B2B Internet Trading Platforms - EDIS

B2B Internet trading platforms:
Opportunities and barriers for
SMEs
A first assessment
Enterprise Papers No 13
2003
Maria Perogianni
Enterprise Directorate-General
European Commission

Enterprise Papers
Enterprise Papers are a mix of policy papers, sector-specific studies, and
a combination of both. Written by the staff of the Enterprise Directorate-
General, or by experts working in association with them, they aim to raise
awareness of enterprise policy issues and stimulate debate. These papers do
not necessarily reflect the opinion or position of the European Commission.
Occasional ‘special editions’ may carry communications, working papers,
conference proceedings, and reports to the Council.
This report was prepared by Maria Perogianni of the Enterprise Directorate-
General, European Commission, Unit D4 – E-business; ICT industries and
services.
It was originally published as a Commission Staff Working Paper (SEC(2002)
1217, 11.11.2002).
For further information, contact
European Commission
Enterprise Directorate-General
Unit D4 – E-business; ICT industries and services
B-1049 Brussels
Fax: (32-2) 296 7019
To request copies, fax (32-2) 296 9930.
E-mail: Entr-Ict-E-Commerce@cec.eu.int
A great deal of additional information on the European Union is available
on the internet.
It can be accessed through the Europa server (http://europa.eu.int).
Luxembourg: Office for Official Publications of the European Communities,
2003
ISBN 92-894-4897-0
© European Communities, 2003
Reproduction is authorised provided the source is acknowledged.
Printed in Belgium
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TABLE OF CONTENTS
INTRODUCTION ................................................................................................................................... 5
1. B2B INTERNET TRADING PLATFORMS: FROM HYPE TO REALITY............................................. 7
1.1. The original idea of B2B e-marketplaces................................................................................. 7
1.1.1. The concept of the butterfly model .......................................................................................... 7
1.1.2. The potential benefits of B2B e-marketplaces ......................................................................... 8
1.1.3. The revenue models for e-marketplaces................................................................................. 10
1.2. The development of B2B e-marketplaces in recent years ...................................................... 11
1.2.1. The quantitative picture.......................................................................................................... 11
1.2.2. From B2B e-marketplaces to new forms of Internet trading platforms ................................. 13
1.2.3. B2B e-marketplaces – a transitory phenomenon.................................................................. 15
2. BARRIERS TO THE USE OF B2B INTERNET TRADING PLATFORMS BY SMES .......................... 15
2.1. Lack of awareness on the potential benefits and risks of Internet platforms ......................... 16
2.2. Lack of information on B2B e-marketplaces, business partners and
products/services .................................................................................................................... 18
2.3. Lack of trust in B2B electronic transactions .......................................................................... 21
CONCLUSIONS ................................................................................................................................... 26
ANNEX I
Table A – Estimated numbers of active B2B marketplaces by region of activity ................................. 27
Table B – Estimated numbers of active B2B marketplaces in Europe by sector................................... 27
ANNEX II
Table A – Participation in B2B e-marketplaces by sector (2002) ......................................................... 29
Table B – Participation in B2B e-marketplaces by size class (2002) .................................................... 29
Table C – Activities on B2B e-marketplaces (2002)............................................................................. 30
ANNEX III
Open consultation on “Trust barriers for B2B e-marketplaces”: The main results ............................... 31
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INTRODUCTION
E-business has the potential to promote the completion of the Internal Market by stimulating cross
border transactions. Business-to-Business (B2B) electronic commerce can help SMEs to access new
markets, find new business partners and benefit from lower prices and increased choice within the
Internal Market.
However, the current state of e-commerce development clearly indicates that the potential of e-
commerce is far from being fulfilled. The Eurostat “e-commerce and ICT usage by European
enterprises” survey of 2001 1 , shows that transactions conducted over the Internet are mainly national,
not cross border. In the EU countries surveyed, more than 75 % of e-business sales are still within the
country of origin of the suppliers. Thus, e- commerce has not yet played the role of a catalyst for the
internal market.
Conducting electronic transactions via specialised electronic marketplaces for businesses - the socalled
B2B e-marketplaces- may represent a more efficient and cost effective form of trading goods
and services, both within national borders and across them. By creating on-line communities of buyers
and sellers, e-marketplaces can facilitate transactions over large geographical areas and with
previously unknown business partners, thus generating cost savings through increased market
transparency and a more efficient transaction process. However, despite their potential benefits, the
use of specific e-marketplaces seems even less accepted than e-commerce in general. According to the
Eurostat survey, on-line purchases through specialised e-marketplaces range, as a percentage of total
on-line purchases, from 0 % in Italy to 16 % in Sweden. Similarly, on-line sales via e-marketplaces
range, as a percentage of total on-line sales, from 0 % in Italy and Spain to 7 % in Germany.
The concept of B2B e-marketplaces has undergone fundamental transformations during recent years,
and the expectations they have raised have changed from euphoria to scepticism and even pessimism.
But electronic transactions using open Internet platforms are still alive and in some industry sectors,
e.g. the chemicals sector, they are particularly successful and are even becoming the norm for buying
and selling. This is despite the fact that many enterprises and in particular SMEs still seem to be
reluctant to actively participate in electronic exchanges.
Indeed, many barriers exist to prevent SMEs from buying and selling their products and services online.
As a result, SMEs may miss the many opportunities and advantages offered by open Internet
trading platforms. This could lead to an even wider digital divide between smaller and larger
companies. This is even truer as in many cases such Internet trading platforms are operated by large
companies, and there might be a risk that SMEs will still be forced to participate in them, irrespective
of the conditions of participation, in order to continue to trade with their business partners.
Today, there is still the opportunity to influence the rules for B2B Internet platforms with the view to
better arbitrating between the interests of the different partners and to prepare SMEs for taking the
maximum advantage from on-line transactions, but this “window of opportunity” may not last forever.
Therefore, the Communication on the impact of the e-Economy on European enterprises 2 has
identified the need “to promote fair trade in both the B2B and B2C environments, in particular
through the reinforcement of self-regulation mechanisms”.
1
2
This major survey covered SMEs with 10 - 249 employees, in 13 EU Member States plus Norway (the
gross sample was 100,000 enterprises), and reflects the situation in the period November 2000 and June
2001. It was conducted by Eurostat together with the National Statistics Institutes and sponsored by DG
Enterprise. This covered the adoption of ICT and e-commerce in all sectors of the economy (except in
Germany, where only the retail and wholesale trade, restaurant and catering sectors were included). The
overall response rate across the Member States was approximately 40 %, but this was significantly
affected by the very low response rate of 7 % from Germany. The conclusions to be drawn from the
German data should, therefore, be treated with some caution.
COM (2001) 711 final
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As a follow up to the e-Economy communication, Enterprise Directorate-General has launched an
open consultation to identify trust-related barriers in B2B e- marketplaces. The main results of the
consultation are analysed in this paper. In addition, other barriers for the use of e-marketplaces, such
as the lack of awareness and insufficient information about how to use the Internet for finding new
partners and for buying and selling products and services are further analysed.
The objectives of this working document are:
– To analyse the current state of development of B2B Internet platforms, taking into account
the results of the dot.com crisis, e.g. which business models have proved to be economically
viable and what are the possible future trends.
– To analyse potential barriers for SMEs in using B2B Internet platforms and to identify policy
challenges and potential actions to address them, e.g. what prevents SMEs from using the
Internet as a business tool for buying and selling goods and services and how to address
these issues.
– To prepare for a policy agenda to facilitate the use of B2B Internet platforms for SMEs e.g.
what if anything needs to be done at European level and how.
In this context, the main policy challenges are to promote the internal market and to address the risk of
a digital divide between large companies and SMEs. More generally, there is a risk of an uneven
distribution of costs and benefits across certain supply chains. This working document should be
considered as a first step to preparing a discussion on these issues at European level.
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1. B2B INTERNET TRADING PLATFORMS: FROM HYPE TO REALITY
1.1. The original idea of B2B e-marketplaces
The perception of e-marketplaces has undergone fundamental changes in recent years. It seems
worthwhile to recall the original concept of e-marketplaces, the so-called “butterfly model” of B2B e-
marketplaces, and then to discuss the value added it was promising to offer before looking at different
revenue models that have emerged from that. Although not all these concepts have survived the reality
check, it is nevertheless important to clearly understand the original concept of e-marketplaces in
order to assess their success or failure against the expectations they have raised.
1.1.1. The concept of the butterfly model
When the idea of B2B e-marketplaces emerged in the late 1990s, they were regarded as being
something revolutionary and distinctly different – like every new idea in the dot.com era. It was
pointed out that B2B e-marketplaces differ in a variety of aspects from other forms of B2B e-
commerce. Unlike the classical e-commerce sites of individual companies (sell-side solutions), B2B e-
marketplaces were considered as “virtual” marketplaces with several suppliers, not just one (Figure 1).
And unlike the procurement networks run by some large corporations - often called extranets or buyside
solutions-, they were supposed to bring together several buyers.
In this concept, B2B e-marketplaces differ from simple information directories and industry networks
in their transaction focus. E-marketplaces should lead to actual transactions and usually offer facilities
for the direct settlement of such trades. Another common element is the idea of a neutral third party,
arbitrating between buyers and sellers. In this sense, e-marketplaces can be defined as an online
service to the benefit of buyers and sellers, offered by a neutral and independent market service
provider against a fee. Hereby, the provider of the e-marketplace has no control over the prices of the
product.
Figure 1 – The butterfly model
Seller
Buyer
Seller
Buyer
Seller
Seller
Marketplace
Buyer
Buyer
Seller
Buyer
Seller
Buyer
Such e-marketplaces may appear in many different forms, differing in their industry orientation and in
the functionality offered. First of all, a major distinction can be drawn between horizontal and vertical
services. Whereas horizontal e-marketplaces are focused on processes and functions that are common
to a wide range of industries, e.g. buying Maintenance Repair and Operation (MRO) products, vertical
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e-marketplaces are geared to the needs of a specific industry. In reality, vertical e-marketplaces make
up the majority of B2B e-marketplaces both in Europe and in the United States and serve such target
groups as chemicals, pharmaceuticals, steel, telecommunications, the transport industry or the food
trade.
A second distinction between e-marketplaces can be made according to the transaction functionality
they offer. One of the several possibilities is to distinguish them as follows:
– Pinboards (also known as message boards) are the simplest type of B2B e-marketplace.
Strictly speaking, one can argue over whether they should really be classified as e-
marketplaces at all, since they frequently only offer limited transaction functionality. They
provide an opportunity to announce a concrete desire to buy or sell something and to prepare
a transaction. This distinguishes them from portals, which only refer the potential customer
to corporate web sites. Often the goods traded are difficult to catalogue, e.g. because they are
unique second-hand capital goods. There is no clear definition of roles; anyone can be a
buyer or a seller. The prices are freely agreed between buyers and sellers, and this
negotiation takes place outside the scope of the e-marketplace.
