First of all, happy new year to all of you reading my posts! Now and since the official launch of this blog 7 weeks ago, you are on average more or less 60 visitors browsing daily 250 pages. Nothing outstanding at all there but still, I am happy about it. To start 2007, let me give you my prediction: … I’ll reach 500 unique readers – or more – at the end of the year!
But let’s be serious…In a quite compelling article from Alain Andreoli (CEO of cc-hubwoo) written on ELP’s magazine (October 2006 edition), you can learn more about his vision of the B2B e-Marketplace world. Though I share most of his points and absolutly agree that
- further and significant consolidation is inevitable,
- B2B Supplier Networks is the future of B2B trading e-Marketplaces,
I can’t afford not to add a comment about Alain Andreoli’s perception of e-Marketplace adoption:
This is a raditional sequence of events in the life-cycle of a new technology. In his book, Diffusions of Innovations, Everett rogers stated that only 2.5 per cent of adopters of a new innovation or idea could be categorised as innovators, 13.5 per cent as “early adopters”, 34 per cent as “early majority”, 34 per cent as “late majority” and 16 per cent as “laggards.” Where do you belong? I believe the market is just entering the early majority stage. the bell curve is ahead!
Early majority? 34 per cent of adopters? … how can it be! If we do speak about usage of online-trading e-Marketplaces (vertical, public or private portals enabling to buy products or services online) I would personally say that we are still in the innovator stage with no more than 2,5 per cent of adopters. Argument: If you add up all buy-side customers from all major vendors (read my learnings from a 2006 Forrester research) representing, according to 20/80 Pareto ruling, 80 per cent of the sector revenue and 20 per cent of total e-Marketplace clients, you end-up with ~1000 buy-side companies. So current market is involving more or less 10.000 enterprises total and… worldwide! Compared to the – few – 2M companies referenced in Kompass, this is less than 1 per cent. Ok, I could admit the early adopters stage has be reached within the fortune 1000 companies group, but that’s it.
What I mean is that e-B2B applications (Spend analysis, Sourcing, Procurement…) didn’t pick-up yet; they are not mature enough yet. Something key is missing (easiness of use and implementation, realtime benefit and return on investment) and have still to be invented. The coming years will be really interesting from this perspective. Acknowledging we are still in a very early stage of adoption after ~10 years is key for a proper understanding of what to do in the future. As you probably understood, I am convinced the adoption level is still much too low; because of the cost and leadtime of deployment of an eProcurement solution; because of the lack of interoperability of current marketplaces; because of the lack of reliability of ASP providers (read the nice post from Jason Busch about Perfect Commerce); because of the too long ROI of such solutions…but most of all – I believe – because of the lack of speed and real-time benefits that anyone is expecting from web-based applications and can find elsewhere in competitive B2B or C2C e-Marketplaces like e-Bay or Alibaba somehow. Future applications have to be user-centric and not process-centric. This is where critical progress have to be made to initiate the snow-ball effect expected in the Y2K; and this will most probably happen in the field of B2B supplier networks. Let’s wait and see.
Well done on some grounded analysis of ‘what is’ rather than ‘what we want to believe is’.
I recommend to others the link provided and take a look at the Forrester presentation.
B2B supplier networks. We are waiting for that to happen and to my mind that is going to need a shift in thinking from:
Buyer: we need to connect so we can collaborate online here is what I need you to do ….
to
Buyer: when we connect online I save money, you save money, and your order to cash cycle is shorter, interested?
In summary, what do readers beleive are the success of marketplaces?
– Does it need to be buyer led (i.e. Ford have a sistem which list all suppliers, who pay to be listed and have no guarantee that their products will be purchased)
– Does it need to be supplier led (we will only supply through this platform)
– Does it have to be full of buyer benefits (not only cost, but delivery/distribution, specific information, etc)
– how altruistic are partners (did eutilia not suceed because it tried to bring together companies that have been competing for a long time and sourcing/buying is such a profit “sucess secret” that partners/competitors did not want to share this knowledge OR did individual companies have very specific buying needs, even though there were in the same industry?)
– can the online purchase cycle realy be improved (reduce cost for both supplier and buyer) … with what ROI?
Hi Andrew! How are you? Where are you and what are you doing? (Andrew worked for Eutilia at the very start, as an Accenture consultant).
To respond – myself – briefly to your questions:
1. It can be supplier or buyer led, if suppliers or buyers are REALLY supporting the initiative andusing the marketplace. So there’s not a preferred model there.
2. Eutilia failed because of a lack of involvement of its founders (only 50% used the platform) who didn’t see the point of sharing a platform and their supplier database (which was quite national at that stage).
3. The model that did run Eutilia proved to be efficient: All former founders are using eSourcing and eProcurement but on a private marketplace structure (no sharing).
Looking at my Shareholders, I always thought I had in front of me a ‘simplified model of Europe’ with 8 nationalities represented, not understanding this same thing behind an identical english sentence and having different priority on their agenda, but none being to share something with a potential competitor.
Nevertheless, what an experience!
Hi Jean Philippe,
After several projects in Accenture, I moved back to Madeira where I joined the Blandy Group http://www.blandy.com and did several projects including setting up and opening the Madeira Story Centre http://www.storycentre.com initiated a selection of a new back-office platform and web sales tool for the travel agency and directed their Nature Tourism company where I increased sales substantially in less than a one year cycle.
I am now working alone, identifying business opportunities including: alternative energy production (wind and photovoltaic) for the grid, tourism promotion and selling and lastly the possibility of creating a marketplace where local farmers can sell their products to local hotels and restaurants, as well as supermarkets and even end consumers. I am developing business models for the three opportunities, although the last two are more supply/demand related, especially the last one.
I am looking for case studies on how farmers (or other associations) joined together to distribute products as well as a clear added benefit to buyers for using a marketplace (price, information, more products other than farm products, etc), as well as other revenue sources for the marketplace, such as sourcing management for hotels/consumers and also possibility of producers also become buyers of products they need (chemicals, farm tools, etc). It is interesting that you confirmed that eutilia shareholders all continue to use eSourcing & eProcurement and reason for lack of success was critical mass, use of national databases and communication issues rather than an issue with sharing information with competitors. As this project will be initially targeted at a regional producer/consumer base, I hope that these issues will not be relevant (I expect there to be others!).
I am also looking for applications for the marketplace (either existing and use ASP or install new application). Application must be user friendly, especially if farmers are expected to updated product availability as well as potentially be able to integrate with buyer ERPs (SAP, and other simpler systems).