It exerts such influence today that no B2B business plan has a chance of survival unless it clearly demonstrates its potential to build liquidity. Liquidity is the essential quality of a successful market and it deserves to be used precisely and to have its various components carefully unpacked. Many of the lessons are drawn from the financial markets, but also show how these lessons extend into markets for physical goods.
Liquidity is About the Number of Traders.
Certainly this was the hope of many new e-markets, which boasted about the thousands of market participants that had been signed up. But of course, the presence of a large number of traders is no guarantee of any transactions actually taking place. A large number of traders is not a sufficient condition to create liquidity. Nor is it a necessary condition-there are very active, successful markets that are composed of relatively small groups of traders, such as private procurement marketplaces or dealer markets. Liquidity is About the Number of Transactions.