– Exchanges represent an extension of the pinboard idea; they are often also termed matching
systems. The main way they differ from pinboards is that the negotiation takes place on the
electronic marketplace. The service typically provides some mechanism for the matching
process and controls the way buyers and sellers come together. For example, a seller
announces that it wants to sell a piece of construction equipment and has some idea of the
minimum price it wants to realise. The potential buyer does not contact the seller directly,
but sends his bid to the site. The site checks the bids and passes the best ones on to the seller,
who can then decide whether to accept a bid. Ultimately, whether a sales contract is
concluded or not depends on the prices and composition of the participants.
– Auction services are very similar to exchanges but have slightly different priorities and are
organised in a much more formal way. For example, it must be possible to describe the
character of the good or service to be auctioned so clearly that the price suffices as the
exclusive criterion for fixing the contract (e.g. auction of a three-year-old, type-X wheel
loader with a previous running time of Y hours). In exchanges, by contrast, a Request For
Quotes (RFQ) can be imprecise (wanted: a medium-sized wheel loader). In addition, another
decision criterion, apart from the price, can be the extent to which the non-price elements of
the offer meet the preferences of the advertiser.
– At the heart of catalogue-based marketplaces lies a combined product catalogue made up of
the catalogues of the various sellers. The separate roles of seller and buyer are clearly
defined in such services. The sellers offer their products in a joint electronic catalogue
together with identical, similar or simply complementary products from other sellers. The
buyers can choose from this range of products, compare terms and order products. The prices
are usually fixed by the seller, but can vary from one buyer to another or according to the
order volume.
In reality, e-marketplaces are often a combination of the different transaction functionalities, resulting
in different business models that often have changed over time in search of profitability. In addition, in
many sectors most of the substantial B2B platforms active in Europe are sites supported by major
companies whereas many of the smaller services that started in previous years have not survived as an
e-marketplace in the strict sense. However, the concept of B2B e-marketplaces is still alive, although
often in a different form and with different emphasis than originally thought.
1.1.2. The potential benefits of B2B e-marketplaces
All the e-marketplace models described above have one thing in common: The e-marketplace operator
is defined as a “middleman” providing special intermediary functions. These functions must be
valuable enough for participants to be billable. In other words, the e-marketplace must provide
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participants with added value. It can do this in a variety of different ways, and all of these have been
the main selling proposition of one or another e-marketplace:
– Cost savings have been the major selling argument by e-marketplace operators and the main
motivation of buyers to use e-marketplaces. Such cost savings can, potentially, be generated
by three mechanisms: (1) growing market transparency lowers the product costs for
participants who have been paying more than the market price up to now; (2) in cataloguebased
e-marketplaces the aggregated buyers have more market power than each individual
buyer and can exert pressure on prices; (3) the electronic processing of purchases and sales
saves transaction costs. While the first motivation has been at the centre of public discussion
about the benefits of B2B e-marketplaces, the third motivation for cost savings has formed
the major motivation especially for larger companies to use or establish e-marketplaces. The
second form of cost savings, often called “power shopping”, has turned out to be less
important in reality than in theory.
– Very much related to transaction cost savings is the process support that can be provided by
e-marketplaces. For example, construction projects require the co-ordination of a large
number of different players – architects, structural engineers, authorising agencies, builders
and the individual craftsmen – and all this under enormous time pressure. Several e-
marketplaces have emerged to focus on this co-ordination process and try to organise it more
efficiently through the means of a marketplace. Although these platforms are not
“marketplaces” in the strict sense of the word, they are often subsumed under this category.
– Apart from speeding up processes and make markets more efficient, B2B e-marketplaces
might even create new markets. There are, for example, many sectors of the economy in
which surplus stocks are thrown away, used capital equipment is scrapped and temporary
excess capacity stands idle, simply because the cost of looking for a customer is greater than
the value of the products concerned, or, in the case of perishable goods, the search takes too
long. B2B e-marketplaces can create markets for these goods. This is a significant factor, for
example, in transport exchanges, telecommunications exchanges, markets for used capital
equipment and markets for surplus stock or second-rate goods.
– A value added that has been highlighted especially by sales departments is market
expansion: Developing new markets at lower cost than by traditional means is a general
advantage of e-commerce. Compared to buy-side or sell-side solutions, B2B e-marketplaces
also deliver added value by matching buyers and sellers in a more targeted fashion.
However, not only B2B e-marketplaces, but also B2B portals and Yellow Pages supply this
added value. The advantage of B2B e-marketplaces is that they enable direct contacts to be
converted into actual transactions.
– A more efficient price finding process is another potential advantage of B2B e-marketplaces.
Wherever a large number of different off-line marketplaces exist, or trading is predominantly
bilateral or handled by commercial agents, market transparency is often low. For this reason,
the prices for the same commodity can differ significantly from one transaction to another.
Virtual B2B e-marketplaces improve the price-finding process. Although this growing
transparency is likely to lead to an overall lowering of the price level, sellers who have been
charging excessively cheap prices up to now can also reckon with price increases. All
participants, however, benefit from the lower costs of price finding. This added value is
significant in markets dominated by bilateral or mediated trading, such as raw materials,
power and telecommunications.
– Efficiency improvements can also come from reducing the duration of the price finding
process. For example, time and cost savings are an important argument in favour of
procurement auctions. Over time, this added value from a more efficient process can be more
important than savings in product costs, as the latter cannot fall indefinitely from auction to
auction.
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Since an e-marketplace needs both sellers and buyers, it is essential for its success that it offers added
value to both groups. For example, cost savings due to electronic processing or process improvements
usually benefit both groups. On the other hand, it is primarily the sellers who benefit from the creation
of new markets or the expansion of existing markets, while buyers benefit most from an increase in
market transparency or lower prices due to a more efficient price finding process (Figure 2). A
marketplace that puts too much emphasis on the benefits for buyers – and many did that in the
beginning – could have serious problems in attracting a sufficient number of sellers. In a market
dominated by very few sellers their participation decision can make or break a marketplace.
Figure 2 – Marketplace value added for buyers and sellers
Buyer value added
Reduction
of Product
Prices
Better Price
Finding
Process
Increased
Market
Efficiency
Process
Support
Transaction
Cost Savings
Creation of
New Markets
Market
Expansion
Seller value added
1.1.3. The revenue models for e-marketplaces
Depending on the e-marketplace type, its targeted user group and its actual value proposition, different
revenue streams are possible. Each revenue stream has its advantages and disadvantages for operators
of and participants in marketplaces. The most important revenue models are:
– Commission fees were initially the most important source of revenue. They reflect the value
of a concluded contract very well and are easy to understand. In addition, they have the
advantage that the users are only charged if a deal is actually concluded. In other words, they
do not represent a barrier to using the site. A disadvantage, though, is that participants are
tempted to take evasive action, particularly in the case of large transactions. This is
particularly serious if the first contact leads to a long-term trading relationship, and
subsequent orders are transacted without further reference to the marketplace.
– Value-independent transaction fees, e.g. charges for publicising a Request For Quotes (RFQ)
or for fixing a contract, are easy to levy, as participants have no incentive to lie about the
contract value. They are also easy to understand by participants. They also do not represent a
barrier to using the site. However, they might not adequately reflect the utility of the e-
marketplace for large transactions.
– Membership subscriptions have been the second most popular revenue stream. They have
several major advantages: They are easy to calculate and understand; the technical cost of
payment collection is comparatively low, and they are easy to sell to the customer, especially
if the e-marketplace also offers transaction-independent benefits. The disadvantage,
however, is that the users must pay their fees irrespective of whether they actually use the
site or not. The subscription can thus act as a usage barrier. This effect is most significant
when fees are high and the participants are small and medium-sized enterprises. In case of
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doubt they will be unwilling to pay a relatively high contribution for the chance of
concluding transactions at a later date.
– Licensing software, which has been developed in-house by the operator of the e-marketplace,
can also be a source of revenue. Software licensing is particularly promising if components
have been developed for the site that can be used outside of the e-marketplace, for example
for corporate supply-chain management or if the software can be used to set up private e-
marketplaces. During the last year or two, several e-marketplace operators made software
revenue their major income stream and slowly mutated into software companies. For these
companies, the e-marketplace is sometimes only operated as a showcase.
A comparison between subscriptions on the one hand and transaction-related fees or commissions on
the other hand shows that they are suited to different types of e-marketplaces. Transaction-related
commissions or fees are most suitable for highly priced goods since individual marketplace
participants rarely place buy or sell orders for these products, and commissions are normal practice in
this field. However, subscriptions seem more appropriate if the goods traded are not so highly priced,
and if the marketplace is geared toward many regular transactions.
1.2. The development of B2B e-marketplaces in recent years
The purpose of this chapter is to analyse the recent development of the B2B e-marketplace landscape
in Europe. In recent years, many business models failed, giving rise to great scepticism and even
pessimism about the future perspectives of e-marketplaces. Nevertheless, Internet trading platforms
seem to have become a fixed element of B2B trading in many sectors and among them e-marketplaces
play an important role.
1.2.1. The quantitative picture
During the dot.com boom of 1999-2001 the number of B2B e-marketplaces increased considerably.
While market researcher Berlecon Research counted 332 e-marketplaces world-wide in late 1999, this
number tripled to 1090 by mid-2000 and – despite the beginning of the end of dot.com bubble –
increased further in 2001 3 . Since then, however, the number is continuously falling.
Much of the strong overall increase in numbers was driven by the boom in the establishment of e-
marketplaces in the United States, as fuelled by venture capital. The number of B2B e-marketplaces in
Europe was at the beginning much smaller. However, the motivation to move into this business was in
2000 and 2001 even stronger in Europe, as there was a considerable potential to catch up. For
example, according to Berlecon Research, the number of European e-marketplaces more than
quadrupled from 54 in 1999 to 230 in 2000.
In Europe, the e-marketplaces boom started 1-2 years later than in the US. Therefore, many e-
marketplace projects in Europe ran directly into the bursting dot.com bubble. As a result, many
planned or even announced e-marketplaces in Europe did not materialise in the end, which also
implied a lower rate of closures. In April 2002, the e-marketplace database of Berlecon Research
showed 469 e-marketplaces that are no longer active plus an additional 76 that have merged or have
been bought by competitors. The number of failed ventures was much higher in North America (388)
than in Europe (140). This tendency is confirmed by numbers from the eMarketServices directory.
Between April and August 2002 this directory shows a decrease in active marketplaces of 20 % in the
US and of only 8 % in Europe. As a result, the number of identified e-marketplaces is meanwhile
approximately the same in both regions.
3
See Berlecon Research (1999): Virtual Intermediaries – B2B Marketplaces on the Internet; Berlecon
Research (2000): B2B Marketplaces in Germany – Status quo, Opportunities, Challenges; Berlecon
Research (2001): Vom Vermittler zum Dienstleister: B2B-Marktplätze in Deutschland 2001.
11

