eMarketplaces:
Here and Now

wireConnect Brings Wire and Cable
Industry Complete eMarketplace Solution

By Heather Rodbell,
Park City Institute
hrodbell@aol.com

You can't keep your head in the sand anymore. An eMarket has come to the
wire and cable industry, and if you are a manufacturer, distributor or
buyer of wire and cable products, you need to quickly become
eCommerce ready. For many of you, the time is now for beginning
pilot eCommerce projects.

What are eMarkets, why must you become knowledgeable, and how
do you learn the bare essentials for eCommerce success? Simply put,
the use of the Internet for business-to-business commerce is growing
exponentially. While the better-known consumer eCommerce sites are
often struggling, B2B eCommerce is changing the way business is done.
It is only a question of "when and how, not if" it will affect your business. 

Read on to learn more about the basics of eMarkets and the wire and cable
eMarketplace – wireConnect. We'll show you what you should be
doing right now to prepare for the coming revolution.

B2B eCommerce Takes Off

The business-to-business (B2B) eCommerce market continues to
grow and scale at a rapid rate, changing the nature of business relationships.
Industry watchers continue to make staggering estimates for the future growth
of eCommerce and its effects on the B2B marketplace. Jupiter Communications,
for example, expects $6 trillion in online B2B trade by 2005, representing
42 percent of total B2B non-service spending.

The meteoric growth of B2B eCommerce is placing an even greater
emphasis on speed of business. With the Internet enabling faster and
more efficient business processes, the speed at which businesses operate
has become an important factor in determining market leadership. The
Internet's effect can also be seen in the increasing levels of competition.
Not only does the Internet expand the universe of players in any given
industry, it allows a company that may not have been a factor in the traditional
brick-and-mortar market, to ramp up quickly and expose itself to additional
partners and sales channels.

With such major shifts occurring, it is important that companies recognize
the power and potential of online technology. Every company should be
intelligently utilizing the Internet as a core enabler to improve overall
business processes. At the very least, they should be preparing to
incorporate online tools to help ensure future success.

Jupiter Communications, in a recent report, advises businesses
"to begin now to incorporate Internet strategies throughout procurement
and sales processes and invest in multiple selling models to leverage
market disruptions while protecting [their] share of [the] market."

As the effects of the Internet are felt in a growing number of industries,
online tools and technology, in general, are becoming increasingly key to success.

More and more, top level management, including CEOs, are involved in
technology decisions because they are so essential to the core business and
can affect the operations of most, if not all, units of the company.

eMarketplaces Burst onto the Scene

To help companies fully reap the benefits of these changes to the market,
eMarketplaces have emerged, effectively utilizing Internet technology and
bringing together a wider audience of industry players. Specifically, an
eMarketplace is an online marketplace that connects fragmented buyers and
sellers in a specific industry, creating value for both.

eMarketplaces, as facilitators of eCommerce, address many of the shifts
resulting from the transformation from traditional business to eBusiness.
They replace expensive manual processes and help companies operate more
efficiently. eMarketplaces are a logical step for many businesses. They
combine traditional tools and techniques with the power of the Internet,
allowing companies to take advantage of new technologies and
opportunities without having to abandon the methods and processes their
success was built on. In addition, eMarketplaces are typically launched and
managed by industry veterans with experience, foremost, in a specific market.
Having a management team sensitive to and knowledgeable on the
particular industry, often results in eMarkets that can offer specialty services
and pro-ducts, tailored to buyers and sellers.

The benefits for business are numerous and will only grow as
eMarketplaces become increasingly integrated into business processes.
Most benefits revolve around increased speed and efficiency, resulting in the
reduction of costs. eMarketplaces create value by reducing search and discovery
costs, standardizing systems, reducing information exchange costs, and
improving matching for both buyers and sellers. Buyers benefit from
access to more choices and sellers benefit from access to more buyers
and both benefit from better market information.

IDC analyst, Chris Silva, summarized the effect of eMarketplaces by saying,
"There are too many cost efficiencies to ignore… this is the future of
business-to-business transactions." (CFO Magazine, 1/00) Researchers
forecast that savings through B2B marketplace trade will reach as much
as $480 billion by 2003 (Giga Information Group).

