Guide

E-marketplaces, online auctions and exchanges

The implications for e-purchasing

Online auctions and exchanges have played an important role in the growth of e-purchasing within businesses of all sizes and types.

E-procurement

There are two parts to the e-purchasing cycle - the more established of which is e-procurement. This has been developed in recent years to deal with the process element of electronic purchasing.

E-procurement is the use of the internet to operate the transactional aspects of requisitioning, authorising, ordering, receipting and payment processes for the required products or services.

A number of e-marketplaces offer transaction services that automate many aspects of the procurement cycle for both the buyer and the seller.

E-procurement covers the following areas of the buying process:

  • requisition against order
  • authorisation
  • order
  • receipt
  • payment

E-sourcing

The other element of the e-purchasing cycle is e-sourcing.

E-sourcing is the use of the internet to make decisions and form strategies regarding how and where services or products are obtained. E-marketplaces can play an important role in this activity, since the price and availability of products from multiple suppliers can be checked from a single point.

E-sourcing covers the elements of the buying process which are at the discretion of specialist buyers, including:

  • knowledge specification
  • request for quotation/e-tender/e-auction
  • evaluation and negotiation
  • agreeing contractual terms

One of the attractions of e-marketplaces in terms of product sourcing is that not only do they provide detailed product information from existing suppliers, they also give access to many new potential partners and suppliers. Furthermore, the use of reverse auctions and online exchanges enables procurement officers to obtain better prices as they encourage competitive bidding between suppliers.