That way begins by researching suppliers, issuing bids, establishing a contract price, then issuing a purchase order for every purchase, which must be generated by a human, matched to an invoice, paid and input into a general ledger or procurement software. I'm exhausted just writing about it. Likewise, buyers save money on a product because suppliers are in constant competition at an e-marketplace. If two lightbulb manufacturers are selling on the same marketplace, you better believe that each will match the other's sale prices. Saving money is clearly strong motivation for buyers.
Sellers benefit in a number of ways as well.
They have to fight it out in price wars, it's true. But in return, they get exposure to potential customers they couldn't reach any other way. A company in an e-marketplace can connect with an international company, new prospects and companies in different market segments in need of their wares. For instance, a supplier of food chemicals might discover through an e-marketplace that biotech companies need its wares. The e-marketplace isn't replacing the whole traditional procurement system yet, but it will.