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Electronic commerce: Three emerging strategies
Electronic commerce is fulfilling its early promise for business-to-business trade. Marketplaces that connect buyers and sellers are up and running in many product categories and are creating value by making trading more efficient. The experience of early participants suggests that an electronic marketplace can capture savings of 10 to 20 percent on sales and deliver lower prices for buyers.
The rewards are split three ways. Sellers can reach more customers, gather better information about them, target them more effectively, and serve them better. The marketplaces also create value for the third-party intermediaries that typically organize them. Intermediaries can earn transaction commissions and fees for value-added services such as information capture and analysis, order and payment processing, the integration of buyers' and sellers' IT systems, and consulting services. The best rewards go to buyers, however. Able to compare products and prices easily, they will compel suppliers to compete more fiercely than ever.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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