One of the most widely used e-Commerce concepts are e-auctions – a quarter of all of e-Commerce transactions take place in auction format. In this article we investigate the three major benefits of e-auctions.
The e-Commerce retail boom is well-documented, and much to blame for what is dubbed the ‘US retail apocalypse’.
Business-to-consumer e-Commerce continues to steal marketshare from its brick-and-mortar counterparts, though what is often overlooked is that the growth trajectory for business-to-business e-Commerce dwarfs that of business-to-consumer. By 234% to be exact.
B2B e-Commerce is worth $7.7 trillion globally and growth is set to continue at strong double-digit rates, as predicted by a report by Statista. According to Wall Street, the B2B online marketplace has a potential to be as much as 10 times bigger than the B2C. This is largely because of all the exchanges of goods and services across the entire supply chain that are involved in bringing final products to market.
The overall effect of B2B e-Commerce is a far less a double-edged sword than B2C e-Commerce, too. The economic and human butterfly effects of growth in this area are far more positive, causing significantly less impact on jobs, and positive economic stimulus.
e-Auction benefit 1: Cost-savings leading to increased market fluidity and economic stimulation
Online auctions affect cost savings in different ways. First, the auction environment, whether a forward or reverse auction, puts downward pressure on pricing, ensuring that goods and services are exchanged at their true market values.
In addition, rates are driven down by reducing costs throughout the supply chain. Online B2B exchanges can result in customer-focused value chains that reduce costs all the way throughout the supply chain, ultimately benefiting the consumer and the economy as a whole.
In addition, savings equate to growth potential for businesses. The more organizations can shave off their operating and manufacturing costs, the better their access to working capital and the more agile a business can be when responding to the market and opportunities for growth and expansion.
Online marketplaces can bring even further benefits to organizations by offering the opportunity for reduced marketing, sales and distribution costs.
Suppliers also benefit from cost reductions, maximizing their profitability and selling products quickly and in bulk. If organizations can reduce purchasing and operating costs and maintain healthy profit margins they can contribute to national and even global economic expansion.
e-Auction benefit 2: Easier entry into new markets
An e-Marketplace can make the world an instantly smaller and more accessible place for many. Organizations are able to enter global markets at reduced costs. Businesses are also able to be more responsive and dynamic, with real-time communication and instant availability of data identifying shifts in markets and opportunities.
The playing field is leveled, enabling smaller businesses to compete among their bigger and more established competitors, creating a more fluid and competitive business landscape.
e-Auction benefit 3: Streamlined processes create a more dynamic business environment
B2B transactions traditionally involve lengthy, convoluted procedures. The process involves researching suppliers, approaching them all for quotes, comparing proposals, negotiating terms, logistics, document generation from both parties, invoicing, payment and analyzing data.
For suppliers, sales resources can often be wasted in responding to lengthy proposals with multiple stages over extended time periods. In an e-auction format, they are able to streamline their processes.
Online auctions can markedly compress lead times on trade and streamline processes involved for all parties. Buyers are able to negotiate with a number of vendors at once rather than in turn. This translates to massive time-savings for everyone.
What is the future of e-Commerce?
Though it may seem that e-Commerce must reach market saturation point in the near future, analysts couldn’t disagree more. In fact, for both B2C and B2B markets, e-Commerce continues to grow and is expected to continue to expand exponentially.
The key to the growth is the continued creation of e-Commerce platforms across both horizontal and vertical markets. ProcurePort has been creating and launching custom e-marketplaces including both forward and reverse online auctions in verticals including but not limited to energy, renewable fuels, retail, telecom, construction and finance. Our e-Marketplace software may help you or your business to take advantage of a growth market that won’t be quitting any time soon.
Looking for more? Here are some tips for more successful e-auctions.