Currently, around one thousand B2B e-marketplaces still exist world-wide, with about 400-500 being
active in Europe (Annex 1-Table A). These numbers have to be treated with some caution, though.
The number of active e-marketplaces is difficult to assess, mainly for three reasons: First of all, many
e-marketplaces changed their business model in 2001 and became software companies, portals or
service providers for private e-marketplaces. They might keep their e-marketplace as a showcase,
although it is no longer their core source of revenue. Secondly, due to the still ongoing economic
slowdown many dot.coms ceased to exist and many traditional players closed down loss-making
subsidiaries. This process is not yet finished and cannot always be identified accurately, as web sites
might remain alive even months after they effectively ceased to be operational.
Both effects lead to an exaggeration of the number of active e-marketplaces. On the other hand, e-
marketplaces are industry-specific and are typically only announced within the industry, especially if
they are smaller. This leads to the effect that e-marketplace directories typically do not have
information about all e-marketplaces existing. Overall, the first two effects probably dominate
currently, so that the number of active B2B e-marketplaces has to be put somewhat lower and will
decrease further – at least for a while.
B2B e-marketplaces are not equally distributed over all industries. As can be seen from Annex 1-
Table B, there are several groups of e-marketplaces without a specific industry orientation, e.g. general
horizontals, office equipment or excess inventory and second-hand goods. The category industrial
equipment and services is also rather broad. The most important sectors for vertical e-marketplaces are
transportation & logistics, food, beverage and agriculture as well as building and construction. There
are different reasons why e-marketplaces can be useful in these industries. In logistics, for example,
the problem of unused capacity is very important. Even years before B2B e-marketplaces emerged, ITsupported
services had been set up to match shipments to empty lorries. In agriculture, B2B e-
marketplaces help to overcome very segmented regional markets. And in building and construction
process support is a major added value by e-marketplaces.
There is, so far, only very little information about the volume of transactions taking place via B2B e-
marketplaces. However, a survey has been recently conducted about the usage of such platforms by
European enterprises. The e-Business Survey 2002, as presented in Annex 2-Table A, finds that about
6.5 % of the European enterprises use e-marketplaces in 2002 and 4.6 % plan to do so within the next
12 months. However, there is a considerable difference between industry sectors. The chemical
industries and transport equipment manufacturing are pioneers in using B2B e-marketplaces with
about 15 % of enterprises each. In the machinery and equipment manufacturing sector, marketplaces
seem also to gain importance (11.4 % participation rate). It is interesting, though, that the plans to use
marketplaces reported by enterprises indicate a higher interest in sectors which are not yet as intensive
users as the leading sectors.
According to the e-business Survey 2002, as presented in Annex 2-Table B, large enterprises are more
likely to use marketplaces than SMEs. While more than 10 % of the large enterprises say they use e-
marketplaces for selling or purchasing products and services in 2002, only about 5 % of the SMEs do
so. Among current non-users, the percentage of enterprises which plan to start using marketplaces is
higher among large enterprises as well, but not as significant as in terms of active participation.
There is hardly a difference between SMEs and large enterprises, however, in terms of which activities
are carried out on e-marketplaces, as suggested by the same survey (Annex 2-Table C). "Simple"
catalogue-based offering (48 %) and purchasing (44 %) are clearly the most important types of
transaction. Participation in auctions is less important. Out of those enterprises using e-marketplaces,
only 15 % (as sellers) respectively 16 % (as bidders) make use of auctions. About 26 % of enterprises
say they answer calls for tenders placed at e-marketplaces. The fact that none of these activities has a
participation rate of more than 50 % indicates that enterprises tend to assume a very specific behaviour
and role in their approach toward e-marketplaces. In particular, it can be concluded that most
enterprises use a marketplace either as vendors or as buyers, but not both.
12

1.2.2. From B2B e-marketplaces to new forms of Internet trading platforms
B2B e-marketplaces were seen as a tool for achieving the cost savings, efficiency enhancements and
additional sales, as described above. Thus, an increasing share of B2B e-commerce was expected to
move to B2B e-marketplaces, providing buyers and sellers with efficient price-finding mechanisms
like auctions or exchanges, settling the ordering, billing and payment and even providing additional
services like trust functions or logistics support. In this period of hype, however three significant
matters were overlooked.
– Firstly, e-commerce itself was expected to form a much higher proportion of total sales than
it has so far done. Consequently, also the forecasts for the further development of e-
marketplaces have proved to be overoptimistic, resulting subsequently in disappointment and
pessimism. A more realistic approach would have helped to avoid later frustration, calling
for more neutral and unbiased economic analysis in the field of e-business.
– Secondly, many analysts did not sufficiently take into account that, for a transaction to
effectively take place – off-line or on-line, via e-marketplaces or other on-line tools –
supplier, customer and any intermediary must add value and be able to realise value from the
transaction. Put simply, too many suppliers and intermediaries have been technology--
oriented rather than business-oriented as though the mere fact that a trading opportunity
existed on-line made it worth while for potential parties to undertake it.
– Thirdly, from the point of view of companies wanting to conduct e-commerce, the world
looks sometimes different than from an analyst’s perspective. For enterprises, independent e-
marketplaces are only one option among many. They can, for example:
– buy on a supplier’s web site,
– interconnect with suppliers or buyers directly (e.g. using EDI or any new Internet
standard),
– sell on a proprietary e-marketplace or on their own web site using Internet portals to
gain attention, and
– negotiate with suppliers and buyers off-line sometimes based on initial on-line contact.
The last point is of particular importance. As the list of different options shows, many solutions exist
to buy and sell over the Internet. E-marketplaces may be the best option for one company to conduct
on-line B2B transactions, but for others different routes may be more beneficial. Reducing processing
costs for buying office supplies, for example, can be achieved by connecting the company to a
Maintenance Repair and Operation (MRO) e-marketplace as well as by connecting it to its preferred
supplier for office supplies. Likewise, new business can be acquired either by looking for Request for
Quotes (RFQ) on B2B e-marketplaces or simply by listing the company’s major offerings on a wellknown
Internet portal. Which of these options provides the most value to the company depends on the
company’s specific circumstances. 4
A company, for example, that wants to auction surplus goods can use a specialised independent e-
marketplace, where its auction is placed among several others, or it can buy an auction-engine
software to offer the auctions on its own enterprise portal. Which option is better depends on a number
of considerations. The costs for the installing the software vs. the costs for using the platform services
4
A recent survey of Dutch exporters showed, for example, that 61 % of those having a web site state that
it has helped them to find new customers. Only one third have made new contacts using marketplaces,
though. This seems to imply that having a web site is more likely to attract new customers. Cf.
Netherlands Foreign Trade Agency: Survey – Dutch Exporters, E-Business and E-Marketplaces, Press
Release from March 19, 2002.
13

are one aspect. Potentially higher sales prices due to more bidders on the Internet platform are a
second aspect. This opportunity to choose implies that B2B e-marketplaces today are – at least
partially – capable of being substituted by software and by company-specific enterprise portals based
on software. This is important to understand because issues like trust play a different role in softwarebased
platforms than they do in public Internet platforms.
Another question is whether to use general “all-inclusive” services or specialised services in order to
address specific parts of the purchasing process. One can observe that many e-marketplace operators
are currently following a strategy of specialisation, not only with respect to industry or target group,
but also with respect to the functionality offered. This specialisation seems to make sense, as the
buying process of companies is much more complicated than the buying process of individuals. Every
step needs a different functionality.
Figure 3 – The purchasing process
Strategic
Direct
Purchases
Strategic
Indirect
Purchases
Finding
Potential
Business
Partners
Evaluation,
Price
Finding,
Sourcing
Purchasing,
Settlement,
Payment
Non-Strategic
Purchases
As figure 3 shows, the first step in the purchase process typically consists of finding a group of
potential suppliers. These are usually screened for minimum requirements like their ability to deliver
the wanted quantity and quality. The second step is often called sourcing. In this step, the actual future
business partner(s) will be chosen from the list of candidates. Price is one criterion but there are
typically many others. And the third step is the actual procurement process that includes all elements
from the actual request of a business unit via approval and forwarding the request to the supplier to
receiving the bill, approving it and initiating payment. Trust matters, in different ways, for each of
these steps.
Many of the current Internet platforms for B2B e-commerce are indeed specialised on providing B2B
e-commerce functionality for a limited number of product types and purchasing process segments.
Several of these platforms are no longer B2B e-marketplaces in the original sense, either because they
do not bring together several buyers and sellers but rather provide functionality for a single company,
or because they do not help in setting a price – which is a major task of a market – but rather settle
transactions on the basis of pre-set prices. Other, related, Internet platforms provide services for
related activities, for example for collaborative design or collaborative forecasting.
Nevertheless, there are still some occasions where the B2B Internet platforms are e-marketplaces in
the original sense. One example is the buying and selling of commodity goods, another the buying and
selling of surplus and off-specification products. Commodity goods like energy, livestock or grain
have already been traded in (off-line) exchanges long before the invention of the Internet. For many
14

