Let’s Get Vertical

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A new breed of intermediaries is emerging to facilitate B-to-B ecommerce. These new intermediaries go by different names – “vortexes,” “butterfly markets,” or “net market makers.” All in some way serve as electronic hubs, each spinning in a new market. These hubs focus on specific industry verticals or specific business processes (from spare airplane parts to secondary mortgages), host electronic marketplaces, and use various market-making mechanisms to mediate any-to-any transactions among businesses. They create value by aggregating buyers and sellers, creating marketplace liquidity (a critical mass of buyers and sellers), and reducing transaction costs.

What makes any of this revolutionary? First, these intermediaries do for ecommerce transactions what a network hub does for bits: concentrating, routing, and switching transactional traffic in B-to-B ecommerce. Second, they occupy a central position between buyers and sellers, much as airline hubs do between city pairs.

In short, hubs promise to reshape the landscape of B-to-B ecommerce.

Editor’s Note: this is a good article for understanding the theory behind the B2B hub concept…

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