Public exchanges

These exchanges attempted to insert themselves in the channel at the strategic point when customers decide who to buy from, how much to buy, and how much they will spend. As payment for matching buyers and sellers through electronic networks, on-line exchanges attempted to charge fees to sellers ranging from two to five percent of gross sales.

Yet the vast majority of industrial suppliers are still independent distributors and dealers who continue to thrive due to their great skill at maintaining high levels of locally delivered customer service and support[6]. Although the fees the exchanges wanted to charge appeared low, they were more than 50 percent of a typical distributor's net margin. Competition quickly lowered these transaction fees to marginal cost - or lower. Some exchanges saw transaction fees drop to as low as one-quarter of one percent, which was not enough to cover operating and capital expenses. Customers were also reluctant to disrupt systems that work,

George S. Day and Katrina J. Bens

even if those systems are partially uneconomic or somewhat inefficient. This is particularly true when the stakes are high, such as business customers that must procure supplies to keep factories and offices running without disruption or downtime.

Exchanges looked promising because customers in most B2B channels face enormous procurement and inventory costs. On-line systems that could reduce these costs and improve efficiencies held great promise. But exchanges misdiagnosed their relative advantage. During the past ten years, industrial customers have been improving the efficiency of their supply chain by consolidating supply contracts and reducing the number of suppliers. A supplier that can lower a customer's total cost of acquisition is preferred over one that simply offers a lower price. Many B2B exchanges went against these fundamental trends by emphasizing the lowest price instead of lowest total procurement cost.

Prospects for pure play B2B exchanges were further dimmed with the advent of industry-wide exchanges created by consortia of bricks-and-mortar companies who could provide both financial strength and guaranteed volume. But even these consortia are sometimes supplanted by private B2B systems (Bloch and Catfolis, 2001; MacDuffie and Helper, 2003). One likely scenario is that each industry will have one or two public exchanges to help buyers and sellers find each other, with subsequent transactions taking place on private networks where logistics can be optimized. A few specialized exchanges will be available to conduct auctions or offer specialized financing and logistics services.

Salehoo Secrets and Tips

Salehoo Secrets and Tips

As with any web site, SaleHoo has a number of features that will help you in buying products from around the world. Once you have an account on SaleHoo, which only costs a one-time fee, you can establish up to twenty named searches for products. After that, any time those items become available, you’ll be alerted.

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