surplus goods and “seconds” the Internet either enabled a market or increased the market’s liquidity
because of its low cost and its wide geographical reach. But also these B2B e-marketplaces are
collaborating closely with traditional businesses. Many surplus e-marketplaces, for example, are
working closely together with well-established auction houses. And commodity exchanges are starting
to work together with off-line commodity exchanges, thereby also creating new financial instruments
(e.g. futures contracts) for the goods they are trading.
1.2.3. B2B e-marketplaces – a transitory phenomenon
Cost savings are generally accepted as the most significant benefit of participation in e-marketplaces.
However, to fully reap the benefits of cost savings companies must also allow for integration of back
office business processes (logistics, payments, servicing, etc). This, in turn, requires a significant
reorganisation effort and investment, which some companies, particularly SMEs, might not be ready
or capable to undertake. Enterprises, therefore, seem to face a hard choice between low risk but
limited results through “light” participation in e-marketplaces and high risk and costly integration of
their supply chains with business partners.
Business integration calls for relatively stable business relationships in “digital ecosystems”, with
clear and transparent organisational rules and commonly agreed technical standards. A good example
for this type of business integration can be found, for example, in the chemical industry, which is
characterised by a buying-side oligopoly market. Here, many larger companies have set-up, either
individually or together, sophisticated enterprise portals or interconnection hubs. The main objective is
to reduce information-processing costs for buyers and sellers of chemicals within already existing
trading relationships and within well established contracts, e.g. by standardising and automating
information exchange.
Thus, e-marketplaces may be considered as frontrunners for more sophisticated models of supply
chain management. Another new route to be followed in the future could be a model of Internet
commerce where companies can search for partners directly in peer-to-peer systems, without the
intervention of an intermediary. Technically, e-marketplaces offer little more than expensive software
programmes running on third-party servers. Therefore, the possibility of a complete disintermediation
seems not to be unrealistic, taking into account also the great efforts to standardise electronic
catalogues. In any case, it is important to understand that e-marketplaces might be a transitory
phenomenon, with a potential to be further developed in different directions.
In all these scenarios, trust plays a major role to materialise the full potential of the different solutions
to buy and sell over the Internet. Yet, different trust challenges may exist for neutral and independent
e-marketplaces, where transactions are more “spot” oriented as compared with models of integrated
supply chain management where trust is more about cost and risk sharing. Here, companies need to
have reasonable confidence that the required investment needed to make business integration a reality
is going to pay.
As far as trust related issues are concerned, this working document is discussing them mainly for e-
marketplaces, defined as an online service which is offering different trading functions for several
buying and several selling companies. This limitation is motivated by the specific characteristics of
such e-marketplaces which call much more than relatively stable and/or transparent forms of Internet
trading platforms for clear transparency rules, market transparency and effective dispute resolution.
However, other barriers, such as the lack of awareness, information or standards exist as well and they
apply to all forms of Internet trading platforms. In this respect, this paper is not limited to B2B e-
marketplaces in the strict sense.
2. BARRIERS TO THE USE OF B2B INTERNET TRADING PLATFORMS BY SMES
E-commerce has often been described as the gateway for SMEs to global markets. However, despite
the potential opportunities, many SMEs remain reluctant to engage in electronic transactions. The
eEurope 2002 Benchmarking Report states that “eCommerce faces particular difficulties. It is growing
15

much slower than expected and seems to be mainly taken up by well-established companies. An urgent
review is required to identify obstacles to eCommerce take-up”. Consequently, the European Council
of Seville invites the Commission “to report back to the Copenhagen European Council on the
development of eCommerce”.
In this context, it seems necessary to identify and to analyse the barriers for the use of B2B Internet
platforms by SMEs, their real needs and the potential actions to address these needs. The emphasis on
SMEs does, however, not mean that larger companies are not facing similar or different problems in
effectively using B2B Internet trading platforms. However, their problems are often related to specific
economic dependencies and market imbalances and are thus different from the general situation of
most SMEs in this field.
2.1. Lack of awareness on the potential benefits and risks of Internet platforms
Whereas most large companies are well connected to the Internet, many SMEs are still lagging behind
in this respect. SMEs differ from large companies not only because of their size. In particular, SMEs
are constrained by having fewer resources than larger companies. This includes not only financial
resources but also time and management resource constraints. They also often have a limited capacity
to take risks or to engage in speculative activities. SME owners are often fully occupied with the dayto-day
affairs of the business and there is only limited room for strategic thinking and reflecting on the
potential benefits of e-commerce. This is as true for the take up of e-business in general and for the
adoption of e-commerce in particular, and implies that they may need assistance from third parties in
guiding them towards the use of Internet platforms.
So, raising awareness on the potential benefits is the starting point in the process of helping SMEs to
consider the advantages and risks of the new opportunities of the Internet to buy and sell goods and
services. SMEs need to understand how Internet trading platforms work and the potential benefits
which they can bring. However, general awareness campaigns are beyond the point where they are
useful to SMEs, especially in view of the negative impact of the dot.com crash. What SMEs
increasingly expect is hard evidence on how it is possible to succeed in e-business, demonstrated by
concrete examples of success stories. In addition, awareness campaigns need to be constantly updated
and be based on empirical evidence rather than projections and best case scenarios. This is particularly
true for e-marketplaces, given the rapid speed of evolution between the different phases described in
Part I of this paper.
Better awareness about the benefits of e-business is particularly important because available data
suggest that the single most important factor impeding SMEs from going digital is the conviction that
e-commerce is not well suited to their type of products and services and that there is thus a lack of
commercial benefits from participation in e-commerce. Even if it cannot be expected that all SMEs
have a commercial interest in trading electronically, the validity of this argument should not be taken
for granted.
In some cases, this perception may be absolutely correct, as many small businesses may not be
strongly affected by a more widespread use of the Internet. However, in other cases the belief that
enterprises are not affected by e-business may be based on a false perception of the reality. For
example, even if the Internet may not be used to sell products and services to the consumers, such as
in the case of many handicrafts, it may be well suited for sourcing and the maintenance of customer
relations. Again, this will impact upon their perception and usage of Internet trading platforms.
In addition, SMEs should be well aware that, in some cases, they will not be left with a choice to use
or not to use the Internet, irrespectively of the size of the enterprise. SMEs which are suppliers of large
enterprises may be forced to adopt e-commerce simply to continue to trade with their customers. In
short, larger enterprises are often able to impose e-business solutions on SMEs for whom, in many
cases, the costs are higher and the benefits proportionally lower. Therefore, it is important for SMEs to
understand how and under which conditions to effectively participate in such business networks in
order to avoid economic exclusion.
16

Not only success stories but also the failures of many e-business models are increasingly offering
information to better quantify the true benefits of e-business. For example, one of the major promises
of B2B e-marketplaces, which has been at the centre of public attention and awareness, was the
potential to save costs by lowering prices of goods and services. This has created high expectations for
cost savings on the side of the buyer, but at the same time has raised scepticism and fear on the side of
the sellers. However, experience have shown that the most important motivation and benefit of
businesses, both buyers and sellers, from their participation to e-marketplaces and other Internet
platforms is reduction in transaction costs resulting from electronic processing of purchases and sales.
Surveys have shown 5 that companies are using e-procurement mainly to save costs internally – not to
put pressure on their suppliers. Enhanced speed and efficiency in their supplier relationships have been
identified as the key benefits of e-procurement.
Nevertheless, it also has to be clearly understood that specific forms of B2B e-marketplaces are calling
for strategic behaviour, in particular in auctions. Many SMEs and also larger enterprises are not well
prepared for this kind of aggressive bargaining which often is limiting competition to price
competition. This lack of understanding for the new economic reality of B2B e-marketplaces indicates
a lack of awareness of the potential risks of participating in B2B e-marketplaces.
In order to promote the usage of Internet trading platforms in general and of B2B e-marketplaces in
specific and to attract in particular better SME participation, awareness building plays an important
role. More and better awareness is needed about:
– The potential risks and opportunities offered by Internet platforms. In this respect, the
emphasis should shift to clear cases, promoting in particular business models where there is
evidence that both sides may win from conducting transactions electronically. An important
lesson to be learnt from the lack of success of many e-marketplaces is that sustainable e-
business solutions depend on a balance of interest. Therefore an e-marketplace, to be
successful, it should offer added value to both buyers and sellers. So, in public awareness
campaigns the B2B e-market places which have been shown to benefit both buyers and
sellers should be highlighted. Nevertheless, full information should be provided about all
electronic trading forms, including on the risks and the needs for strategic behaviour.
– The different forms of buying and selling over the Internet. A clear understanding is
necessary of the various types of Internet platforms and of their potential added value in
different circumstances. For example, auctions seem to be the best known medium for doing
business electronically, because of their potential to achieve important price reductions.
However, auctions may not always be the most appropriate model to trade electronically. A
necessary prerequisite for the use of auctions is the ability to specify the characteristics of the
products or services in a very clear and precise manner, so that the price constitutes the
decisive factor.
– The range of potential benefits from the use of Internet platforms that go beyond buying and
selling over the Internet. Apart from the commercial benefits from undertaking specific
transactions, businesses may gain important business information about their competitors, as
well as about competitive prices of goods and services, as a result of increased market
transparency. SMEs should be aware how to use simple and more sophisticated Internet
search tool in the most effective manner.
Awareness campaigns must reflect the realities. This includes the risk that there might be winners and
losers, a factor to which businesses themselves must respond. In addition, such campaigns should
always emphasise that businesses must take their own decisions about how and to what extent they
5
PricewaterhouseCoopers “Trust not built at e-speed” Trust issues in European b2b e-procurement
17

