E-Business Solutions

Market misconceptions

MANY CONSORTIA of large companies have announced internet e-marketplaces - with hundreds, if not thousands, still to come. However, half of those announced are expected to fail in the next two years. And while this is less than the expected failure rate for new-entrant or dotcom e-markets (70-80%), caution is needed when investing or participating in one e-market exclusively.

Unlike dotcom B2B e-markets, 'industry incumbent' e-markets do not face financial failure because they are being launched with $50-200 million in capital, and their owners have deep pockets.

Instead, they face threats such as disagreements among founders, regulatory difficulties, waning enthusiasm and mergers for volume.

The creators of these marketplaces have to wrestle with dozens of thorny issues. Some are obvious - such as what are the objectives of the e-marketplace? Is the goal to maximise revenues and profits for the investing companies? Or to improve the efficiency of the supply chain?

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