E-marketplaces: 'Sorry we're closed'

While we're sharing good news, silicon.com also learnt that an ICL-built service allowing public sector customers to purchase online will move from 'pilot' to 'live' status next month. According to project manager, Gerry Grimes, this will "become the preferred method of trading", accounting for "well over" 50 per cent of purchases.

The e-marketplace is not only here, but it's working. Right?

Not necessarily.

Firstly, it's debatable whether either of the above are true marketplaces. Certainly, there are a number of suppliers competing on price, but in each example there is only one customer (albeit a very large customer in the case of the public sector).

Where is the insurance marketplace in which RSA joins forces with rival firms to use their combined buying muscle for the benefit of all? If RSA has its own procurement service, it won't be long before Allianz, Axa et al decide to do it for themselves as well.

If so, are we really seeing anything particularly revolutionary here? The answer is no. What we are seeing are 'closed' not 'open' markets. And we've always had closed markets.

Secondly, neither subject of today's good news stories has a proven track record. Granted, the Ariba/RSA project has only just gone live, so we will have to reserve judgement. The public sector project, on the other hand, is five months through a six-month pilot and the results so far are not too promising.

"Our biggest challenge is to convert e-browsers into e-buyers," says Grimes. Only a third of participants have bought online. Given all those on the trial volunteered to take part, that's a pretty small figure.

None of this is to say e-marketplaces are a failure. But, until we are shown a live, fully working, fully open marketplace that adds efficiency while reducing costs, potential participants are entitled to remain sceptical.