Companies warm to doing deals on e-marketplaces

9 June 2004
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10 June 2004 | Sam Fortescue

Online marketplaces have been slow to develop, but buyers and suppliers are starting to realise they offer real cost and quality gains, according to research backed by CIPS.

Concerns persist, however, over the financial stability of marketplaces and whether they will be around long enough to deliver on their promises.

Research carried out for the I-Exchange project, in partnership with the University of the West of England, Oracle and BT, found that suppliers cut invoice and ordering errors by an average of 69 per cent when using an e-marketplace.

Twenty-eight per cent of buyers said they offered a better service to internal customers, while nearly a quarter said the supplier relationship improved.

Users were markedly more positive than non-users, suggesting that there are real benefits. Roy Ayliffe, director of professional practice at CIPS, said: "The survey shows users are prepared to acknowledge, perhaps for the first time, that e-marketplaces deliver significant savings.

"They can have a key role to play in terms of driving efficiencies and allowing companies to concentrate on strategic issues that hit the bottom line, such as strong customer and supplier management."

But the research also emphasised the drawbacks of using an e-marketplace.

Despite initial optimism over the potential of this new tool in the late 1990s, take-up has been slow because of the large capital investment required to adapt individual purchasing and supply systems to work in an electronic forum.

More damaging still is the widely held fear that e-marketplaces might not have the financial legs to last until suppliers and buyers see a return.

A majority of respondents also felt that e-procurement was not suitable for certain goods.

Steve Russell, manager of BT Transact, said complex or low-volume goods and services were best traded in a traditional way: "Using an online marketplace is not a solution on its own but complements other elements."

SMjun2004

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