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Citing the lack of a mature e-commerce marketplace, Dell (Nasdaq: DELL) has shut down one of its business-to-business (B2B) online marketplaces, called Dell Marketplace, only four months after it originally opened.
The exchange allowed customers to purchase Dell personal computers, notebooks, servers and related information technology equipment, as well as office products, from select suppliers.
Dell’s B2B e-procurement purchasing and information portal site, called Premier Dell.com, remains open.
Dell Marketplace never
signed on more than three suppliers, Pitney Bowes, Motorola (NYSE: MOT) 
and 3M, to sell
their own products directly to customers via e-marketplace.
"They didn’t reach a critical mass of suppliers," Jupiter Research senior analyst Tim Clark told the E-Commerce Times. "And this is one of their peripherals -- it distracted them from what they were trying to do [sell computers]. Now they’re deciding to focus on their core business."
No Host
Rather than generate revenue from selling the business products themselves, Dell charged suppliers on the marketplace both transaction and hosting fees. The site enabled customers to bundle orders from Dell and its complimentary suppliers into a single purchase.
However, the exchange was shut down earlier this month due to "a limited readiness of customers to make use of an electronic marketplace," Dell spokesman Ken Bissell said.
In other words, customers never saw Dell as the place to purchase business supplies. With more than US$50 million a day in online transactions at its computer site, it became quickly apparent that the marketplace viewed Dell exclusively as a computer hardware vendor.
Come Together
Successful B2B growth may lie in consolidation efforts. An Arthur Andersen survey published in December found that 50 percent of e-commerce executives believe consolidation will increase the success of online marketplaces.
This trend has already begun to manifest with several joint B2B initiatives
by online computer e-tailers popping up last summer, including an
Internet-based exchange for supply chain management formed last May by
Compaq, Hewlett-Packard (NYSE: HPQ) and Gateway.
The alliance with nine computer parts suppliers to create an online marketplace was said to have the potential to cut annual supply costs by 5 to 7 percent.
Collaborative Pursuits
Last June, IBM (NYSE: IBM) and a group of international computer manufacturers formed a
$200 million e-marketplace for computer, electronics and
telecommunications companies to buy and sell goods and services.
Clark said that the HP and IBM ventures are focused more on collaboration (on product design and supply chain visibility, for example) than on computer sales.
"Dell’s decision is not a sign that these industry marketplaces won’t work," Clark said. "It’s a sign that Dell had higher priorities."
By the Numbers
According to a report released last month by ActivMedia Research, about 25 percent of businesses are currently ordering products online, with those orders only being placed in certain product segments.
Still, businesses are continuing to try to increase efficiency and lower product costs through B2B marketplaces. According to Jupiter Research, spending on B2B e-marketplaces is expected to jump from $2.6 billion in 2000 to $137.2 billion by 2005.
Last week, chief executive officer Michael Dell said Dell's revenue for the
year ending Friday is expected be $32 billion, meeting the company's
original forecasts. Shares of Dell were up $2.44 at $26.88 at the end of
trading Tuesday.
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