should use Internet platforms. There will be cases where the presence of e-trading will fundamentally
shift the balance of power in a supply chain. Some suppliers which have created a strong off-line or
on-line brand may benefit from the ability to raise prices – others may suffer from price transparency,
by-passing of intermediaries or the “commoditisation” of their products. Therefore, publicly supported
awareness building should not be confused with the promotion of specific e-business models, such as
e-marketplaces. It would seem hazardous to recommend any particular solution since the technologies
and business models under discussion are still in their early phases of development. This should be left
to those who have strong commercial interests to defend.
Awareness raising is the responsibility of business associations (SME associations, Chambers of
Commerce, business support networks, or economic interest groups) as such organisations can
effectively reach the targeted audience and have a better understanding of the tools and practices that
will work in an SME environment. Thus awareness campaigns about participation in e-marketplaces
should ideally be routed through such trusted intermediaries. It is suggested that the needs of SMEs
identified in this chapter will be addressed in the context of such awareness events.
2.2. Lack of information on B2B e-marketplaces, business partners and products/services
To be generally aware of the commercial opportunities of B2B Internet platforms is one thing; to use
them effectively is another. SMEs which have decided to conduct their business electronically first
need an electronic catalogue if they wish to offer their products and services via the Internet. For many
SMEs, this initial hurdle is already too high, thus limiting them to sourcing activities. In any case,
SMEs - like many larger enterprises - will have to find out the most appropriate B2B e-marketplace to
conduct their e-business activities. In addition, they need customised information and guidance in
searching for potential business partners as well as the products and services to be traded
electronically.
Conducting B2B electronic transactions can take many different forms. As argued earlier, B2B e-
marketplaces are one form for trading electronically but not necessarily the only one. Therefore, SMEs
still need to find the most advantageous solution. In general, SMEs don’t establish their own e-
marketplaces but rather they use Internet platforms operated either by consortia of large companies or
by independent operators. As a result, they need to have a clear picture on the existing solutions, their
economic importance, their sustainability and the relevant trading rules. In this context, the question of
which e-marketplaces are truly active is of major importance for SMEs but can be difficult to assess.
In order to minimise risks and ensure access to the relevant information at low cost, more market
research on this issue is needed as the lack of information on relevant B2B e-marketplaces may
otherwise constitute a barrier to entry for SMEs, taking into account that such search costs can be
relatively high.
In fact, several online or printed directories on e-marketplaces exist in Europe. They are either
internationally oriented like eMarketServices or are focused on the marketplaces active in a certain
country, like for example the B2B marketplace guide regularly published by the German BME 6 in cooperation
with a business magazine. While such services and publications exist, they could most likely
be better known among enterprises. More difficult to address is, however, the question which role
Internet trading platforms can realistically play for buying and selling goods.
Best suited to improve the transparency are probably guides in combination with best-practice
examples. These can either be published by industry associations, by government institutions or by (or
in co-operation with) the trade press. These guides should, however, focus on specific target groups
and business processes. To be able to initiate such targeted information campaigns, first the
application areas have to be identified, where the potential gains from using B2B e-marketplaces are
large and where the usage of such platforms is nevertheless considered to be sub-optimal.
6
"Bundesverband Materialwirtschaft, Einkauf und Logistik e.V."
18

The next problem is to find the right partners for online businesses, bearing in mind that B2B e-
marketplaces offer the opportunity to engage into new business relationships. Many information
services, such as Internet portals and information directories have been developed by the market,
providing businesses with various type of information which facilitate online transactions. Such
Internet portals include databases, which allow business to search for companies or e-marketplaces,
products and services, often offering advanced search functionality, e.g. a search for the supplier of
specific products. In some cases they only provide a link to the relevant web site and in other they give
more detailed information on the company itself or the e-marketplace. Such information usually
includes e.g. the name of the company, contact details, legal form, trade register and registration
number, executives, financial information, nature of the business activities, business model of the e-
marketplace etc
Other services have been developed by public authorities, such as Trader Registers 7 , which have
officially the duty to collect and update company information. In these cases, a large variety of
information is provided, ranging form standard company data e.g. identification, management, trading
activity, turnover, balance sheets and annual accounts, to more detailed economic and legal
information e.g. level of debt, payment suspension declarations, liquidation procedures, legal actions
and bankruptcies. The main advantage of such services is their reliability, as they are based on official
sources. Their disadvantage is that they are normally not free of charge.
At European level, a telematic network connecting the business registers of 13 European countries has
been implemented – the European Business Register (EBR) – with the specific task to make available
data originating from the process of business registration. Building upon this network, an online
information service will be developed to deliver authenticated, official company information about
companies with an own website, including company name, identification of the register, VAT number
etc. This “Trust and Internet Confidence Service” (EBR-TIC) responds to the legal transparency
requirements for online service providers, as defined by the EU E-commerce Directive. The objective
is to provide, by the year 2005, such “TIC profiles” for 1 million companies in Europe.
Finally, the efficiency of Internet trading platforms and their further prospects strongly depend on the
availability of commonly used standards. Clearly, standardisation issues are not confined to e-
marketplaces but have to be addressed in a more general context. Rather, e-business standards of
different kind form the foundation for electronic B2B transactions of many kinds. The more
information is exchanged between companies and the higher the degree of automation in information
exchange, the more important do standards become.
The first specific issue is that of product identification. E-business can only be conducted reliably if
each product can be identified in a unique manner. The use of different data standards by buyers and
sellers can reduce the extent to which the full benefits of e-marketplaces are realised. However, neither
the standards for data exchange, based on XML, nor for products and services (“e-catalogues”) are
generally accepted within industries and across borders. For example, on the Internet more than 160
different and mostly incompatible standards for electronic catalogues are said to be found, making it
for SMEs very difficult to decide which standards should be followed for the documentation and
classification of products and services.
The second issue to be discussed are industry-specific e-business standards. As each industry has its
own processes and problems, there is a tendency to create industry-specific standards to accommodate
these peculiarities. At first sight, it might seem to be sub-optimal if each industry invents its own set of
standards upon which B2B Internet trading platforms are based. One might be inclined to call for a set
of standards that is unique across industries and covers all products. For example, it would be essential
that industry and retail sectors work together and not to develop inconsistent solutions. The same
applies to the need to find, preferably at international level, a common base for a future ebXML
standard. On the other hand, it has to be acknowledged that the cost of implementation of a consistent
7
Greffiers du tribunal de commerce de Paris, http://www.infogreffe.fr
19

and comprehensive set of standards is often very high. It is therefore important to develop a thorough
understanding of the standardisation needs within each industry.
As a consequence, general awareness about the opportunities of Internet trading platforms is not
enough to effectively use them as a business tool. Taking into account the growing diversity and
complexity of the available business models, search tools and technologies for e-marketplaces, SMEs
need:
– Neutral and unbiased information about existing B2B e-marketplaces, based on up-to-date
research and providing reliable data on their turnover and the usage by buyers and sellers, in
order to reduce uncertainties and search costs;
– Reliable information to facilitate the search for trustworthy business partners. Although the
usefulness of the existing information services should not be underestimated, their practical
value for SMEs is not always evident. In particular, SMEs are often not always aware of the
existence of such information services, do not always know how to use them to best
advantage or whether they should trust them.
– Identification of the standardisation needs for e-business and neutral guidance on the use of
relevant standards and technologies to classify products and services and to establish
efficient B2B Internet trading platforms, with the view of standardising and automating
information exchange at all stages of e-business.
In general, the provision of information services on Internet platforms and companies is the
responsibility of the market. However, in order to promote their neutrality and reliability, the
Commission may play a role in supporting such services. For example, the Commission may support
the establishment of a repository containing neutral and regularly updated information on existing
B2B e-marketplaces in specific industrial sectors.
In particular, the issue of the impartiality and reliability of the emerging information services on
company data is of major importance to enhance trust on potential new business partners. In this
respect, the development of quality standards to define the main company information to be covered
by such services and to ensure their regular updating can contribute to promote the reliability of such
information services. This can be done on the basis of codes of conduct or guidelines to be defined by
the market. The emerging “Trust and Internet Confidence Service”, as provided by the European
Business Register (EBR) seems to be a promising approach to meet the legal obligations to publicise
company information that could be further supported by existing e-business trustmarks developed by
business and consumer associations 8 .
Business associations (such as chambers of commerce) and Euro Info Centres (a network providing
information on Community activities to businesses and intermediaries throughout Europe) have a
major role to play in addressing the information needs of SMEs identified in this chapter. In general,
since most SMEs tend to consider e-business as part of their normal business, they would continue to
trust and seek the advice of existing, familiar business organisations that they are currently use for
other business issues. In this context, such organisations can help SMEs by informing them about the
existing and most reliable information services and providing guidance and advice where to find them
and how to use them.
The issue of product classification is also the responsibility of the relevant industries. In this context,
industrial associations, with the full involvement of both buyers and sellers, should take the initiative
to promote common specifications, preferably at European level. In this respect the European
Standards Bodies may offer a neutral platform to leverage such business specifications into European
and international standards. It should be clearly understood that e-business standards go beyond
technical interoperability but must also define electronic formats for business processes, like the orderto-cash,
procure-to-pay or logistics execution. Therefore, it is important to better involve user
8
Eurolabel (Eurocommerce), Online Confidence (Eurochambers), Webtrader (Test-Achats)
20

