In our earlier article, we have discussed about Virtual Marketplace (Electronic Marketplaces). Marketplaces can be described from three different pages based on the companies that initiate the marketplace. As with all electronic business models that support trade relationships, these are buy-side, sell-side, and neutral marketplaces. The operator structure has a significant influence on the strategy and goals of the marketplace with regard to the market players. Furthermore, competitive relationships play a role with several operators.
Differentiation of Electronic Marketplaces
Horizontal and vertical orientations
Vertical Marketplaces are geared towards the specific needs of each sector/industry and are also referred to as industry-based or industry-specific. They are often based on the merging of fragmented sub-markets. Again, the goal is to support the entire value creation of a supply chain, but in the form of a specialization of the marketplace in the targeted industry.
Products, services, etc. that are traded and in demand across more than one industry, but usually do not go into great depth, are primarily found on horizontal marketplaces. The focus is on the procurement of industry-independent products such as C-parts (spare parts, office supplies, etc.) and MRO goods. The decisive criterion is the efficient handling of cross-industry procurement processes, with a differentiation of price and variety of offers and thus induced process cost savings.
Closed and open electronic marketplaces
In closed systems, users are primarily interested in retaining their existing suppliers in the medium to long term, rather than opening up a new group of suppliers. The focus is more on communication purposes and less on the integration of fulfillment services.
Open marketplace systems focus on connecting as many participants as possible. At the same time, the demand for integrated additional services in addition to the usual offerings of the EMPs is very high, as the marketplace participants often do not know each other and thus there is an increased demand for risk management and financial services. In addition to pure order processing, open marketplaces are primarily intended to create a competitive situation between sellers who offer the buyer the best possible price within a price war. Furthermore, buyers have the opportunity to find new suppliers. Any supplier or buyer who adheres to the rules associated with the system has the possibility of access. The offer can be both industry-oriented and cross-sectoral. In addition to the costs associated with closed systems, there are often additional costs for transaction-related fees and fees for platform use.
Centralized and decentralized marketplaces
The distinction between centralized and decentralized marketplaces is derived from their organization. While centralized marketplaces are based on a central computer system, decentralized structures allow both decentralized data storage and decentralized intelligence. The maintenance of the decentralised system modules is carried out by the market participants and less by the marketplace operator. In a decentralised market, negotiations and pricing take place multilaterally, through individual communication between the participants. Decentralised electronic markets have the advantage that no redundant data storage is required and the data made available to the marketplace is up-to-date. The central appearance links either individual computer networks or, as in the case of Covisint, entire portals. In the case of centrally coordinated markets, prices are formed directly by appropriate mechanisms or are fully automated. All the information necessary for market pricing is available to the market participant. Centralised electronic markets can be used to facilitate market transparency and price discovery.
Core, material, and specialty marketplaces
Core marketplaces are 100% geared to the needs of the industry and are based on long-term business relationships with framework agreements and development partnerships. They are characterized by a variety of functions, tools, and application programs. Material marketplaces, on the other hand, are relevant for various industrial sectors. In the automotive industry, for example, they are responsible for mapping procurement processes for important raw materials and material groups such as metal, plastics and electronics. Here, too, there are framework agreements, but also spot purchases. Special marketplaces, on the other hand, are characterized by irregular offers and demands for services, which are primarily capital goods and machine or production capacities.