Now, small buyers suddenly can buy from these large sellers. Small sellers love it, too, because they get access they otherwise would not have to large buyers. The large buyers also have some advantages because they can get better prices. The large sellers are the ones that have the most reluctance to participate. They argue that they have access to the large buyers anyway and this just results in erosion of their prices.
Some hubs generate advertising revenue.
Kaplan and Sawhney's formula is that the value created by a consumer hub increases linearly with the number of buyers. I get the same benefit. Once you have a million people there on either side, it's incredibly attractive because the seller knows that he is going to find a buyer and the buyer knows he is going to be able to find what he wants. Horizontal, or functional, hubs can perform a process or function across several different industries. Hubs can use different procedures to arbitrate between buyers and sellers.