Digital Marketplaces Deemed Crucial to Strategy

The importance of digital marketplaces to a company’s overall e-business strategy is crucial, and over the next 12 months, their role as a means of competitive positioning will dramatically increase, according to a survey by Arthur Andersen. The survey also found that most executives see e-procurement as an effective on-ramp to marketplaces.

The survey revealed that 50 percent of executives see digital marketplaces as a critical means of competitive positioning in the next 12 months, while one-third perceive digital marketplaces as critically important to their companies’ overall e-business strategy.

Two-thirds of those surveyed have or plan to implement an e-procurement system, with most executives planning to buy rather than lease. The potential barriers to successful e-procurement implementation include lack of internal skilled resources, cost, or supplier adoption.

Conducted by KS&R, the Arthur Andersen survey polled 105 high-level executives from large and mid-size companies, start-up dot-coms, and high-technology companies in the US.

While the anticipated importance of digital marketplaces has remained steady over the past six months, companies are more likely to offer and procure products or services via marketplaces now than they were at the time of a previous Arthur Andersen survey in June 2000. Forty-five percent indicated that their firm currently offers products or services in one or more digital marketplaces established by other companies, an increase from the 31 percent from six months ago. Also, 66 percent of respondents indicated their firm procures and purchases products or services via digital marketplaces, vs. 48 percent from six months ago.

“The challenges are mounting for digital marketplaces, including globalization issues and impending consolidation that could dramatically reshape the sector,” said Kevin Costello, partner and global leader of Arthur Andersen’s digital markets solutions. “But despite these considerations, companies are continuing to realize that these marketplaces will play a key role in the future of B2B.”

Other findings from the Arthur Andersen survey include:

  • Realization of ROI. Thirty percent of those participating in a digital marketplace have realized an average ROI of 29 percent. Those who have not yet realized an ROI, on average, project realization 13 months from inception.
  • Consolidation likely to increase success. Consolidation will most likely increase the success of digital marketplaces, according to 50 percent of respondents. In comparison, 42 percent believe consolidation will not affect success, while another 7 percent suspect it will greatly decrease the prospect for success.
  • Adding value to digital marketplaces. Customer service, ease of use, and reliability were ranked as critical value-added services for digital marketplaces. In addition, an average of 50 percent of respondents named logistics, back office/ERP, buyer/supplier adoption, and inventory management most important to digital marketplace success.

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