The Role of E-Marketplaces in Relationship-Based Supply Chains

Despite the considerable excitement surrounding business-to-business (B2B) E-marketplaces around year 2000, many exchanges have since closed, citing their inability to generate sufficient revenue from thin transaction volume. Discussions with industry participants reveal that many firms are carefully watching developments, but are reluctant to commit serious trading volumes to online channels. Many firms continue to conduct the majority of their strategic transactions through traditional relationship-based contracting. Surviving E-marketplaces are trying hard to come up with compelling value propositions for participants. This paper explores the difficulties faced by e-marketplaces, and discusses potential sources of value that will encourage their adoption by preserving and complementing long-term B2B relationships. The focus is on the role of E-marketplaces in B2B transactions, where long-term relationships between buyers and sellers are important, as is the case in many supply chains. Our objective is to present an industry perspective, using real-world examples to demonstrate how firms can use e-marketplaces for their advantages.