B2B Internet Trading Platforms - EDIS

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
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