One of the most adrenaline-charged corners of the Internet during the dot com boom was occupied by electronic marketplaces. At their peak, over 1,000 of them existed, mostly in B2B verticals. By some estimates, fewer than 100 of them survive today, and the most successful of them are B2C marketplaces.
Electronic marketplaces are important to buying guide publishers because not much separates the two. Indeed, marketplaces offer a logical evolutionary path for buying guides because they support infocommerce precepts of business process integration and adding value by increasing user productivity. Most tantalizing of all, marketplaces hold the promise of transactional revenues, which can far exceed advertising and subscription revenues. It’s the right destination, but the road to this promised land has been a rocky one. (think IndustryNet – ahead of its time and VerticalNet – out of its mind).
Why are consumer marketplaces flourishing while B2B marketplaces struggle? There are three primary reasons. First, consumer marketplaces are a totally new concept, and compete only marginally with local yard sales and flea markets. They’re asking users to do something new, not change their established habits. B2B marketplaces, by contrast, are rigid and highly structured, and often require substantial changes in how users conduct their business. Second, it’s easier to achieve liquidity with consumer marketplaces – enough buyers and sellers to produce satisfactory outcomes on both sides. B2B marketplaces, by contrast, often need fantastically high levels of industry participation to achieve liquidity, and most fail before to achieve it. Third, consumer marketplaces are a borderline form of entertainment. They tend to be the electronic equivalent of noisy bazaars, with personality, pictures, and generally low price-low risk transactions. B2B marketplaces are more typically designed for the “rational” business buyer, so content is factual, quantitative and so uniform that computers can make purchasing decisions – and indeed some B2B marketplaces were designed with exactly that objective. So it’s no wonder that humans have been slow to embrace them.
The most important trend in consumer marketplaces is that they now are moving from the spot market, auction model to more conventional storefronts, where specific merchandise is dependably available at any time. In a sense, they are morphing from flea markets, where you never know what’s on sale, to shopping centers, where you go because you know exactly what you’ll find. This is a significant evolution and one that is now being adapted by business-oriented marketplaces (think eBay Business). With the organization of large collections of vendors in one place with common front-end interfaces for product discovery and ordering, we’re seeing the next-generation of buying guides, and they will present a formidable challenge. For buying guide publishers, the time for pre-emptive moves is now.