Users shun 'costly' B2B marketplaces

NEWS Research just completed by the company indicates that suppliers are still shying away from B2B marketplaces because they perceive them as costly and complicated. Respondents claimed they are forced to participate in marketplaces by pressure from competitors and customers. The survey looked at 300 European suppliers of specialised engineering maintenance equipment. Just under one-third of respondents cited pressure from important customers as their main reason for participating in a marketplace. While 52 per cent of respondents believe their competitors are already competing in a marketplace, only 25 per cent claim to be currently involved in marketplace activity. However, even this figure is debatable according to Joe Baah, business development manager with MRO Software. He claimed that many of these suppliers are simply participating in the free trials offered by major vendors, but have not yet gone live with transactions. Suppliers also have unrealistic expectations about cost savings involved, according to Baah. Almost a quarter of suppliers hoped to see a ten per cent increase in cost savings over the next year through marketplace participation, yet the same number forecast a mere one per cent increase in business in the same period. "Suppliers are covering their backs to be seen to be doing something. They're reactive rather than proactive. But they're still not aware of what the technology can do," Baah said. However, Ferdi Roberts, MD of Ariba UK & Ireland, claims that companies such as MRO are not encouraging suppliers to participate because they operate business models which charge suppliers a transaction fee. "It's a fundamentally flawed model and it is unsustainable. We see it as a barrier to liquidity. Less transactions are likely to occur if the supplier is charged. Suppliers need to protect their margins so transaction fees are just another addition to the cost of sale," he said. Suppliers are approaching marketplaces from a different position than buyers, according to Andy Kite, research analyst at Gartner. He is not surprised suppliers remain wary. Buyers were the first to invest, they have deeper pockets and ultimately they control marketplace operations. "You can't assume a supplier has choice. If a major customer decides to buy through a particular marketplace, the supplier listens or dies. It's a Darwinian environment," Kite said.