industries into the standardisation process in order to avoid standardisation efforts that only produce
specifications that will not be practically implemented.
2.3. Lack of trust in B2B electronic transactions
Trust and confidence has, so far, been mainly addressed in the context of B2C e-commerce, under the
aspect of consumer protection 9 . However, trust and confidence is a major issue also in the B2B field.
Trust has always been the foundation of business relationships and e-commerce has further reinforced
its importance. In general, many issues of trust in B2B are equivalent to B2C. The main difference is
that the customer is a company instead of a private consumer and this may make the need for trust
even more pressing, as the financial risk is often higher if something goes wrong with the transaction.
In general, B2B relationships are characterised by a high degree of familiarity, often based on long
established relationships, between suppliers and buyers. Statistical data 10 suggests that businesses are
using e-business mainly to communicate more effectively with suppliers they already know. 68 % of
companies purchasing on-line continued to work with existing business partners, while only 22 % of
companies choose new suppliers. However, reaping the full benefits of e-business may be subject to
the condition that companies transact with partners they have never met. Therefore, how to build trust
with so far unknown suppliers can be a critical issue for the future success of e-business and in
particular of open e-marketplaces.
The Eurostat e-commerce survey confirms that the lack of trust is one of the most important barriers to
the take up of e-commerce. In particular, enterprises cited that the most important barriers for e-
purchasing are uncertainties about contracts, delivery and guarantees (23 %) and uncertainties about
payments (21 %). For on-line selling, the perceived lack of trust on the side of the customer ranks as
second most important barrier, as regards payments (20 %) and contract terms of delivery and
guarantees (17 %).
In addition, the open consultation of the Enterprise Directorate-General on B2B related trust issues,
conducted between March and May 2002, confirms that the most important trust barriers for the use of
e-marketplaces for on-line purchasing, as perceived by companies, are the uncertainties related to
confidentiality of sensitive data (60,7 %), the lack of clear information on the terms and conditions of
the contract (57,1 %), the uncertainties related to security issues (55,4 %), to on-line payments
(51,8 %) and to the settlement of disputes (51,8 %). The most important trust barriers to the use of e-
marketplaces for on-line selling are the uncertainties related to the confidentiality of sensitive data
(58,9 %), to security issues (51,8 %) and to the settlement of disputes (51,8 %). In addition, the lack of
transparency and clear rules for auctions has been identified as a major trust barrier for SME
participation is such business model. This clearly confirms that trust is also an issue for B2B as well as
for B2C. A detailed analysis of the results of the consultation is annexed to this paper (Annex 3).
In general, the trust challenges in B2B electronic exchanges may differ according to the specific
business model and on the type of functionality it offers. For example, on-line auctions may raise
specific concerns related to the nature of this business model as a tool to reduce prices. In addition, the
trust issues are different according to whether the business partners already know and trust each other.
In case the business partners are well established and known in the off-line environment, the main
trust issue concerns the security of the electronic communication systems. If the business partners are
previously unknown to each other the trust issues concern both the identity and creditworthiness of the
business partner as well as the transaction process.
9
10
The E-confidence initiative was launched in May 2000, to address the problem of consumer trust and
confidence in e-commerce. A group of consumer and industry stakeholders has been established to
discuss the main issues at stake and as a result an agreement has been reached between UNICE and
BEUC on a set of commonly agreed guidelines. The Commission intends to adopt a Recommendation
on the basis of the agreement. http://econfidence.jrc.it/default
PricewaterhouseCoopers “Trust not built at e-speed” Trust issues in European b2b e-procurement
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The main trust challenges for B2B electronic transactions can be categorised as follows:
– Transparency and information disclosure forms the basis of trust. Businesses need to have a
clear understanding with whom they are dealing and about what, subject to what conditions,
and what information is relevant in order to take an informed decision. This is a major issue,
in particular for on-line procurement as well as for auctions and reverse auctions.
– Security of the electronic communication systems and confidentiality of sensitive commercial
data is the second pillar of trust. Businesses need to be reassured that business secrets will
not be passed to third parties. In this respect, the security and reliability of information and
communication systems is crucial. This is an important issue for all types of electronic
transactions, both for the buyer and for the seller.
– Alternative Dispute Resolution Systems, preferably on-line, can help to promote trust by
ensuring quick and effective resolution of disputes. Although free choice of jurisdiction for
cross border disputes is legally permitted for B2B on-line transactions, court litigation is
often costly and time consuming. Alternatives to court litigation, such as arbitration and
mediation schemes, are well established in the area of B2B disputes. Their main advantage is
that, in general, they are faster, more flexible and less costly than court proceedings.
Therefore the voluntary acceptance by business to submit disputes to arbitration or mediation
mechanisms has the potential to remove uncertainties and to enhance business trust in
electronic transactions. However, as traditional arbitration schemes have been conceived for
disputes between large companies, usually involving large amounts and high arbitration
costs, the issue may arise whether such schemes are suitable for SMEs.
In the legal and regulatory field, important progress has been made to enhance trust and legal certainty
for on-line transactions. The e-commerce Directive 11 , establishes the country of origin principle to
ensure the free movement of Information Society services within the EU, stipulates free choice of law
for B2B cross border transactions and provides the basis for the legal validity of electronic contracts.
At the same time, the Directive defines transparency obligations for service operators. In addition, the
Rome Convention 12 regulates conflicts of law, including free choice of law for B2B cross border
transactions, whereas the Brussels Regulation 13 gives the option for the parties to agree upon the
competent court for B2B cross border disputes. Finally, the e-signatures Directive 14 creates a
harmonised framework for the use and the legal validity of e-signatures.
In particular, the e-commerce Directive addresses the need for transparency, by harmonising
transparency requirements for service providers, which apply both to B2B and to B2C electronic
transactions. In some cases, such requirements are mandatory for service operators both in their
transactions with consumers and between companies, e.g. information requirements on the identity of
the service provider 15 , information requirements on prices 16 , information requirements on the terms
11
12
13
14
15
Directive 2000/31/EC of the European Parliament and of the Council Directive on certain legal aspects
of information society services, in particular electronic commerce, in the Internal market, of 8 June
2000. OJ nº L 178, 17.7.2000, p.1;
1980 Rome Convention on the law applicable to contractual obligations, OJ nº C 27, of 26.01.1998, p.
34;
Council Regulation (EC) N°44/2001 of 22 December 2000 on jurisdiction and the recognition and
enforcement of judgements in civil and commercial matters , OJ nº L 12, of 16.01.2001, p.1;
Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a
Community framework for electronic signatures, OJ nº L 13, of 19.01.2000, p.12;
Article 5.1 “Member States shall ensure that the service provider shall render easily, directly and
permanently accessible to the recipients of the service and competent authorities at least the following
information: (a) the name of the service provider; (b) the geographic address at which the service
provider is established; (c) the details of the service provider, including his electronic mail address, (d)
where the service provider is registered in a trade or similar public register, the trader register in which
the service provider is entered and his registration number or equivalent means of identification in that
register, (e) where the activity is subject to an authorisation scheme the particulars of the relevant
22

and conditions of the contract 17 . In other cases, such requirements are not mandatory, in the sense that
the Directive allows business partners to deviate from them by making a different agreement, e.g. for
the provision of information on the different steps for the conclusion of the contract 18 , legal rules on
the placing of the order 19 etc.
A harmonised legal framework for electronic transactions, by lowering barriers to market access and
enhanced transparency, is likely to increase trust in cross-border transactions and consequently to
increase cross-border trade. It must be underlined that the existence of clear and established
competition rules acts as a facilitator, creates trust and ensures that dominant enterprises can not abuse
their position vis-à-vis suppliers or customers infringing Art. 82 EC or that enterprises enter into
agreements contrary to Art. 81 EC.
Competition rules are important to ensure undistorted competition in B2B e-marketplaces. Such e-
marketplaces may create a network effect because the value of an electronic exchange increases with
the number of users. This may lead to market ‘tipping’ and the creation of a dominant position if the
network effects are strong enough to induce all market participants to use the same network. This
problem could in particular arise in the context of sector specific e-market places, if most buyers and
suppliers are linked to the same system.
There is the concern of buyers or sellers that sensitive information on prices and quantities may be
exchanged in an uncontrolled manner, thus leading to anti-competitive agreements on prices or other
terms and conditions of the contract. Furthermore, there are fears that the participants in an electronic
market can effectively bundle purchasing or selling volumes. If this is the case, a competition concern
could arise if they were able to co-ordinate their behaviour as buyers or as sellers.
Finally, the ownership of e-marketplaces and the rules governing them may raise concerns. These
rules could be used, for instance, to exclude certain participants from the most efficient e-marketplace,
thus putting them at a competitive disadvantage. In other cases, companies, in particular SMEs, may
be forced by dominant enterprises to use specific e-marketplaces in order to continue to transact with
their business partners. An issue of discrimination could arise if certain market participants (e.g. the
founders) were to receive privileged information about transactions in the market. To deal with this
issue, certain market places are setting up “Chinese walls” to impede any information flows between
the parent companies and the joint venture.
16
17
18
19
supervisory authority … (f) where the service provider undertakes an activity that is subject to VAT, the
identification number referred to in Article 22.1 of the sixth Council Directive 77/388/EEC
“Article 5.2: “Where information society services refer to prices these are to be indicated clearly and
unambiguously and, in particular, must indicate whether they are inclusive of tax and delivery costs”.
Article 10.3 : “Contract terms and general conditions provided to the recipient must be made available
in a way that allows him to store and reproduce them”.
Article 10.1: “Member States shall ensure, except than otherwise agreed by parties who are not
consumers, that at least the following information is given by the service provider clearly,
comprehensible and unambiguously and prior to the order being place by the recipient of the service:
(a) the different technical steps to follow to conclude the contract; (b)whether or not the concluded
contract will be filled by the service provider and whether it will be accessible; (c) the different
technical means for identifying and correcting input errors prior to the placing of the order; (d) the
languages offered for the conclusion of the contract
Article 11.1: “Member States shall ensure, except than otherwise agreed by parties who are not
consumers, that in cases where the recipient of the service places his order through technological
means, the following principles apply: (a)the service provider has to acknowledge the receipt of the
recipient’s order without undue delay and by electronic means; (b) the order and the acknowledgement
of receipt are deemed to be received when the parties to whom they are addressed are able to access
them ; Article 11.2 : “Member States shall ensure that except when otherwise agreed by parties who are
not consumers the service provider makes available to the recipient of the service appropriate, effective
and accessible technical means allowing him to identify and correct input errors, prior to the placing of
the order.
23

As acknowledged by the e-Economy communication, existing competition rules provide powerful and
flexible instruments to prohibit anti-competitive activities. Therefore, in general, the legal framework
for B2B electronic transactions is well established and creates a “level playing field” for all economic
entities, irrespectively of their size and origin. However, legislation and competition rules cannot solve
all the problems. Business culture and unwritten conventions are also important to foster business and
build trust. As in the off-line world, trust and confidence for on-line transactions has to be built on
both the legal and regulatory framework as well as on mutually acceptable business practices.
Self-regulation can play a major role in promoting fair and reliable business practices. The e-
commerce Directive clearly encourages the development of codes of conduct at Community level, by
trade, professional and consumer associations, aiming at the proper implementation of the Directive. 20
In this context, codes of conduct may play an important role in facilitating the proper application of
the e-commerce Directive. However, as the legal requirements established by the Directive are the
minimum conditions that service providers should respect, codes of conduct may go beyond these
conditions by defining other areas, where business consider that further information could be usefully
disclosed. In any case, codes of conduct or any other form of self-regulation should be compatible
with Community law.
In particular, self-regulation may be useful in such areas as information on the transaction procedure, 21
information on products and services, 22 information on the conditions and rules for on-line auctions, 23
information on the goods and services to be auctioned 24 information on the methods to ensure the
security of information and communication systems, information on the settlement of disputes,
information on “notice and take down” procedures for the removal of illegal information from the
Internet etc. 25 In all these areas, self-regulation would contribute to enhance trust in B2B electronic
transactions.
20
21
22
23
24
25
Article 16.1(a) Member States and the Commission shall encourage the drawing up of codes of conduct
at Community level, by trade, professional and consumer associations, designed to contribute to the
proper implementation of Articles 5 to 15.
Such as information on the different steps for the conclusion of the contract, information on the
availability of products and delivery dates, information on payment modes, information on the
languages of the transaction etc
Such as information on the main characteristics of goods and services, information on certification of
products and services etc
Such as clear rules of the procedure, information on the criteria for participation, information on the
evaluation criteria for the bidding, information on the starting time and duration of the auction etc
In particular, clear specification of the products and services seems to be a major issue for auctions
since the price is often the decisive factor
Information on the handling of complaints by the company, information on the availability of
alternative dispute resolution mechanisms etc
24

The development of codes of conduct is, by definition, the responsibility of market players. In order to
be efficient, codes of conduct should be inclusive and reflect consensus between all relevant
stakeholders and should be developed at European level, thus contributing to the completion of the
Internal Market. European business associations have to play a major role in initiating the process or
in leveraging national initiatives at European level. The Commission could facilitate this process by
encouraging European wide self-regulation, e.g. by bringing together interested stakeholders and by
offering a platform for the exchange of views and experiences and for sharing best practice in building
and maintaining trust in B2B electronic transactions.
25

