound and Deliver", of Europe’s 25 leading e-marketplaces and 30 companies (March 2002), 88 % of the main e-marketplaces are currently unprofitable and only 36 % are expected to reach a break even during 2002. The leading 25 marketplaces generated just 350 mio Euro in revenue during 2001 - but have received a total of 2 bio funding from VCs and industry. E-marketplace usage remains low by European firms. During 2001 only 6 % purchased more than 5 % of direct materials through a net market, 80 % sold less than 1 % of goods through an exchange.

To survive the shake out, independent marketplaces are therefore searching for new, original business models that offer significant cost savings and/or enhanced revenue opportunities to both buyers and sellers. Most marketplaces are refocusing today either o a particular horizontal or vertical niche within highly fragmented industries, or on low-risk trading activities. Some of them are simply backing up from this kind of business and become software solution providers or hosts for other e-marketplace enablers.

Marketplaces: main industry sector e-marketplaces at a glance

Which are the main e-marketplaces per industry sector ? The following table gives an overview. However:  the information has to be taken with care, due to the fast changing nature of the B2B marketplace environment.

For more detailed information you can consult the B2B WebSites Directory, which gives a comprehensive overview on B2B Marketplaces worldwide.

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