(This is the fourth in my series of posts on the nine value propositions offered by B2B platforms/multi-sided markets.)
Value Proposition #4: Industry Catalogs
There are plenty of catalog-based industries–office products and generic MRO are just two examples. But what I am referring to here are direct materials or strategic MRO that have traditionally resisted easy search and aggregation. Industry catalogs seek to end that difficulty and provide efficiency to the buyer and supplier in complex and often vertical markets. Industry catalogs make the unsearchable, searchable.
Industry catalog strategies work where the product to be purchased is a highly definable “stock-keeping-unit” (sku), but where the content is:
- complex, multifaceted
- perishable (e.g. a seat on a plane)
- hard to compare due to lack of branding,
- or where there are several of levels of quality (e.g., branded, unbranded, used, re-manufactured, etc.)
Industry catalog providers include:
- The GDS providers in travel (e.g., Sabre). (These companies are also supply chain automators, as many industry catalogers are.)
- Sciquest in lab supplies. Sciquest started aggregating and normalizing data on lab supplies and reagents, making search better for researchers and academicians. Only later did Sciquest become a complete supply chain automator.
- iTradeNetwork in foodservice products. iTradeNetwork provided data normalization and enrichment in foodservice, where every manufacturer and distributor made it nearly impossible to compare items across providers.
- PartsTown in restaurant equipment. PartsTown aims to provide an industry catalog to restaurants trying to replace the parts in the myriad pieces of equipment provided by a fragmented supply base.
- PartsSource in medical equipment replacement parts. PartsSource does the same, and more, for parts and supplies in the healthcare industry.
- In auto parts, the Big Three formed, OEConnection to make OEM parts available to dealers. MAM software and other companies provide the same information for non-OEM and used/re-manufactured parts.
- In consumer packaged goods, Gladson and others have built databases of logistics information, photos, and nutritional information of over 350,000 products
Strategic Issues Facing Industry Catalogs
- How do industry catalogers gain access to the content necessary to build a great catalog? It’s not easy to get large suppliers to develop, or even part with, this content in the B2B space. Many industry catalog providers have to compile this information themselves, develop relationships with suppliers, or gain leverage over suppliers to capture this content.
- Industry catalog providers must determine how to add value to the data through cleansing, enrichment, normalization, ratings, and other techniques. Simple aggregation is typically not enough value add in this business.
- Finally, industry catalog providers must decide if they are just going to provide a catalog, or will they add portions of the rest of the procure-to-pay process. Will they add value proposition #1: supply chain automation? Many industry catalog providers listed above, added order distribution capabilities; some become started as, or became, full-fledged distributors. Others, such as Sciquest and iTradenetwork built a complete procure to pay platform for clients that did not have an e-procurement system of their own.
- In a future post, I’ll cover one more strategic issue that will some day face these companies: Amazon Supply. Amazon knows catalogs and logistics, we’ll see if they can learn B2B. If they do figure out B2B, each of these players may, some day, have to decide to whether, and how, to interact with the world’s most powerful e-commerce platform.
Up next, the fifth B2B platform value proposition: leveraged contracts.