As a result of these benefits and the growth of e-commerce, eMarketplaces
are popping up everywhere. Researchers estimate that there were between
500 and 1000 eMarketplaces at the end of 1999 and there will be anywhere
from 1500 to 10,000 by the end of this year.

This growth is supported by increased participation. A Forrester Research

survey of Fortune 1000 companies found 28 percent of buyers and
18 percent of sellers today use eMarketplaces, those numbers are expected to
rise to 69 percent and 71 percent respectively by 2002. Forrester Research
also estimates that the volume of B2B trade flowing through digital
marketplaces will reach $1.4 trillion by 2004.

eMarketplaces are rolling out in a variety of industries to meet the demands of
traditional businesses looking to take greater advantage of eCommerce. The
wire and cable market is an industry ripe for a net market. The industry represents
over $150 billion of sales globally and over $35 billion in North America. But
wire and cable is fragmented on both the buying and selling sides.  There are
thousands of manufacturers, value-add enterprises and distributors and tens of
thousands of buyers worldwide. Traditional procurement and marketing
methods in the industry are inefficient, costly, and time consuming for both
buyers and sellers. The lack of widely available pricing and market information,
along with limited technology adoption, further inhibit efficiency in the industry.

wireConnect, the first eMarketplace focused on the wire and cable industry,
provides an eCommerce structure that streamlines procurement methods,
reduces inefficiencies in the supply chain, and broadens sales and marketing
channels. And as the industry's first mover, wireConnect is positioned to
introduce the wire and cable industry to the advantages of eCommerce offerings.

Is Your Company Ready for an eMarketplace?

First, you need to learn more about the options, benefits and services.
Take a look at our guidelines and decide what type of market would
work for your company and at what stage you think you should be
getting involved.

Public, Private or Horizontal?

There are three different kinds of eMarketplaces - public, private
and horizontal. Depending on the company and products, each type
offers different advantages. (Shown in Chart #1)

A public eMarket connects fragmented buyers and sellers in the same
vertical industry, creating value for both parties. In this many-buyers-
to-many-sellers environment, the eMarket functions as a hub for
commerce activity. In addition to implementing one or more transaction
methods, the eMarket typically provides relevant industry content and
community building tools as it develops into the go-to source for industry
information. Extended reach for both buyers and sellers is one advantage.
Channel conflict as commerce moves online, is a possible disadvantage.
wireConnect is a public eMarketplace.

A private eMarket is usually formed by a group of strong industry participants.
These markets, also typically vertical, are usually created in an effort to
aggregate buying demand and address industry supply chain inefficiencies.
Because of the companies involved, private eMarkets have the advantage of
market liquidity on their side. However, they are often price driven and
somewhat exclusionary. Covisant and Aeroexchange are examples of
private eMarkets.

Horizontal eMarkets are formed around a group of products and services
rather than a specific industry. They serve a broad market base, i.e. small
businesses, with solutions for buying indirect items, MRO products, and
services such as business insurance or banking solutions. These eMarkets
provide efficient online ordering in a catalog transaction environment
(see explanation below), but typically do not provide online negotiation
tools and are not focused on specific industry needs.

Catalog, Auction or Exchange?

Within these three types of markets, businesses will typically be
offered a variety of business models to facilitate transactions between
buyers and sellers. Transaction types include fixed pricing (catalog) or
dynamic pricing (auction, exchange) options. The choice will vary based
on the product type and/or desired outcome by the participants.

With a catalog model, value is created by aggregating fragmented suppliers
and buyers. Catalogs are best used when the transaction value is relatively
small and negotiation, even online, is too costly. Participants are usually
known to each other and products are typically standard. Catalogs can be
set-up for one-off buys or reflect specific buyer/seller discounts or
contract pricing.

