Disruptive Marketplaces to drive Innovation

September 23rd, 2022

Digital is central to innovation today. But most companies struggle to keep up with the pace of change. It’s particularly difficult to know what latest pieces of technology could be utilized to solve business problems, and more importantly how and where to procure them.

An online marketplace can help, as it combines multiple innovative technologies as prepackaged solutions. A market is where buyers and sellers conduct trade. A marketplace is a platform where the third-party owner brings together multiple buyers and sellers to trade with each other. The owner does not own any inventory of goods. According to Forrester, 63% of online business transactions in the US took place through e-marketplaces in 2020. The pandemic has rapidly accelerated this trend.

B2B e-marketplaces have existed for more than two decades, and packaged technology solutions are their latest offerings. Ford, General Motors, and DaimlerChrysler had set up Covisint in 2000 as an information exchange platform between manufacturers and suppliers.

• Infosys marketplace

Infosys has implemented this approach for its technology solutions (Figure 1). The initiative started as a code store for internal usage, to help architects and developers find reusable software “blocks” or new services. It then evolved into a lab for prototypes and pilots, but then it quickly included a commercial and contractual layer that enabled clients to access the best of Infosys’ latest technology. It has become a one-stop shop for sales teams to easily reach out for services, solutions, and sales collateral.

Figure 1. The Infosys marketplace lifecycle

• LEGO Ideas co-creation platform

Marketplaces are not limited to the trade of goods and services. Co-creation of intellectual property starting from ideation up to go-to-market can happen. For instance, LEGO’s IDEAS is an online co-creation platform that has democratized innovation. Anyone can submit a new idea for a toy and vote for others’ submissions. When an idea gets a minimum number of votes, internal design and marketing teams evaluate it for manufacturing feasibility. The creator of an approved design gets 1% of the net sales as a royalty.

• India’s open digital commerce network

ONDC or Open Network for Digital Commerce's purpose is to create a freely accessible online system where traders and consumers can buy and sell anything. It is a non-profit entity set up by the Indian government’s department for Promotion of Industry and Internal Trade. Nandan Nilekani is helping build the open technology network that seeks to level the playing field for small merchants in India's fragmented but fast-growing $1 trillion retail market. "It will be a natural business compulsion for companies to join ONDC", its CEO T Koshy said recently.

“ONDC is an idea whose time has come.” - Nandan Nilekani

• e-marketplaces in IoT, auto world

Bosch has created its Data marketplace to drive IoT adoption. Its aim is to bridge the interoperability gap of the IoT and provide a scalable platform for data providers and consumers to meet and establish data-centric IoT ecosystems. Ericsson launched its IoT Accelerator Marketplace in 2018 to help address the need for collaboration within the digital ecosystem community.

In the Indian automotive ecosystem, the Auto Component Manufacturers Association or ACMA launched AutoDX, its EDI (Electronic Data Interchange) platform in 2014. Its aim is to eliminate the inefficiencies caused due to manual processes to exchange transactional data by shifting to data exchange through the cloud. TVS Group recently launched its e-mall for automotive parts. The company expects the move to generate INR 500 crores by the end of 2022. The company has built a catalogue of over 100,000 parts and 85 brands through partnerships with over 80 suppliers across the country.

An e-marketplace will be a key channel to take products, services, and digital technologies to the market. The above are some recent examples. Economic incentives like price, network effect or the number of users, and quality control that include ease of use will be the key factors for successful marketplaces.

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