B2B for beginners
The confusing term "on-line B2B marketplace" covers as many types of market arrangements as exist
off-line, including auctions, catalog sales, clearances of old stock, groups of buyers pooling
identical purchases to get bigger discounts, and groups of sellers displaying their goods
contiguously to cut customers' search costs. All of these market arrangements, and others, can be
replicated on-line, often more efficiently than their off-line precursors and at lower cost to
transactors. In addition, B2B marketplaces can wrap pre and post-transaction services into one
convenient package. Buyers and suppliers can collaborate on product specifications on-line, for
example: after the deal, they can use the track-and-trace software of the marketplace to track orders
en route to the buyer's premises.
Some intermediary has to set up, own, and run an on-line marketplace, like any other. Many firms are jostling to play this role. The first comers in the United States were entrepreneurs with venture capital and an idea for a market. Some also owned the supporting technology. More recently, large players from within trading industries have established B2B marketplaces. Both kinds of owners typically generate revenue by charging users either subscriptions based on expected volume or a fee for each transaction. B2B marketplaces may be horizontal or vertical. Horizontal B2B marketplaces are for supplies common to many industries: computers or work clothes, for example. Vertical marketplaces are used to trade supplies, such as petroleum or agriculture, that are peculiar to a specific industry.
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