Page 280 - Electronic Commerce

Business-to-Business Activities: Improving Efficiency and Reducing Costs

or vortals. In this section, you will learn how these B2B electronic marketplaces were
conceived, developed, and operated as this sector of electronic commerce matured from
1997 through the present.

Independent Industry Marketplaces
The first vertical portals were trading exchanges focused on a particular industry. These
vertical portals became known by various names that highlighted different elements of 255
their collective nature, including industry marketplaces (focused on a single industry),
independent exchanges (not controlled by a company that was an established buyer or
seller in the industry), or public marketplaces (open to new buyers and sellers just
entering the industry). These portals are also known collectively as independent industry
marketplaces. Ventro opened its first industry marketplace, Chemdex, in early 1997 to
trade in bulk chemicals. To leverage the high investment it had made in trading exchange
technology, Ventro followed Chemdex with Web marketplaces in a range of industries,
including specialty medical supply, food service, and general business products. Many
other companies followed Ventro’s lead.
By mid-2000, there were more than 2200 independent exchanges in a wide variety of
industries but most of them were not earning profits and today fewer than 100 industry
marketplaces are in operation. Only one or two independent marketplaces in any
particular industry could survive; however, the number of industries that have a
functioning marketplace has increased somewhat in the past three years. In 2012,
Amazon.com launched AmazonSupply, a marketplace for industrial goods. Google followed
a year later with Google Shopping for Suppliers, a similar site.
Some of the industry pioneers who closed their industry marketplace operations, such
as Ventro, were able to build successful businesses selling the software and technology
that they developed to run their marketplaces. Today, leading software vendors such as
IBM, Microsoft, Oracle, and SAP also offer products that can be used to build B2B
marketplaces. In the mid-2000s, B2B marketplace models gradually replaced independent
marketplaces as the dominant form of operation in this type of electronic commerce. You
will learn about four of these B2B marketplace models—private stores, customer portals,
private company marketplaces, and industry consortia-sponsored marketplaces—in the
remainder of this section.

LEARNI NG FROM FAI L URES

MetalSite

Although a number of small steel manufacturing plants (called minimills) have opened in
the past 20 years, most of the world’s steel is still produced in very large steel mills. In
these steel mills, it is economical to produce steel only in large batches. Because of the
high cost of reconfiguring machinery, a steel mill set up to create one type of steel (for
Continued

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