Homegrown Apps Infrastructure Stalls Net Market Success, Predicts Forrester Research
Today’s custom-built eMarketplaces will fail to reach full potential while perched on a precarious software foundation. According to a new Report from Forrester Reseach, Inc. (Nasdaq: FORR), leading eMarketplaces will assemble a four-tiered architecture that supports the full trading life cycle, because today’s fail to meet new market profiles. Forrester found that 68% of sites have drawn more than 100 active buyers, but only 36% of eMarketplaces are closing more than 100 sales per month.
The highly competitive Internet marketplace has led firms to create loosely integrated technologies for quick, functional hits, while sacrificing aggressive, long-term strategies. But these basic systems lack simple workflow and rules engines that support increasing volumes. Today’s commerce software isn’t designed to support the many-to-many market structure demanded by Net markets, and it doesn’t enable buyers and sellers to execute transactions online.
“eMarketplaces must replace today’s patchwork approach to market site design with a robust application architecture that supports participants from product discovery to trade dispute settlement,” said Stacie S. McCullough, senior analyst at Forrester. “This infrastructure will be assembled in layers that work together to facilitate the entire transaction process — from dynamic negotiations to fraud detection and risk mitigation.”
To serve the entire life cycle of a business relationship, sites must invest in automated, service-rich features that draw users into online dialogues and trade. To drive participation, sites should offer community-enhancing features, including personalized search, chat, and buyers’ guides. Once familiar with the trading environment, users will need to define business parameters, research products or offers, and approach prospective partners. To close deals, sites will help users offer, negotiate, and commit to transactions — and all these processes will be automated. Once the deal has been agreed to, marketplaces must ensure that users fulfill commitments.
eMarketplaces will define their investment strategies to attack the highest-value services first. To prepare, sites should plan based on market characteristics. Offerings will run from static to dynamic, buyer needs will range from tactical to strategic, and partner supply chains will vary from simple to complex depending upon the number of suppliers contributing to final goods.
With the majority of eMarketplaces planning to purchase applications over the next two years, vendors are offering stronger solutions to capture market share. Consolidation fever will consume application players, but as market activity settles, platform owner-operators will emerge via strategic alliances. In the absence of a single-vendor solution, sites will turn to integrators to guide their features, enhancements, and acquisitions.
“Manufacturers, distributors, and suppliers will be bombarded by invitations to join new marketplaces,” added McCullough. “Rather than jumping at each opportunity, these users should methodically choose partners based on strategy, technology foundation, and community.”
For the Report “eMarketplace Hype, Apps Realities,” Forrester interviewed 50 business-to-business eMarketplace leaders about their existing and planned functionality and software. Seventy-two percent of eMarketplace respondents use homegrown apps.