Suppliers shy away from B2B marketplaces

B2B marketplaces have been highly touted as the next big thing, promising to maximise the supply chain and slash as much as 30% from the cost per transaction. But research conducted by B2B vendor MRO Software indicates suppliers are still shying away from B2B marketplaces.

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By  Greg Wilson Published  January 28, 2001

B2B marketplaces have been highly touted as the next big thing, promising to maximise the supply chain efficiency and slash as much as 30% from the cost per transaction. But research conducted by B2B vendor, MRO Software indicates suppliers are still shying away from B2B marketplaces, because they perceive them as costly and complicated.

Respondents also reported that they are forced to participate in online marketplaces by pressure from competitors and important customers.

MRO’s research looked at 300 European suppliers of specialised engineering maintenance equipment. The survey discovered the under one third of respondents cited pressure from important customers as their main reason for joining e-marketplaces.

Also, while 52% of respondents believe their competitors are already competing in a marketplace, only 25% claimed to be actually involved in marketplace activity.

But according to Joe Baah, business development manager with MRO Software, even this figure is debatable. Says Baah, many of these suppliers are simply participating in free trials offered by major vendors, but have yet to go live with transactions.

According to Baah, many suppliers also have unrealistic expectations about cost savings involved. Nearly 25% of suppliers hoped to see a 10% increase in cost savings over the nest year through marketplace participation, however, the same number forecast a mere 1% increase in business in the same period.

“Suppliers are covering their backs to be seen to be doing something. They’re reactive rather than proactive. But they’re still now aware of what the technology can do,” adds Baah.

Gartner Group analyst, Andy Kite says that he’s not surprised that suppliers remain wary. According to the analyst suppliers are approaching marketplaces from a different angle to buyers. “You can’t assume a supplier has a choice,” says Kyte. “If a customer decides to buy through a particular marketplace, the supplier listens or dies. It’s a Darwinian environment,” he explains.

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