But these exchanges are subject to funding and profitability pressures that potential participants must scrutinize carefully. While suppliers certainly won't participate in sites that attract few buyers, many are also reluctant to take part in sites dominated by buyers interested mainly in driving prices down. Potential participants often can tell a lot about an exchange simply by perusing the available catalog content, experts said. A dearth of content often means a dearth of suppliers and that the e-marketplace isn't ready for prime time. We like VerticalNet because when you request information on flow meters, you get a short list of our company and its competitors, and nothing that's extraneous.
Technology also plays a critical role in e-marketplace selection, according to experts.
Although many exchanges are still in early development, some already offer advanced functions such as online payment, negotiation, credit checking, logisics, and order management. Exchanges must offer services tailored to their specific industries, experts said. For example, an automotive e-marketplace must not only provide links to parts suppliers, but also a means of benchmarking the quality of the parts and ensuring quick delivery to dealers or manufacturers. So far, many e-marketplaces are little more than amalgamated electronic catalogs. In fact, the vast majority of exchanges can't even process transactions yet, said Vern Keenan, president of Keenan Vision, which recently published a study of 620 trading exchanges.