Supplier shortage holding back marketplace growth

1 February 2001
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01 February 2001 | Cathy Hayward

A lack of suppliers is holding back the growth of BT's indirect goods e-marketplace BT MarketSite, according to David Furniss, BT Ignite's vice-president of products and marketing.

"The availability of suppliers is the main issue stopping firms participating," he told SM. "Buyers say until there is a real body of suppliers, they can't change their current systems, such as EDI. Suppliers claim that e-marketplaces just preserve current relationships and are a recipe for lower margins. It's a real chicken and egg situation."

BT set a target of 400 suppliers on MarketSite by the end of last year, but only 180 have signed up to date.

BT Marketsite was launched in April 1999. By last June, it had only 12 buyers, including Boots and PowerGen, and 17 suppliers. Another 95 suppliers had signed up but their catalogues were still being developed.

Furniss acknowledged that the cost of joining - between £10,000 and £15,000, plus catalogue charges - was holding back suppliers. Only large suppliers, such as electrical components firm RS Components and office stationery giant Guilbert, tended to join.

Some buyers helped their suppliers to get on the site through buying communities, he said, but this meant there were no independent suppliers on Marketsite.

BT is attempting to entice SMEs with an initiative called Sell Side, which is set to launch later this month and would help them to compete with large companies.

Simon Torrance, chief executive of Netmarkets Europe, a think-tank for the European business-to-business industry, was unsurprised by the lack of enthusiasm. "Suppliers have to pay to put their catalogue up and they're asking: 'What's in it for us? You're going to try and squeeze us on price and we have to pay to do business with you'."

Several marketplaces have disappeared or been taken over since a flurry of launches last year. Chemical marketplace Chemdex, launched in September 1997, closed down recently because it cost too much to attract customers, said Torrance.


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