Tuesday, October 02, 2007

How SMEs can benefit from e-marketplaces

Apart from having their own websites to sell their goods and services, Small and Medium Enterprises can also benefit from joining e-marketplace platforms.

The concept of e-marketplaces was quite foreign to me until I was introduced to it at an APEC e-commerce workshop in Taiwan last month.

An e-marketplace is an online space that brings together buyers and sellers to communicate, collaborate, and do business transactions.

You basically wander through the e-marketplace just like you wander through Koki or Gordons market, looking for goods and services, the difference being that you are in cyberspace on an e-marketplace.

The goal is to simplify the buying and selling process.

Usually, extra services are provided on an e-marketplace.

Overriding goals of joining include increasing revenue, and reducing costs.

China-based http://www.alibaba.com/ is a good example of a very-popular free e-marketplace which is primarily focused on SMEs.

You can buy and sell betel nuts on Alibaba.com, given that so many Asians chew betelnut just like us in Papua New Guinea.

Taiwan-based http://www.taiwantrade.com.tw/ is also a glowing example of an e-marketplace that readers of this column may want to visit.

Alibaba.com offers negotiation-based pricing, has won good reviews from around the world, and also offers premium/subscription services.

The current environment for e-marketplaces around the world is that they are still quite underused.

Common view is that adoption of a marketplace as a sales or purchase channel will change the way a company handles its sales and procurement.

It should bring productivity and sustained profitability to the bottom line.

Papua New Guineans should learn more about e-marketplaces to develop better-informed marketing strategies.

This also helps them to keep abreast of the changing business landscape.

So who owns e-marketplace platforms?

Sometimes, it’s an independent third-party, such as an industry association or government.

Sometimes, it’s an existing channel member.

Sometimes, it’s a co-operative of stakeholders with a vested interest.

Whoever it is, they are generally referred to as a “market maker”.

A typical e-marketplace will have over 100,000 members; therefore, the chance to increase business goes up.

E-marketplaces have basically three transaction models:
Auctions; and

Developments in Information Technology (IT) can be intimidating for SMEs, and e-marketplaces are a mystery for many.

But you often need only a minimal turnover to participate.

So why join an e-marketplace?

Large organisations expect suppliers to be available at these marketplaces.

They open up competition across geographic boundaries, creating greater competition.

More opportunities but potentially more competition in your own region.

Advantages of e-marketplaces include:
Access wider range of buyers/suppliers;
Faster purchase decisions;
Potential for partnerships;
Communication/administration flexibility;
24/7 convenience;
Access to information;
Improved customer service;
Dynamic updating of information;
Lower search and transaction costs;
Opportunity to differentiate from competitors in the same marketplace; and
Enter supply chain of larger firms.

Barriers of entry for SMEs include:
Lack of resources/knowledge;
Low IT skill level for many SMEs;
Lack of trust in the online world;
Lack of e-commerce readiness;
Lack of awareness of the benefits of e-marketplaces;
Lack of support from market makers;
Lack of industry/technological standards;
Understanding importance of integrating into larger supply chains;
Low web usage of buyers within an industry;
Short-term focus on benefits;
Difficulties in global trading (language/customs etc); and
Financial constraints (offering credit terms etc).

Both buyers and sellers have complained about crowding out of small local dealers, poor quality supplies, limited assistance by the e-marketplace in follow-up operations, insufficient specifications of technical features in bids; and unclear requirements for participation in auctions.

In sum, unrealistic short-term expectations are likely to lead to disappointment, effective planning of a participation strategy is important, and specific and realistic objectives should be set if an SME is to realise benefits.

I leave you with this letter from a good lady friend studying in Canberra, Australia: “Bro, good to know that you're doing all you can to publicise the IT world issue.

“I still stand on my point that leaders should be well educated...particularly on "Development Issues" in order for them to understand what you and I are talking about.

“I believe that it's their lack of knowledge about how essential it is (during this era) in terms of what goes on in the rest of the world that makes the rest of us suffer.

“I am learning a lot of good stuff about IT here at the University of Canberra but when I return to PNG, there is NO WAY...NO WAY I will be able to implement it effectively simply because the technology is not there.

“I dread the day I will return if you know what I mean.

“In terms of education, when my son was in Grade 1 at Goroka International School I was so amazed when he taught me how to use some programs that I had on my computer which I had no idea about.

“IEA (International Education Agency) introduces their students to the IT world as early as Early Childhood years, something that National Department of Education really needs to look into seriously.”

For comments and feedback, email the author at malumnalu@yahoo.com or SMS 6849763.

No comments:

Post a Comment