Trading Places

Be A B2B Member

To start your own online exchange, you'll need more than tech savvy--you'll need millions of dollars in financial backing. That's because launching an exchange requires a complex technical platform and a massive marketing effort to bring buyers and sellers together.

But if you don't have megabucks, don't fret--you can still reap some of the benefits by using exchanges as a buyer or supplier. You'll save money on advertising, and you might even be able to forgo launching your own Web site. Just being a member of a B2B exchange could be enough.

Mary Cicalese, a senior analyst at Jupiter Communications, points to another benefit of Net markets, noting that B2B exchanges are getting better at retaining buyers and suppliers. For instance, buyers and suppliers today are charged a 4 percent transaction fee on average, compared to the 12 percent fee that was charged about one year ago.

And Cicalese says that, in the future, transaction fees might disappear altogether. Instead of charging suppliers a fee, B2B exchange owners might ask suppliers for information about their buyers, such as what they buy, why they buy and how they pay for purchases. Then, B2B exchanges could take this information and sell it as a value-added service back to suppliers.

If you want to get involved in an exchange, check the Web, read industry publications and ask your contacts for the names of leading exchanges. Most B2B exchanges will make sure your company is reputable before letting you sign on, and most will seamlessly integrate your product catalog into their site.

Also, check out VerticalNet Inc., a Horsham, Pennsylvania, company that owns and operates 56 industry-specific Web sites designed as B2B communities. These communities provide users with information, interaction and e-commerce, and are grouped by industry sector. Each community includes industry news, a career center, a wide variety of industry resources and a product center, which lets visitors access a buyer's guide and product showcase within that sector.

You can use either one of VerticalNet's services: e-commerce centers (cost per year: $9,400), which allow customers to purchase products from sellers' catalogs on the site with VerticalNet fulfilling the orders, or storefronts (cost per year: $15,000), which allow customers to research companies' products and request additional information online.

Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

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This article was originally published in the November 2000 print edition of Entrepreneur with the headline: Trading Places.

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