B2B Auctions And
Exchanges Will Mature Beyond Price, Predicts Forrester Research
Advancing eMarketplaces will propel dynamic
pricing beyond today's limited uses. According to a new Report from Forrester
Research, Inc. (Nasdaq: FORR), trade via real-time models like auctions and
exchanges will reach $746 billion in 2004. As eMarketplaces evolve, firms will
move beyond today's simple, ad hoc purchases toward configuring online markets
for each transaction -- trading across product attributes and giving special
attention to preferred partners.
"Dynamic pricing is expected to grow
twenty-fivefold over the next five years," said Steven J. Kafka, analyst
at Forrester. "During this period of rapid expansion, today's rudimentary
eMarketplaces will evolve to support matchmaking across multiple product
attributes, automated matching of bids, and deeper integration with back-end
systems. This new environment will enable broader participation of suppliers
with the fear of price margins getting squeezed."
As eMarketplaces expand their trading practices
and deals materialize and evaporate with one click, traditional processes for
finding suppliers and negotiating long-term contracts will change. Due to the
new set of suppliers available at every transaction, buyers will need to
establish a set of criteria to automatically evaluate new suppliers.
Forrester believes that over the next three
years, the combination of next-generation eMarketplaces and smarter
participants will catalyze an entirely new trading environment involving
on-demand trading, contingent dealmaking, and partner preferencing. Although
most firms currently use auction and exchanges on an occasional basis,
on-demand trading will help companies match their purchasing requirements to
an appropriate dynamic auction and automate recurring bidding decisions.
In offline transactions, buyers make implicit
tradeoffs among multiple product attributes, and contingent dealmaking will
bring the practice online. With well-defined preferences for nonprice
attributes, companies will be able to optimize their purchases by factoring in
critical elements like quality, warranty service, and credit. Buyers and
sellers will also bid using ranges for key product attributes.
Lastly, in these highly evolved venues, firms
will tailor every interaction with suppliers, excluding nonqualified vendors
and providing bidding advantages for preferred partners.
For the Report "B2B Auctions Go Beyond
Price," Forrester spoke with 19 eMarketplaces, eCommerce integrators,
infrastructure firms, and technology vendors. Small signs that eMarkeplaces
are already initiating aggressive enhancement plans include experimentation in
multi-attribute deals, testing of trading algorithms, and the beginning of