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Indpendent Portal and Online Trading Communities

It may well be that the development of the independent portal site (shown in Figure 6.3)—where multiple buyers and sellers can meet electronically and transact all types of business through a single point of integration—will be one of the most significant events, both in terms of IT and economic development, since the invention of the microchip. The portal model, a single Web site entry point available to anyone on the Internet, worldwide, allows any participant to log on and transact business for a subscription fee, a transaction charge, or a percentage of exchange fee. Activities include viewing catalogs, placing orders (or bidding, in the case of online auctions), and routing payments.

Figure 6.3 Independent portal model.

It is probably not hyperbole to say that seldom in history has so much money and attention been focused so intensively on a single new growth area in the economy (see Figure 6.4). To illustrate the point, consider that in the spring of 1999, there were around 30 vertical e-marketplaces online. By the end of 2000, that number was approaching 1,500. There are today representatives from every conceivable support area of procurement and supply chain—software vendors, hardware suppliers, venture capitalists, and industry-leading organizations from vertical industries—that moved quickly to form collaborations with other interested parties in order to sponsor industry-focused electronic trading communities. Some analysts, alarmed at the enormous amount of activity in this area, estimate that there may be as many as 10,000 e-marketplace trading communities by 2003. Volpe Brown Whelan & Co. estimates that e-marketplaces will account for $35 billion in transactions by 20041.

Figure 6.4 B2B e-commerce forecast. (Source: The Gartner Group as printed in "FT-IT Review 2," The Financial Times, October 18, 2000.)

The sponsors for these electronic trading hubs also vary in ambition and levels of service. Taking their inspiration from companies such as Amazon.com and eBay, many exchanges are limited to providing an online many-to-many storefront for multiple buyers and suppliers, usually focused on a single horizontal or vertical industry sector. In truth, in these early days, most e-markets are primarily focused on selling indirect goods often via auctions and a "spot market," which currently accounts for between 10% and 30% of procurement being carried out over trading hubs today.

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