An auction model creates value by matching buyers and sellers within
an industry or outside an industry where perceived product values vary
greatly. Products best suited for this process are one-of-a-kind, non-standard
or perishable items. Examples include used capital equipment, returned goods,
hard-to-find items or products with limited shelf life.  Allowing the market to
value the product rather than a traditional liquidation service, can create
additional value for the vendor. Auctions can also be used as an RFQ
negotiation platform for contract pricing or blanket agreements.

In an exchange model, value is created by matching product supply and
demand in a dynamic, negotiation process. Participants typically "bid"
on multiple attributes including price, delivery, shipping terms, etc.

Products suited to an exchange are commodity or near-commodity
products that can be easily defined.

wireConnect currently offers an exchange mechanism and will likely
implement multiple transaction models to satisfy a range of different
buyers as the marketplace continues to grow.

Benefits to Buyers and Sellers

All of these marketplaces and business models offer buyers and sellers
a variety of benefits. eMarketplaces typically focus on industries where
fragmentation, on both the buy-side and sell-side, make it difficult for the
industry to realize price and product discovery independently.  The existing
friction in the market makes these industries ideal for eMarketplace
services that target unpredictable and uneven pricing, hasten information
availability, accelerate buying and selling cycles and target process cost reduction.

Buyers use eMarketplaces to lower procurement costs for both direct and
indirect products. They can use the global scale of an industry marketplace
to focus their spend on selected, preferred suppliers or expose it to a
worldwide supply base.  Buyers also have access to tools for logistics,
finance, quality assurance or testing to attack inefficiencies in their supply
chain. AMR Research estimates that these process improvements could
deliver 15-27 percent back to businesses in reduced process costs.

Sellers use eMarketplaces to lower costs and increase access to new customers.
There are also opportunities to strengthen relationships by utilizing online
collaboration tools, build ties between supplier and buyer, promote spend
aggregation, and cut supply chain costs. Sellers also have the ability to
expose new products to the market quickly and use the marketplace for
product price or value discovery.

All in all, the benefits are significant - systems are standardized,
communication is improved, excessive time and effort spent on
missed faxes and phone calls is eliminated. Faster transactions result
in cost savings, reduced paperwork and an overall reduction in errors.

Products and Services

eMarketplaces will continue to help companies in greater degrees
as they expand the features and services offered through the markets.
eMarketplaces are now going beyond enabling transactions, offering a
complete suite of services to support these transactions. These additional
services are establishing eMarkets as valuable business partners.

wireConnect delivers all of these benefits to the wire and cable industry.
It opens up a new universe for buyers and suppliers, improving discovery
and matching for both audiences. It allows users to efficiently access new
markets and identify new customers that previously could not be serviced
due to cost considerations or because they simply were not on the radar
screen. Buyers benefit from a greater number of choices. Sellers benefit
from access to a greater number buyers and the ability to showcase their
products to a wider audience.

wireConnect offers the wire and cable
industry a total eCommerce solution.

Through its suite of e-commerce services, wireConnect benefits both
buyers and sellers by making wire and cable transactions easier and
faster. Importantly, wireConnect brings the advantages of today's
most advanced technology to all members of the global wire and
cable industry. wireConnect offers marketplace solutions that free
users from having to invest the time, resources and capital required to
create and maintain advanced e-commerce platforms.

Ready, Set, Go

With all of this information, the last decision that needs to be
made is whether or not to join an eMarket. The chart below should
help with this decision based on a company's product. 

 If you have been shaking your head through the last few pages,
then it is probably time to start realizing the benefits of an eMarketplace.
The following chart will help you get started.

The benefits of B2B eCommerce are driving the rapid adoption of
eMarketplaces. With the Internet reshaping the way we look at
business and business processes, companies must catch the
eCommerce wave, or risk being left behind. Businesses that
that take advantage of the Internet and eCommerce tools to
initiate, extend and broaden business relationships, will eventually
lead the B2B market. eMarketplaces offer companies the opportunity
to build and enhance their most vital relationships – those
with buyers and suppliers.

wireConnect – with its multi-transaction method platform and
targeted value-add services – offers the wire and cable industry
a vehicle to participate in this revolution.

For a reprint of this article please e-mail: marilyn@wiringharnessnews.com