"Electronic Marketplaces

Electronic marketplaces, or e-marketplaces, are online systems where government buyers and vendors come together to do business. They are typically publicly owned but built and, in some cases, run by private contractors. Typical features include catalog and RFQ purchasing. A few feature sealed bidding and reverse auction capability.

We'll begin by reviewing some examples:

STATE EXAMPLES

NC e-Procurement @ Your Service - North Carolina
http://www.ncgov.com/eprocurement/asp/section/index.asp

At the North Carolina e-marketplace, vendors pay nothing to register. There is a 1.75-percent transaction fee (called a "marketing fee") for successful sales. The site features requisitioning, purchase order transmission, along with email notification of such events as request for quotes and receipt of goods.

Vendors set up "marketing pages" to showcase products, capabilities and other information, including guarantees and warranties, mission statements, and historically underutilized business (HUB) status. Electronic bidding is planned for future releases.

eVA - Virginia
http://www.eva.state.va.us/

Virginia's e-marketplace, eVA, charges a $25 registration fee for basic memberships, $200 for premium. There is a 1-percent transaction fee per sale, capped at $500.

Keeping fees low is a stated top priority among Virginia procurement officials. That's a common theme: state e-marketplaces tend to be relatively low cost for the vendor.

FEDERAL EXAMPLES

GSA Advantage
http://www.gsaadvantage.gov

To compete at the federal government's most active e-marketplace, GSA Advantage, businesses face a substantial up front investment. To be a part of GSA Advantage, a company must first be awarded a multiple award schedule (MAS) contract.

Consulting firms will take a company through the rather elaborate process of obtaining a GSA MAS contract for fees ranging from $8,000 to $30,000, depending on the type of business and the type of schedule. (GSA awards MAS contracts to companies when it determines that the prices offered are "fair and reasonable." To make such a determination, agency officials compare the price or discounts that a company offers the government with those offered to its commercial customers.)

Navy Electronic Commerce Online (NECO)
http://www.neco.navy.mil/

At the Navy's NECO site, there is no vendor registration fee and no monthly fee. Vendors can register to receive notices from individual Navy installations or all of them. Registration allows receipt of e-mail notices and means to submit a response to a procurement opportunity.

SBA Exchange
http://www.sbaexchange.gov
(still under construction)

When this long overdue system is built, vendors will pay, at minimum, $1,500 per year to be a part of it. http://web.sba.gov/list/. Ouch.

SMALL BUSINESS STATUS

There are a couple of views small businesses can take toward these online marketplaces. The optimistic view says that they open up opportunities in new places. The pessimistic (or "spoiling the party") view says that they bring in new competition into places you were doing just fine thank you very much.

The accuracy of your particular view of course will depend on a number of factors, including to whom you've been selling and what you sell.

A recent study suggests that small businesses are doing fairly well in the government e-marketplace environment. The General Accounting Office (GAO) found that, for fiscal year 2000, the small business share was 61 percent for the Defense Medical Logistics Standard Support E-CAT, 51 percent for GSA Advantage, and 39 percent for GSA's Information Technology Solutions Shop, compared to the overall 22-percent government-wide small business share.

The report noted, though, that many small businesses still face important obstacles. Among these: limited in-house technical expertise, differing requirements for online purchasing programs, and lack of good customer service assistance.

JOINING E-MARKETPLACES

Let's assume you've taken the view that says it's better to join than be left behind. So then which e-marketplaces do you join?

Fees:
Fees for joining government-owned marketplaces vary widely, from the very cheap (which tend to be concentrated among state sites) to the very high. Before joining, always know what the fees are. Fees can include up-front fees, monthly fees and transaction (aka "marketing" or "success") fees.

Time:
Beyond fees, technical time is an important consideration. The time and effort required in posting and managing catalogs for various government systems can be considerable.

Like the private sector, there are competing standards among government sites for tagging catalog information. The federal government, for example, relies on Federal Supply Class (FSC) codes to categorize the products it buys. For services, the federal government employs what are known as Product Service Codes (PSCs).

Many state and local governments, on the other hand, rely on National Institute of Government Purchasing, or NIGP, codes.

There also are various standards and procedures for loading and updating catalog information.

FOCUS ON CUSTOMERS

Perhaps most important of all: focus on your target agencies. E-marketplaces guarantee no business. They're merely resources that MAY help you sell more effectively.

One question to ask is this: Do any of your current customers buy through the particular e-marketplace? Find out, in other words, which sites your customers routinely use, either by their own choosing or by law.

For example, let's say a vendor sells high-end supercomputers. If the vendor is located in North Carolina and has had success (or at least is confident of success) in generating sales in that state, then it probably should become part of NC E-Procurement@Your Service, especially given the relatively low costs involved. If the vendor focuses on federal facilities only, it probably should become part of GSA Advantage, despite the high up-front costs.