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A website, usually focused on a particular
industry or area of interest, where goods and services are exchanged between
buyers and sellers. Almost anything can be bought and sold in a variety of
ways on such sites, and they have attracted traders in commodities as
diverse as almonds and petrochemicals.
Such exchanges attracted much
attention and publicity at the height of the dotcom boom, but in
common with many E-commerce businesses they have largely failed to
live up to expectations. The harsh reality of their business model, once
pitched by internet gurus as the prevalent way in which goods would be
bought and sold online, has made it impossible for them to function
in a flaky economy. To make profits on small percentages of transactions (as
little as 0.2% in most cases), sites need to generate huge volumes of
business, a problem in the vertical markets in which most exchanges
currently operate. Most of the sites doing significant business rely on a
small number of customers, with many making as much as 50% of their revenue
from just one or two big traders. A 2000 survey by A. T. kearney, a
New York consultancy, showed that less than 15% of them were actually
delivering services or completing electronic transactions, and several other
studies show that most users of b2b exchanges were unhappy
with their performance. Some estimates indicate that less than 1% of b2b
e-commerce is conducted through industry exchanges, although some companies
continue to do well, including Dove Bid, which helps people buy and sell
equipment from failed start-ups. |
