E-marketplaces, online auctions and exchanges

You should consider the following areas when assessing if it is right for your business to participate in an e-marketplace.

Industry fit

What is the purpose of the e-marketplace and is it compatible with your business strategy? Ensure that you understand who buys from the e-marketplace and that your business is likely to fit the profile of the sellers and/or buyers on there.

Management of the e-marketplace

It is important to establish ownership of the e-marketplace. Successful e-marketplaces require sound financial backing to ensure their success and longevity. So, you need to know who shares the profits and the risks. Equally, you do not want to be involved in a marketplace if your competitor is the major owner.

Costs

What does it cost to participate in the e-marketplace? Possible charges include commissions for completed transactions, membership fees and listing fees. You should also establish if there are any costs associated with changing to another e-marketplace should your original choice not live up to expectations.

Marketing

Does the e-marketplace have a strong brand or image that will assist your marketing activities? What are the marketing plans, how aggressively will the marketplace be promoted and is it likely to attract the attention of the right types of customers for your own business?

E-marketplace design

Does the overall design and functionality of the e-marketplace make it easy for would-be purchasers to find and buy products? Does it take into account good website design principles?

You should also establish how your presence will be displayed on the site. Will your logo and brand image be clearly displayed?

Technical issues

Is the e-marketplace adequately staffed to ensure that services are maintained on a round-the-clock basis since any downtime will impact directly upon your own business?

Also, establish if there are any costs associated with making your own IT systems compatible with the systems used by the e-marketplace.