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Selling the e-bazaar

R. Savitha

The Internet has transformed the way companies go about their business. In 2000, the total value of B2B (business-to-business) e-commerce was estimated at $210 billion, accounting for over 78 per cent of all e-commerce transactions. By 2004, the figure i s projected to increase to $2.2 trillion, accounting for 88 per cent of all e-commerce transactions.

According to an IDC report, suppliers' e-distribution sites will handle the majority of B2B e-commerce (52.4 per cent). The other major path taken would be the buyers' procurement site. Together, they would account for nearly 40.1 per cent of global B2B e-commerce.

Today, e-marketplaces play a minor role in B2B because of their relative immaturity. Only 7.5 per cent of B2B e-commerce moves through e-marketplaces.

It is too early to say that any one segment of B2B commerce is approaching maturity. The real growth rates of e-distribution, e-procurement and e-marketplace sites would vary significantly over the next three years. This is for the big players. But what about the small and medium-enterprises which abound in our country?

In fact, for most small and medium-sized enterprises, setting up sophisticated B2B e-commerce systems with advanced interfaces and personalisation would mean large spending from their scant resources. Because of financial constraints, they would not be a ble to set up their own brand equity to make their system pay off. Their money would be better spent linking up to e-marketplaces that can deliver a consistent interface, advanced functions and a pre-set community of qualified buyers.

To provide such a facility, the Pune-based Pixel Technologies Ltd has set up an e-marketplace. This does not cater to a particular segment or industry, but is common to all industries. At present, it caters to 480 users.

According to Sunil R. Nair, Chief Executive Officer/Founder Director, the concept has been developed keeping in mind the fact that real marketplaces are not being created. A marketplace is important for small businesses which need to communicate with eac h other. This can be possible only if the World Wide Web spreads across the country. The creation of portals and infrastructure is incomplete without really concentrating on the end-user, he adds.

Also, the grassroots end-user has to be IT-savvy, otherwise the concept would fall flat. People generally expect businesses to be attracted to an e-marketplace merely because it is available. But this is not the case. Also, factors such as the penetratio n level of the Internet amidst small and medium-businessmen are ignored.

Further, most small businessmen are not comfortable using the Net simply because no one has helped them through the learning curve, Nair says. To make matters worse, each segment of the industry has created a B2B marketplace, overlooking businesses that buy from multiple vertical markets.

Also, dotcom entrepreneurs have jumped into the fray, without thinking about the creation of a basic e-commerce system, a platform that is truly Indian in nature and feel, which can yet Net-enable the grassroots market.

According to Nair, Pixel's e-Market-places helps businesses sell over the Net without having to install or maintain their own e-commerce infrastructure.

What the users say

According to Mahesh Hinduja of Mumbai-based Evermore Convest, the site has been useful basically in terms of cost savings. The company did not have to invest huge sums on buying legal copies of software to keep track of data, and then spend again on main taining the personnel for updating, he says.

The main advantage is that the site is tailor-made to meet the specific needs of the Indian marketplace.

The company also realised the cost benefits of not going in for ERP (enterprise resource planning) implementation. Barely six weeks into the marketplace, he has been able to rope in about four vendors. In terms of business turnover, he says that it is to o early to comment, but points out that with the advantages, the turnover should increase in due course.

Lalit Bhuwalka, Managing Director of Pune-based Alucon Fabricators, echoes similar sentiments. Alucon is a vendor for automobile major Bajaj Auto Ltd. Bhuwalka says the company earlier relied on e-mail, but has been able to obtain information instantly t hrough this e-marketplace. The response time has improved. It has also provided a common platform for similar kind of people to interact. It is too early to predict a turnover, but he sees a better future.

Nair says the site has aligned itself with AT&T in India to enable users to have business-critical information available on their WAP (wireless application protocol) mobile phones in addition to the e-marketplace facilities. Users have the choice of rece iving information through pagers or mobile phones.

So far so good. What about registration charges? Users would have to pay fees ranging from Rs 1,000 to Rs 3,000 per annum for the service. This includes store fronts for display of material, customised applications, credit rating services, foreign exchan ge advisory, community content, e-mail and client-side software.

Yet another alliance is with Sparepartsmart.com and eMecklai.com to provide information on forex and metals to SMEs in India. Eventually eMecklai and e-Market-places will partner to provide value-added services such as bulk buying of non-ferrous metals t o SMEs. Currently, e-Market-places provides information on currency conversions in real-time and money market rates on a daily basis to its members.

It still remains to be seen whether such an e-marketplace can really capture the imagination of small and medium-sized enterprises.

(Please e-mail us at bleditor@thehindu.co.in if you have queries on computer usage or if you find an interesting way of using the PC.)