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68 Part 1 Introduction

C Neutral sites are independent evaluator intermediaries that enable price and product
comparison and will result in the purchase being fulfilled on the target site.
D Buyer-oriented sites are controlled by third parties on behalf of the buyer.
E Buyer-controlled sites usually involve either procurement posting on buyer-company sites
or those of intermediaries that have been set up in such a way that it is the buyer who initi-
ates the market making.
We will see in Chapter 7 that the most successful intermediaries such as Covisint are those
which are not independent, but are seller-oriented or seller-controlled.
Evans and Wurster (1999) have argued that there are three aspects of navigation that are
key to achieving competitive advantage online. These should be considered when selecting
intermediaries. The three aspects are:

Reach. Evans and Wurster say: ‘It [reach] means, simply, how many customers a business
can connect with and how many products it can offer to those customers.’ Reach can be
increased by moving from a single site to representation with a large number of different
intermediaries. Allen and Fjermestad (2001) suggest that niche suppliers can readily reach
a much wider market due to search-engine marketing (Chapter 8). Evans and Wurster also
suggest reach refers to the range of products and services that can be offered since this will
increase the number of people the company can appeal to.
Richness. This is the depth or detail of information which is both collected about the
customer and provided to the customer. The latter is related to the richness of product
information and how well it can be personalized to be relevant to the individual needs.
Affiliation. This refers to whose interest the selling organization represents – consumers or
suppliers – and stresses the importance of forming the right partnerships. This particularly
applies to retailers. The authors suggest that successful online retailers will provide
customers who provide them with the richest information on comparing competitive
products. They suggests this tilts the balance in favour of the customer.

It is also useful to consider the scale of e-commerce when evaluating the long-term potential
of an e-commerce site and in particular business-to-business marketplaces or exchanges
(Chapter 7, p. 400). Has the facility been set up by a single supplier or by multiple suppliers?
Can it support many customers or is it available to a limited number of customers? Such
questions need to be asked by companies developing an e-business strategy since it will
govern who it is best to partner, both for procurement and for sales. Such questions are
answered from a strategic perspective in later chapters. Figure 2.8 shows three alternatives
across the continuum of trading for trading within the electronic marketspace.

The options can be summarized as follows:
Sell-side at supplier’s site (typically one supplier to many customers). Examples: most
e-tailers such as Amazon (www.amazon.com) or Dell (www.dell.com).
Sell-side at distribution portal (some suppliers to many customers).
Buy-side at buyer’s site (many (or some) suppliers to a single customer). Examples: first to
set this up was General Electric Trading Post Network, now the GE subsidiary Global
eXchange Services (www.gxs.com).
Buy-side at procurement portal (many suppliers to selected customers).
Neutral exchanges, marketplaces or hubs (many suppliers to many customers). Examples:
VertMarkets (www.vertmarkets.com) and Global Composite (www.globalcomposites.com).
Markets can also be considered from another perspective – that of the type of commercial
arrangement that is used to agree a sale and price between the buyer and supplier. The main
types of commercial arrangements are shown in Table 2.4.
It can be seen from Table 2.4 that each of these commercial arrangements is similar to
traditional arrangements. Although the mechanism cannot be considered to have changed,
the relative importance of these different options has changed with the Internet. Owing to
the ability to rapidly publish new offers and prices, auction has become an important means