CONCLUSIONS
This working paper analyses the current state of B2B Internet platforms and the potential opportunities
from, and barriers to, SMEs participating in them. Part I focused on the assessment of B2B Internet
platforms, starting from the original concept of B2B e-marketplaces, including their development over
time and their current form and functionality. The main conclusion of this analysis is that the position
of B2B e-marketplaces has shifted over time such that e-marketplaces are now only one, but not
necessarily the only, way to conduct on-line transactions. However, experience has shown that
participation in e-marketplaces may result in important reductions in transactional costs, through
electronic processing of purchases and sales.
In part II, potential barriers for the participation of SMEs in B2B Internet platforms have been
identified and further described, considering different ways in which SMEs use the Internet for buying
and selling goods and services. The main conclusions of this analysis can be summarised as follows.
Firstly, despite the potential benefits of Internet platforms, their actual use is still relatively limited. In
particular, rightly or wrongly, many SMEs remain sceptical about actively using them. Thus there is a
potential need for better awareness by SMEs on the possible benefits and risks, based on real
experience and documented cases. Secondly, SMEs are likely to need reliable and neutral information
and guidance to decide which Internet platforms to use and how to search for business partners,
products and services. And thirdly, trust and confidence matters for B2B electronic transactions at
least as much as for sales to consumers. All market players need to be reassured that the transaction
will be completed in a fair and transparent manner.
Thus, this working document raises many important questions. Most of them are addressed to the
private sector, though the Commission’s services may assist in defining the problems and in bringing
stakeholders together. Therefore, to follow-up this working paper, Enterprise Directorate-General has
established an expert group, representing the different interests at stake in the field of B2B electronic
exchanges. This group brings together industrial and other interested associations, mainly at European
level, e-marketplace operators, as well as companies participating in e-marketplaces.
The objective of this group will be:
– To discuss the barriers to the participation of SMEs in B2B Internet platforms, starting from,
though not being restricted to, the barriers identified by this working paper.
– To propose possible solutions to address the needs of SMEs and in particular the need for
better awareness, better information and advice on the appropriate Internet platforms,
reliable information tools to search for Internet platforms, business partners, products and
services.
– To identify best practice in building business trust and confidence in B2B electronic
transactions and to discuss how to leverage them at European level.
The working group will develop a report, by June 2003, analysing the different issues at stake and
issuing recommendations for specific actions at European level, notably in support of self-regulation,
to facilitate the use of electronic transactions as a tool to promote the internal market and to better
integrate SMEs into e-business. All documents related to the work of the expert group are published in
the following website: http://europa.eu.int/comm/enterprise/ict/policy/b2b/index.htm
26

ANNEX I
Table A – Estimated numbers of active B2B marketplaces by region of activity
ACTIVE IN BERLECON RESEARCH (4/02) EMARKETSERVICES (8/02)
World 1060 966
North America 669 497
Europe 381 496
Source: B2B e-marketplace databases from Berlecon Research [www.Berlecon.de] as of April 26, 2002 and of
eMarketServices [www.emarketservices.com] as of August 19, 2002.
Table B – Estimated numbers of active B2B marketplaces in Europe by sector
TYPE OF MARKETPLACE
NUMBER
General Horizontals 77
Industrial Equipment & Services 60
Transportation & Logistics 44
Food & Beverage 39
Building & Construction 37
Agriculture 32
IT Products & Services 32
Services & Education 22
Metal & Mining 20
Textiles & Leather 20
Chemicals 19
Healthcare & Pharmaceutical 19
Electronics & Electrical products 18
Finance & Insurance 18
Automotive 17
Plastics & Rubber 17
Telecommunication & Bandwidth 17
Energy & Fuels 15
Office Equipment 15
Packaging, Paper & Pulp 14
Marine 13
Retail & Consumer Goods 13
Science & Engineering 13
Printing 11
Forestry & Wood 10
Government 10
27

TYPE OF MARKETPLACE
NUMBER
Environment 9
Geographical Focus 9
Hospitality & Leisure 9
Excess Inventory, Second-hand Goods 9
Advertising & Media 8
Aviation 5
Arts & Entertainment 4
Defence 4
Manufacturing 4
Other Verticals 25
All European eMarkets 496
Source: eMarketplace directory at eMarketServices (www.emarketservices.com) as of August 19, 2002.
28

ANNEX II
Table A – Participation in B2B e-marketplaces by sector (2002)
SECTOR
TRADING
ON E-MARKETPLACES
PLANNING TO TRADE
ON E-MARKETPLACES
WITHIN 12 MONTHS
% of enterprises
% of enterprises
1 Food, beverages and tobacco 3.8 3.8
2 Publishing, printing & audiovisual
services
6.9 6.6
3 Chemical industries 17.2 2.1
4 Metal products 4.9 3.1
5 Machinery and equipment 11.4 1.4
6 Electrical machinery and electronics 7.6 8.7
7 Transport equipment manufacturing 14.1 4.9
8 Retail 5.7 7.2
9 Tourism 8.5 3.9
10 Financial sector 2.0 5.0
11 Insurance and pension funding services 6.1 3.7
12 Real estate activities 3.1 1.7
13 Business services 4.5 4.1
14 Telecommunications & computer services 8.6 5.1
15 Health and social services 3.4 3.5
Total (EU4) 6.5 4.6
Notes: EU-4 (D, F, I, UK). All figures employment-weighted
Source: e-Business W@tch (e-Business Survey 2002) – Preliminary results
Table B – Participation in B2B e-marketplaces by size class (2002)
SIZE CLASS
TRADING
ON E-MARKETPLACES
PLANNING TO TRADE
ON E-MARKETPLACES
WITHIN 12 MONTHS
% of enterprises
% of enterprises
Micro and small enterprises (0-49) 4.5 3.3
Medium sized enterprises (50-249) 5.4 3.9
Large enterprises (250+) 10.1 5.1
Uweighted figures, EU15 (Note: composition of NACE sections covered by survey differ by country), N = 9264
Source: e-Business W@tch (e-Business Survey 2002) – Preliminary results
29

ACTIVITY ON E-MARKETPLACES
Table C – Activities on B2B e-marketplaces (2002)
PARTICIPATION RATE
(100 % = enterprises trading on e-marketplaces)
Catalogue-based offering 48.3
Catalogue-based purchasing 44.3
Auctions: selling 14.9
Auctions: bidding 16.1
Launching calls for tender 16.1
Answering calls for tender 26.4
Uweighted figures, EU15 (Note: composition of NACE sections covered by survey differ by country), N = 497
Source: e-Business W@tch (e-Business Survey 2002 – Preliminary results
30

ANNEX III
Open consultation on “Trust barriers for B2B e-marketplaces”: The main results
The Communication on the impact of the e-economy on EU enterprises has identified the “need to
promote fair trade in B2B, in particular through the reinforcement of self-regulation mechanisms”. As
a first step for the follow-up of the Communication, Directorate General Enterprise has launched, in
the beginning of March, an open consultation on “trust barriers for B2B e-marketplaces”. The
objective of the consultation was to identify potential trust barriers, in particular for the participation
of SMEs in B2B e-marketplaces. The consultation has been completed at the end of April. The main
results are presented in this paper.
1. THE CONSULTATION
The consultation was divided into three questionnaires, addressed to e-marketplace operators,
associations/chambers of commerce/companies and trust operators/e-business platforms.
– The questionnaire addressed to associations/chambers of commerce and companies was
aiming to provide feedback from the business community on the most important trust
barriers for the use of e-marketplaces for buying and selling on-line.
– The questionnaire addressed to e-marketplaces was aiming to provide information about the
current practices of e-marketplace operators, in particular with respect to the information
they provide on e-marketplace web sites and the information they require from participating
companies to disclose.
– The questionnaire addressed to trust operators and e-business platforms was aiming to
provide feedback on the experience of these groups as the regards the most important trust
barriers.
Each one of the questionnaires was structured as follows: Part I was dealing with the identification of
the stakeholders: country of establishment, sector of activity, type of the e-marketplace and number of
employees in the case of companies.
Part II was addressing the following questions: (a) the issue of codes of conduct and in particular: the
identification of existing codes of conduct or guidelines for B2B e-marketplaces, the potential role of
codes of conduct as a tool to enhance trust in B2B electronic transactions, as perceived by
stakeholders, the potential role of the Commission in promoting trust in B2B, as perceived by
stakeholders, in particular the possibility to establish a group of stakeholders to discuss best practice in
building trust and the potential interest of stakeholders in participating in such as group; (b) the
potential trust barriers for B2B e-marketplaces, and in particular: the most important trust barriers for
the use of e-marketplaces, both for online purchasing and online selling purposes, as perceived by
companies and trust operators/e-business platforms and the business practices followed by e-
marketplace operators.
2. THE MAIN RESULTS OF THE CONSULTATION
In response to the 3 questionnaires, 103 answers have been received. The answers came from
associations/chambers of commerce/companies (62 %), e-marketplaces operators (27 %) and trust
operators/e-business platforms (11 %). In addition, one letter was received by a Chamber of
Commerce, expressing general comments on the overall initiative and in particular on the role of the
Commission in the development of codes of conduct.
31

