E-marketplaces were overhyped and must now grapple with limited relevance, according to one analyst, while an industry observer noted that private marketplaces, on the other hand, are going strong.
"E-marketplaces were definitely over-hyped in the early 2000s," said Andrew Bartels, vice president and principal analyst at Forrester, in an e-mail response to ZDNet Asia. "Companies [were looking] at the eBay phenomena and assumed that similar exchanges would arise between [buyers and suppliers] in different industries."
That did not happen, he said, noting that eBay's one-to-one model had only "marginal relevance" for business-to-business (B2B) e-commerce.
E-marketplaces were championed as a platform to aid communication between suppliers and buyers, connecting businesses from similar vertical markets so they can source for subcomponents and seek out the best deals, and provide the tools to support online transactions. Despite the touted benefits, though, B2B marketplaces never quite took off.
Bartels' view was echoed by Inovis CTO Erik Huddleston. In an e-mail interview, he noted that public e-marketplaces have limited success in just a few verticals such as Alibaba in manufacturing. However, Huddleston added that private e-marketplaces such as Wal-Mart's RetailLink are flourishing.
In the past, public e-marketplaces had limited adoption because of poor integration and governance, he explained.
Today, while cloud services and embedded workflow have simplified enterprise integration between trading partners, he noted that complexities in the supply chain have outstripped most e-marketplace models to smoothly integrate into finance and fulfillment systems.
On the other hand, private marketplaces provide the control brought about by a restricted trading community. When combined with a cloud services framework, a private marketplace can be a low-cost, elastic and governed solution for organizations, Huddleston said.
Bartels noted: "What was lost in this e-marketplace activity was that it made more sense to have electronic documents, such as purchase orders, invoices and receipts between the business buyer and business supplier, flow through an intermediary responsible for formatting and routing, using a many-to-one-to-many model." This model made more sense than one where buyers and suppliers have to connect directly with each other using multiple one-to-one models, he added.
The many-to-one-to-many model has benefited supplier networks such as Ariba Supplier Network, OB10, Perfect Commerce, Hubwoo and Xign, he said, noting that private e-marketplaces such as 1SYNC and E2open also provide similar networks for supply chain data.
Cloud to top it off
Add cloud to the equation, as Huddleston noted, and e-marketplaces could offer the flexibility and low-cost platform that businesses seek.
But while some cloud applications have gained inroads into supply chain management, Bartels noted that tools with functions such as vendor inventory management, warehouse management or supply chain forecasting, planning and replenishment tools are still primarily sold as behind-the-firewall, on-premise software.
In addition, deploying cloud services for supply chain management brings up the same issues that have emerged with other cloud offerings, such as security, network dependence and data control.
Huddleston noted that businesses need to consider whether they can manage the added flexibility.
"As cloud services grow, businesses should be less concerned with where the supply chain data [is stored and put] emphasis on quickly creating and dismantling connections," he said.
Another issue that needs to be addressed is whether a cloud infrastructure can support a collaborative governance and exception management model, he added.
This will be critical as supply chain connections become more complex, where people--even those from outside the organization--will need to be brought together to identify, diagnose and resolve supply chain issues, Huddleston explained.