E-Sourcing and Beyond: Free vs. Close to Free (WhyAbe and Ketera)

Even though this post is certainly biased (it comes from the owners of WhyAbe), it certainly got me thinking about the future of free vs. cheap -- not to mention mainstream pricing -- in our sector. In it Joe Payne, the author, questions whether it was "truly innovation and a broad understanding of the future needs/wants of the buyer and supplier community" or "a reaction to shifts that happened a long time ago" in the market that led Ketera to their new network-based business model (and low-cost e-sourcing toolset).

Joe goes on to pimp Source One's own free offering and the capabilities available over on ThomasNet including what he describes as "one of the most extensive supplier directories ever created, as well as sourcing tools and contract management". Moreover, in comparison to Ketera, he suggests that what their competitor "doesn't understand is that buyers see supplier directories and pricing data as information, not to be paid for but to be used as an aid when deciding how much to pay. Storefront technology and all the other P2P enhancements may make the transaction process more efficient, but in a sense its apples and oranges." But is it such a comparison? I’m not so sure.

MFG.com has successfully shown in at least niche markets (fragmented metals categories and textiles) that the supplier-pays sourcing and marketplace model can work. But at their current revenue compared with say an Alibaba or an eBay, you can't exactly say this approach is becoming a marketplace standard, especially considering that the supplier-paid advertising and storefront model of Thomas is not exactly knocking it out of the park of late. Personally, I think it's too early to handicap the victors in the free vs. "nearly free" debate. But without question, both WhyAbe and Ketera -- not to mention MFG.com -- have done something that no other providers have done in the market. And that's to give procurement practitioners a no-cost or virtually no-cost e-sourcing option to ponder in relation to more expensive offerings (or at least to use as leverage in negotiation against full-price providers).

Jason Busch

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