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An online marketplace can be a sophisticated extension of electronic data interchange or the simplest kind of computer bulletin board (see Chapter 18), I&E networks (see Chapter 19), and online catalogs (see Chapter 20). Online marketplaces (versus online catalogs) typically encourage competition within the same product or service category. An online marketplace is a service for buyers and sellers that usually charges both.

Millions of items are listed, and billions of dollars of sales are made through online marketplaces every year. There may be an online marketplace reaching prospects and buyers for your products and services. It may be possible to list and price some of what you sell for very little money, perhaps a tiny percentage of sales.

Anything for sale can become part of a databank of things for sale. The host computer assembles and classifies such data according to categories. It lists item numbers and information such as quantity available and price–with the firm's name, address, and phone, fax and/or modem number. The computer arranges this in small or huge files. It can update, as often as desired, facts such as the latest inventory availability and price. For anyone shopping for anything, the computer can search in a flash and call up onscreen a choice of sources and price quotes for an article or service.

This is an online marketplace. Of the many different such marketplaces, each has been born because a need was seen and filled, and each came about in its own way. Some grew out of an information service online while others developed out of an online catalog. Often a trade association organizes one for its members. Often the online marketplace is a joint endeavor.

Online marketplace advantages include the following:

An online marketplace's equipment needs vary from the simplest to the most sophisticated. The marketplace can be created with a BBS or on an I&E network, or on more than one. The biggest online marketplace may involve an investment of hundreds of millions of dollars yet list products and services for modest cost. There are always more marketplaces to choose from.

Some online marketplace disadvantages include

Shopping on an online marketplace is a habit that often is acquired slowly. Far fewer consumers shop online marketplaces than in business-to-business situations.

Should you market your wares on an online marketplace? Yes, but only where the marketplace fits your field, where someone is profitably selling a product or service comparable to yours, or where the risk to you is nil.


Finding Online Marketplaces That Fit

Associations sometimes start online marketplaces. Trade publications often report on related ones, particularly new ones. Phone the associations, trade papers, and newsletters in your field. Read the Help Source Guides at the ends of chapters 18, 19, 20, and 21. Newsletters reporting on BBSs can update you on the newest BBS-based online marketplaces. Each I&E network can give you a list of the marketplaces on their network. Gerald O'Connell of Modem Media (see last chapter) can update you. He ran one. Ask your business library to help you find stories on online marketplaces. An online "clipping service" can come up with more at very little cost.

Make a list of those marketplaces that fit your field and send for an information kit from each. Now let's look at how varied the online marketplace is in cost structure and customer appeal.


Online Marketplace Examples

I asked Ogilvy & Mather Direct's Electronic Marketing Division Director Martin Nisenholtz: "What is the biggest success story of a computer marketplace on line that you know of?" Martin answered: "CompuCard [the Corporate name is CUC], by far." CUC offers 10 to 50 percent savings off manufacturers' list prices on a huge range of consumer goods via its online marketplace. The CUC computer calculates the lowest price delivered to your door. It also offers automatic, two-year warranty protection coverage up to a full year on items bought, and online service 24 hours a day, 7 days a week.

To be listed with any of the more than 250,000 products on CUC International's online marketplace of brand name consumer items costs the seller nothing. CUC typically makes a commission of 6 to 8 percent of sales.

The subscription shopping service is a product of CUC International. Its 3.3 million shopping members pay a $39 to $49.95 fee each year. The online members, for years, paid online time to shop on some online networks. The online members are not idle shoppers but are looking to buy. CUC's online marketplaces are on virtually every I&E network and on many online data banks and services. In magazines or newsletters for each, publicity and ads promote CUC online shopping. CUC produces nine to ten catalogs each year. Its average sale is $182.


The Salvage Marketplace Network

AutoInfo of Maywood, New Jersey, has brought the technology of satellites and computers to the auto salvage industry. The company offers several services including: (1) Orion Trading Network, (2) Checkmate Workstation, (3) Insurance Parts Locating Database. AutoInfo's Orion Network is a satellite-based trading system used by over 1300 dealers in the United States and Canada to buy and sell auto parts. Over 4 million messages are sent yearly over the network. The company's Checkmate workstation is used by more than 500 auto salvage dealers to profitably analyze potential trades. The insurance parts database contains information on over 10 million used auto parts. AutoInfo also operates a motorcycle parts network and a cattle feeder network.

The Orion Network allows auto salvage dealers to send parts requests to other dealers. The monthly subscription price of $375 includes software, hardware (satellite dish, PC and terminal, maintenance and communications). The salvage dealer just supplies paper, ribbons, and a telephone line. Martin Rubin, president, says:

The Orion Network has changed the way auto dismantlers conduct business. Instead of dealing with only local dealers, the salvage dealers can deal with fellow dealers hundreds or thousands of miles away. Our system is less expensive and more productive than telephone or fax.

Our first year online, we had 50 customers and did about $198,000 in revenues. We lost money. Five years later, our sales and after-tax profits were $9.6 million and $2.4 million respectively.

Sometimes, the marketplace existed previously in another form and just needed a new delivery system. Martin Rubin says:

In the auto salvage industry, parts have always been traded between dealers. In the 1940s this was done by teletype and in the 1950s by voice network. We simply enhanced the concept by offering trading by computer over satellite.


The Online Yacht Marketplace

BUC Marine Sales Network (BUCNET) is a worldwide marketplace for yacht brokers and sellers of boats. It's a multiple-listing service paid for by the membership of over 500 dealers and brokers. The minimum membership charge is $780 a year. Dealer/broker subscribers are charged 35 to 65 cents per minute to use the Network.

The BUC Marine Sales Network is without charge to buyers and sellers until a boat is sold, at which time a commission (traditionally 10 percent) is paid to a broker member. BUC also offers a New and Used Boat Price Guide and BUC's Personalized Boat Evaluation Service.

BUC offers a database of the selling prices of new boats and another one of used boats. BUCNET also has a Marine Lender Listing Service which lists boats taken back by lenders and available for sale via its members.

BUC President Walter Sullivan says: "Listings on BUCNET are much more detailed than the typical real estate listing. The result is comprehensive information describing each vessel listed on the network, rather than summarized reports."


Bargain Ad Marketplace

If you make any of the 200,000 kinds of fasteners in the world, you can list your entire line of inventory on the FastFinder online marketplace for only $35 a month. It's used primarily to list inventory available below the market price.

On FastFinder, just enter a description of the part you are seeking. FastFinder locates the item, quantity available, and any possible substitute parts. An average search takes about 45 seconds. Access is possible around the clock. FastFinder is continually and easily updated. Williams & Watts President William Van Etten reports on FastFinder: "We list our inventory online. Our phone number is onscreen. People call us. There's no effort. To update, we just run and mail in a computer tape."