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B2B Exchanges Dead Or Alive

By: James A. Warholic

The Talk Of The Town Was And Is, That B2B Exchanges Are Going To Change The Way Buyers And Sellers Get Hooked Up Online

There was talk by many experts in the B2B industry that these B2B exchanges would be the life blood of everything from buying and selling chemical products to machining and other fabrication services. Business-to-Business Exchanges were supposed to be an online eCommerce marketplace where buyers and sellers could get together and be a place were deals could be made. Buyers would be able to select suppliers based on pricing and delivery and save on costs. Sellers of products and services would be able to get their products and services seen by the greatest market penetration possible and ultimately increase their sales.

So, what went wrong and what happened to these business to business exchanges?

Here are a few quotes from the pro side of B2B Exchanges.

Why Suppliers Should Use B2B Exchanges

"By becoming a member of a B2B exchange you can benefit in both cost-saving and revenue increase - two primary requirements of productivity increase."

B2B Exchanges
B2B Exchanges - The Killer Application in the Business to Business Internet Revolution

The authors of this book claim that B2B Exchanges will quite literally be the next "killer application" on the Internet.

So, what has happened to all the B2B exchanges? Did they drop dead? Are they ready to come alive and be the next best thing to sliced bread? Or, are they already dead, before they ever really took off in the first place?

The other side of the coin with the B2B exchanges can be read in this article.

B2B exchanges dying off fast
Inherent problems, false assumptions speed demise of e-marketplace sites

"The dinosaurs got to rule the planet for 160 million years before they disappeared.

The mighty B2B exchanges got about two years."

I believe that B2B suppliers are of a much too competitive nature for B2B exchanges to work out the way those that are promoting the B2B exchanges would love to see it. The thought of it working is just too idealistic. Competition is on the selling side of the equation and not on the buying side. You can have hundreds of buyers with very few sellers that hooked up with the exchange in the first place. There is nothing keeping the buyer at the exchange. If a deal can be got outside the exchange, a buyer will always take the best deal possible. But, this isn't the only reason, or even the major reason why B2B exchanges will ultimately fail.

To really understand why exchanges are destined to fail we simply can look at the B2C side of the equation and see how that has played out with the AOL online access model. AOL thought they could roll along forever by adding new subscribers to their dedicated online portal. However, they found out that the consumer ditched their dial-up modems to get high speed Internet and quite literally turned off their dial-up connections. Also, try as they might, AOL could not stop people wondering off of their dedicated portal. Yahoo, is in much the same boat. Although Yahoo did not start off as a dial-up service, they created this Web portal for their regulars to go through. Yahoo has been scrambling of late, to get their regulars back to their portal. Well, now everyone is a portal. Everyone has access to a wealth of Information. Information without borders or boundaries. Millions of websites are being created with all types of information for consumers, businesses, and personal use. And, because of the information that is in diverse places, search engines got their start to catalog all that wealth of information. And here in lays the true for B2B exchanges.

Search Engines Are The B2B Exchanges Online

B2B exchanges have been with us ever since the first directory was put together. The Yellow Pages were the first mass produced exchanges to go out to the masses. Then Thomas Brothers with their annual list of suppliers came out in encyclopedia form. Then along comes the Internet with its light speed communication and information dissemination. And then we needed a system to get that information into the right hands. Online directories were started to help group these companies together. But that wasn't good enough.

Along Came The Search Spiders And Sat Down Beside Ours

They gobbled up all those keywords in our network of websites. All the major B2B and B2C companies in the world invited those search spiders to feast at their websites. They wanted them to pick up every particularly important word and words that would help push them up to the top of the search results for their industry. Then even the smaller B2B players realized they too could have equal footing to get their website discovered online. Competition was working at the max. Owners and presidents of corporations recognized the marketing impact that could be made using the search engines to capitalize on the fact that buyers and consumers all over the world were using the search engines to find the things that everyone wants.

The true B2B exchanges of the world can never be encapsulated. There are no bounds online. You can not stop information that wants to be free. Information that wants to be free does not mean that it is not going to cost you from the suppliers point of view. It does mean that the competitive marketplace will have suppliers that take advantage of everything they can on the Internet. This is very good for both the buyers and consumers and also for all the suppliers. But, make no mistake about it, there is a marketing cost involved.

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Labels: B2B Marketing, Business, Buyers, eCommerce, Products, Sellers, Services, Suppliers

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