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Have you used an e-Market Place as a Sourcing Strategy?

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Can e-marketplaces be used as an effective sourcing strategy? Here are my observations.

I was very pleased with the 30% savings I made by ordering my Subway lunch on a lazy Sunday afternoon from www.foodpanda.in, instead of driving to the nearest subway outlet in my locality. Especially because it came with an added bonus of free delivery (no fuel cost), hassle free ordering and saved me the effort of standing in a queue (which by all standards is on top of my NVA - non value added activity list).

Having spent the previous week discussing savings achieved for one of our newest engagements, I started wondering (rather wishing), if it would ever be equally easy to achieve savings in Indirect categories that we manage for most of our customers. One thought led to another and I started doing some research on existing e-marketplaces in different industry sectors and if they could really be used as an effective sourcing strategy.

I spent a lot of time going through websites like www.alibaba.com, www.indiamart.com, www.bizeurope.com, www.amazon.com etc., in search of my Food-panda-like experience. Here are my observations:

  • B2C e-marketplaces are more evolved and offer better user experience, but B2B marketplaces are catching up fast. There is no reason we buyers/Sourcing managers should not explore using these e-marketplaces for assistance with our day-to-day buying.
  • I was surprised to find that e-marketplaces like Alibaba and Indiamart even have their free mobile apps, plush with features including, category-wise segregation of goods, country-wise segregation of suppliers, options to obtain quotations from multiple suppliers within seconds, supplier qualification/verification tools, instant chat with a supplier representative, secure payment options, online bar code scanner, etc.,. There are also options to attach specifications in the form of pictures or other files to obtain customized quotations, survey the supplier facility and get quality checks done.
  • B2B e-marketplaces are designed more to support start-ups and SME type business set-ups and may not be ready to cater to complex requirements of large businesses yet. However, even large businesses can benefit from e-market places for their tail-spend requirements for categories ranging from personal protective equipment, electrical consumables, hardware and tools, packaging, advertising, office supplies, pumps, chemicals, rubber and plastics, minerals and metallurgy, pumps, LMV parts, tires, etc.
  • In-spite of all the modern features, B2B marketplaces are still a chaotic place and may overwhelm a new buyer. Expect to spend significant amount of time getting comfortable with navigating the tools before you can actually place an order or send an enquiry. 
  • I could not locate my Food-panda or Amazon type discount coupons, so I guess negotiating is still upon the buyers, i.e., after you have zeroed in on the right supplier. I also found that terms and conditions of purchasing may be supplier centric, which most large organizations would not be comfortable with.
  • While I found several B2B e-marketplaces for goods, I could find only a handful of e-marketplaces for professional services whose offerings were limited to some specialized services.

Have you used e-marketplaces as a sourcing strategy? Please leave a comment and share your experience.


eMarketplace is a good concept to promote SME's. This might work very well with your tier 2 and tier 3 suppliers however large and complex service providers e.g. professional services, consulting, IT Infrastructure etc. might not adapt to the concept of eMarket place...Having said that, yes this is an excellent concept and has already started to evolve in Middle east countries

Jyoti - Good thought. Yes I had taken e-marketplace but not in its sophisticated form as of today. Had done an e-Sourcing for an ocean freight in Y2001 for a value of INR 10 crores, which was the budget. Ultimately, through e-auction we got the deal for INR 8 crores, and also the job was done successfully and the supplier made good money. Indeed we need to take this route and bring in more adoption by the smart systems we have.

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