2.1. General comments
In general, the initiative has received a strong support by the large majority of the respondents. In
addition, many stakeholders, representing in particular user industries, have contacted Directorate
General Enterprise in order to further discuss the specific trust problems they are facing when using
B2B e-marketplaces. The proposal of establishing a group of experts to further discuss this matter and
to identify best practise has been widely supported. In this context, some associations have presented
their initiatives for developing codes of conduct, in particular for auctions and reverse auctions.
However, a small number of European associations and Chambers of Commerce, have also expressed
concerns. In particular, the opinion has been expressed that e-marketplaces are just being implemented
and that it would be better to address the trust issue at a later stage. In addition, concerns have been
raised about the role of the Commission in the self-regulatory process. The view is that the
development of codes of conduct should be the exclusive responsibility of business actors and should
not be subject to efforts of “regulating self-regulation”, as observed in other fields.
2.2. The specific results of the consultation
The specific results of the consultation can be summarised as follows:
2.2.1. Questionnaire addressed to associations/ chambers of commerce/ companies:
The majority of the responses to this questionnaire are from companies (48,4 %) and from associations
(40,6 %). Only a small percentage was from Chambers of Commerce (10,9 %). Most of the
respondents to this questionnaire are from the following Member States: Germany (23,4 %), Belgium
(17,2 %), France (14,1 %), Italy (14,1 %), Spain (12,5 %), United Kingdom (10,9 %) and The
Netherlands (9,4 %). Moreover, some replies were from outside the European Community (14 %) and
in particular: Romania (9,4 %), Lithuania (3,1 %) and countries such as USA (1,6 %), Iran (1,6 %) and
Israel (1,6 %).
The most represented sectors of activity in the responses are the following: business services (21,9 %),
IT (15,6 %), public administrations and organisations (10,9 %), chemicals (6,3 %), other transport
equipment, other manufacturing (6,3 %), motor vehicles (4,7 %), retail trade (4,7 %), wood, paper,
publishing printing (4,7 %), machinery equipment (3,1 %).
Codes of conduct
According to the results, around 48,4 % of the respondents replied that they are aware of codes of
conduct or guidelines for B2B e-marketplaces, while 51,6 % replied that they are not. Some of them
are actively involved in initiatives to develop B2B codes of conduct.
Examples of such codes of conduct are the following:
– Good Trading Practices in Electronic Bidding Processes: Reverse Auctions, European
Aluminium Foil Association: www.alufoil.org
– Fairness for electronic market places, ArGeZ: www.argez.de
– Code of Conduct for auctions, Europacable: www.europacable.com
Virtually all respondents (96,9 %) are of the opinion that codes of conduct are useful tools to
enhance trust and confidence in B2B e-marketplaces. In addition, a very large majority
(93,8 %) is supportive to the proposal of establishing a group of stakeholders by the
Commission to discuss guidelines for codes of conduct in B2B e-marketplaces. Many
respondents (83 %), would be interested in participating in such a group.
32

Trust barriers
The most important trust barriers for the use of e-marketplaces for online purchasing purposes, as
perceived by the respondents, are the following:
– Uncertainties related to the protection of confidentiality of sensitive data (59,4 %)
– Uncertainties related to the security of information and communication systems (57,8 %)
– Lack of clear information on the terms and conditions of the contract (e.g. applicable law;
jurisdiction, etc) (56,3 %)
– Uncertainties related to the settlement of disputes (50 %)
– Uncertainties related to on-line payments (48,4 %)
– Lack of sufficient information on the different steps for the conclusion of the contract
(42,2 %)
– Lack of sufficient information on the identity of the companies (name, address, telephone
number, VAT number, etc) (37,5 %)
– Lack of sufficient information on the right of withdrawal from the contract (35,9 %)
– Lack of sufficient information on product return and recovery of amounts paid (34,4 %)
– Lack of sufficient information on the characteristics of the goods/services (31,3 %)
– Lack of sufficient information on availability of products and delivery time (29,7 %)
– Lack of sufficient information on payment methods (25 %)
– Lack of sufficient information on certification of products/services (23,4 %)
– Other (23,4 %)
– Lack of sufficient information on the prices of goods/services including additional charges
(e.g. taxes) (20,3 %)
– Lack of sufficient information on insurance of goods/services (18,8 %)
– Lack of sufficient information on the costs of delivery goods/services (15,6 %)
– Lack of sufficient information on the language of the transaction (14,1 %)
– The main trust barriers for the use of e-marketplaces for on-line selling purposes, as
perceived by the respondents, are the following:
– Uncertainties related to the protection of confidentiality of sensitive data (54,7 %)
– Uncertainties related to the settlement of disputes (50 %)
– Uncertainties related to the security of information and communication (46,9 %)
– Uncertainties related to on-line payments (43,8 %)
– Other (26,5 %) e.g. high “entry costs”: some marketplaces have high entry costs to take part
at the business and often to get in contact to customers you already know (1,5 %)
2.2.2 Questionnaire addressed to e-marketplace operators
All responses to this questionnaire are from e-marketplaces operators based in the EU, with most of
them from Germany (32,1 %), Italy (17,9 %), United Kingdom (14,3 %) and Belgium (10,7 %).
The e-marketplace operators who answered to the questionnaire are active in the following sectors:
business services (46,4 %), IT (21,4 %), textile-clothing-leather (17,9 %), wholesale (17,9 %), food
industry (14,3 %), wood, paper, publishing, printing (14,3 %), financial services (10,7 %),
construction (10,7 %), motor vehicles (10,7 %), machinery, equipment (7,1 %), agriculture, fisheries
33

(7,1 %), hotels, restaurants, tourism, travel agencies (7,1 %), chemicals (3,6 %), transport (3,6 %),
extraction, quarrying, mining (3,6 %), electricity, gas, water (3.6 %).
The responses are from horizontal e-marketplaces (53,6 %) as well as from vertical e-marketplaces
(46,4 %). For the purposes of this consultation, a “horizontal e-marketplace” has be defined as an e-
marketplace which facilitates the purchase and sale of goods or services used by a range of industries;
“a vertical e-marketplace” should be understood as an e-marketplace which facilitates the purchase
and sale of goods or services in a specific industry sector (e.g. chemicals, metals etc).
In addition, the large majority of responses are from “neutral e-marketplaces” (96,4 %). For the
purposes of this consultation, a “neutral e-marketplace” should be understood as an e-marketplace
operated by an independent third party (neither a seller nor a buyer) and aiming to bring together all
buyers and sellers in a particular industry or region.
Codes of conduct
According to the results, only 39,3 % of the respondents have replied that they are aware of codes of
conduct or guidelines for B2B e-marketplaces. In addition, only 35,7 % have replied that they have
developed or subscribed to a code of conduct and only 10,7 % of the stakeholders are participating in a
trustmark program.
Virtually all respondents (92,9 %) are of the opinion that codes of conduct are a useful tool to enhance
trust and confidence in B2B e-marketplaces and all respondents (100 %) are supportive to the
establishment of a group of stakeholders by the Commission’s services to discuss guidelines for codes
of conduct. In addition, a large majority (92,9 %) would be interested in participating in this group.
Trust barriers
Concerning the type of information e-marketplace operators provide in their web site, the main results
are the following:
– Information on the available mechanisms to ensure the security and the confidentiality of
sensitive data (67,9 %)
– Information on the criteria for the selection and admission of participants to the e-
marketplace (60,7 %)
– Other (37 %)
– Information on the dates for on-line auctions (32,1 %)
– Information on the applicable rules for online auctions (32,1 %)
– Information on the criteria for participation in on-line auctions (21,4 %)
Concerning the type of information e-marketplaces operators request from participating companies to
provide, the main results are the following:
– Information on their identity (name, address, telephone, VAT number etc) (92,9 %)
– Information on the characteristics of the products/services offered (71,4 %)
– Information on the prices of goods/services; including additional charges (67,9 %)
– Information on availability of products and delivery time (42,9 %)
– Information on payment methods (42,9 %)
– Information on the terms and conditions of the contract (e.g. applicable law; jurisdiction, etc)
(39,3 %)
– Information on the language of the transaction (39,3 %)
– Information on the costs of delivery of goods/services (35,7 %)
34

– Information on certification of products/services (35,7 %)
– Information on the different steps for the conclusions of the contract (28,6 %)
– Information on insurance of goods/services (14,3 %)
– Information on product return and recovery of amounts paid (14,3 %)
– Information on the right of withdrawal from the contract (14,3 %)
– Other (7,1 %)
2.2.3. Questionnaire addressed to trust operators/e-business platforms
The responses to this questionnaire came mainly from Member States (81,8 %), in particular from
Germany (27,3 %) and Italy (18,2 %).
Codes of Conduct
According to the results, (54 %) of respondents replied that they are aware of codes of conduct or
guidelines and (36 %) answered that they are involved in an initiative to develop a B2B code of
conduct or a trustmark.
All respondents (100 %) have replied that codes of conduct are a useful tool to enhance trust and
confidence in B2B e-marketplaces and that there is a need to develop such codes or trustmarks. All
respondents (100 %) consider that the Commission should create a group of stakeholders to discuss
guidelines and 91 % are interested in participating in such a group.
Trust barriers
According to the responses, the most important issues that a B2B code of conduct should address are:
– Information on the available mechanisms to ensure the security and confidentiality of
sensitive data (81,8 %)
– Information on the terms and conditions of the contract (81,8 %)
– Information on the transaction procedure (delivery, payment, return, etc) (81,8 %)
– Information on goods/services offered (characteristics, prices including charges) (72,7 %)
– Information on the criteria for the selection and admission of participants to the e-
marketplace (72,7 %)
– Information on the identity of participating companies (63,6 %)
– Information on the settlement of disputes (63,6 %)
– Information on on-line auctions and applicable rules (45,5 %)
– Availability of Alternative Dispute Resolution mechanisms (36,4 %)
2.3 Other comments
In addition to the responses to the three questionnaires, the following comments have been received:
– E-procurement: Two associations and one company have stated that although e-procurement
is meant to create a higher level of transparency, better competition and more opportunities
for SMEs, in practice this is not true. In the longer run, competition is eliminated and SMEs
are excluded because they cannot face large customers and dumping procedures are
promoted.
– Reverse auctions: Four associations and one company have expressed concerns about unfair
practices in reverse auctions. In particular they expressed concerns that some auctions are
35

launched without having the intention to change supplier or without the intention to buy
anything. Sometimes, the company which launched the auction, participates itself in the
bidding, in order to artificially impact the process. In addition, there is no check on whether
competitors can deliver the specified volume and quality and sometimes there are changes in
the order after the transaction is closed.
3. SUMMARY OF RESULTS
The results of the consultation can be summarised as follows:
– Trust is an important issue for B2B e-marketplaces. This is confirmed by the high number of
responses to the consultation and the strong support for this initiative by a large majority of
relevant stakeholders, both companies as well as e-marketplace operators.
– Codes of conduct are considered to be important tools to address the need for trust in B2B e-
marketplaces. This is confirmed by the fact that a number of codes of conduct is currently
being developed by national and European associations. In addition, the importance of
promoting the development of codes of conduct at European level has been widely
acknowledged.
– The most important trust issues for participation in B2B e-marketplaces, according to
companies, associations and trust operators are the following: Security, confidentiality,
transparency, in particular of the terms and conditions of the contract and the transaction
procedure and alternative dispute resolution. According to e-marketplace operators, a lot of
the information related to those issues is being made available on their web sites, with the
exception of online auctions where the information seems to be rather limited. This different
perception of the situation may suggest a “trust gap”, either resulting from a lack of
awareness or from different views about the effectiveness of the measures taken in
addressing trust issues in B2B e-marketplaces.
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