Frontier magazine - October 2009, Marek Kolasinski
One of the greatest challenges in today's market is to put buyers and sellers together. But, as Marek Kolasinski finds out, this may soon become much easier.
How many companies out there fail to take off because they cannot find a buyer or distributor? And how many buyers get frustrated by the lack of competitive pricing or the absence of innovative products on offer? International trade markets are dominated by large multinationals with well-established distribution networks and fat contact books of all the most important buyers and, mostly, this makes the world go â€˜roundâ€™. But for small and medium companies, the route to market can sometimes be a drag, or even just a distant dream. Paperwork, bureaucracy, processes, credit lines, distribution and demand will all conspire to erect obstacles in the way of suppliers who are genuinely intent on developing their business. And things get worse at an international level.
But there might be a solution around the corner that is about to hit the international community with elements reminiscent of the ubiquitous global networking websites we all love (or hate, depending on your point of view!) so much nowadays. emarket.com is a new concept as far as trading is concerned and incorporates many features that could be very attractive for smaller suppliers as well as for buyers. Effectively, what emarket.com does is act as a go-between - but always as a principal â€“ between the suppliers and the buyers by providing a virtual marketplace where the suppliers can post their products and the stock available, meaning that buyers can, at the click of a mouse, order what they require.
Having concentrated primarily on FMCGs in the international domestic arena, emarket.com sees a lot of potential for its service in travel-retail/duty-free. It is definitely a market we want to capture because I think there's a huge mutual benefit there for both people in the industry to source products much more easily and for us to make the logistics a lot simpler; of taking the product to them and also to enable manufacturers to reach the market," says Ravi Sharma, one of the founders of emarket.com.
Although FMCG is only one category amongst many - and mostly interesting for F&B outlets in the industry - Sharma explains that they needed to "focus on one category in order to launch and have liquidity; that's our main focus to begin with. But category expansion is definitely one of the plans and something we hope will be led by the members".
Even if at first it might seem an unlikely candidate to do well in the sector, speaking with Sharma it soon became evident that travel-retail and duty-free is very relevant to emarket.comâ€™s business model. "We see travel-retail as a massive sector where I think we can add value, for the reason that logistically it is much more complicated in terms of the fragmentation and the geographic spread," explains Sharma. "That complexity offers an opportunity for us to act as go-between between manufacturers and, say, ship chandlers or [other retailers]. So there's a huge part for us to play where we can connect the two. A ship chandler can go onto the site and compare prices on a product range, click and buy, and we handle the whole delivery process. And we also make it easier for manufacturers so that they don't have to open hundreds of different accounts across different countries but where they can service all of these people through one source."
And this is where emarket.com differentiates itself from other ventures that may seem similar: it is not just a platform that facilitates transactions; it handles the entire process, from the order placed to the delivery of goods. Effectively, the order is placed through emarket.com, which will then source the goods directly from the manufacturer. All the suppliers are vetted from a due diligence and credit check point of view, while emarket.com representatives try to meet as many members to their site as possible to both make sure of their trustworthiness and understand the nature of their business.
In addition, there is a whole system in place to determine liability at all levels of the supply chain. Once an order is received, emarket.com collects the goods from the supplier, inspects them at one of its warehouses and ships them on to the buyer's preferred delivery point.
What makes the system straightforward and easy to use is that suppliers upload their products with their selling price onto the system, which will then automatically calculate the delivered cost for any member. "So they see all the information on a personalised basis with the price delivered to them, including the freight, all applicable taxes and duties, and our margin, which is a fixed margin between 2% and 6% depending on the value of the transaction," says Sharma.
The advantages are not limited to the ease of use and the straightforwardness of the transaction. For instance, buyers can put an alert on the system for a specific product or products at a specific price range, and they will be automatically notified when these conditions are met. Similarly, suppliers will be made aware of what is requested and can adapt their offer to those same criteria. "One of the key benefits for TR is the ability to compare prices on a like-for-like basis by having instant online access to the best deals in the marketplace at any one time," says Sharma. "Looking at the breadth of products is another one; for instance, looking at what has just been launched, specific promotions for the TR sector, etc."
And the platform - ideal for SMEs - can also benefit larger companies, for instance by providing them with access to markets where they may not necessarily have a distribution network, or to find an outlet for residual stocks. Travel-retail/duty-free is a particularly tricky channel to go into, and many companies do not sell to it because they do not have a department dedicated to it. But emarket.com can take that consideration out of the equation for many companies and make their route to market that much easier to pursue.
With the creation of a new pan-european online trading platform. Irish suppliers and retailers should be able to tap into new markets with much greater ease. As emarket director Ravi Sharma tells John Ruddy.
If the collapse of sterling has highlighted one thing to both Irish retailers and suppliers alike, it is that the old supply chain rules are now firmly a thing of the past. Multiples, wholesalers, even multi-store independents, are now all tapping into grey markets or going direct to brand principals in an attempt to gain cheaper product.
The rights, wrongs and long-term impact of this new world order may be the subject of great debate, but with Irish retailers and suppliers now increasingly aware of the opportunities of direct sourcing (for retailers) or supply (for producers), the timing for the launch of a new e-trading platform - emarket - could not be better.
The emarket format is simple. Suppliers wishing to sell stock list their products on the online portal- giving details of quantity, price and availability. Retailers can then search for stock, buy it through the portal, with emarket arranging delivery and, crucially, guaranteeing the bona fides and the credit facilities of both buyer and seller.
It's a system that is glorious in its simplicity, but one which has proved extraordinarily successful since its soft launch earlier this summer. Already, four of the top five French retailers are members, with transactions totalling â‚¬5 million taking place in the first two months of the trial period, and high-profile endorsements from the likes of Leclerc.
"I can scan the marketplace at a glance and compare prices from producers across Europe on a like-far-like basis," Frank Helou, national buyer, E. Leclerc.
According to emarket marketing director, Ravi Sharma, the platform has key benefits for both suppliers and retailers. Smaller suppliers can use the emarket system to gain access to retailers whom they previously could not reach, while retailers can scan the market to find the cheapest prices across Europe.
"It is about creating visibility in the market, with real-time pricing. It gives suppliers opportunities to tap into markets where they are not strong, or do not have sales teams. We can bring buyers and suppliers together," Sharma said.
While many bigger manufacturers and wholesalers are now using the emarket platform to shift residual product - Sharma gives the example of Coca-Cola Germany using the portal to shift 34 containers of Coke close to its expiry date - he maintains that there is much more to emarket than just an online auction for spurious grey stock.
"It's not just about grey stock, although it does allow retailers to tap into markets which they might not normally have access to, The key is that customers looking to sell products control the process. They decide who gets to see what they are offering, so they can only make it available to domestic retailers, or only international retailers - they are in full control." This 'control', as Sharma puts it, means that buyers can register interest in certain products, with alerts provided when stock (at the right price and the right quantity) becomes available, Suppliers can also access information on what buyers are looking for - allowing smaller producers (both branded and PL) to tap into retail networks with whom they may previously not had a relationship.
With the emarket trial working well, the company is now gearing up for a full launch in September. So far, the main focus of member acquisition has been in the UK and continental Europe, Sharma says, however, he maintains that there are huge opportunities for both Irish retailers and suppliers.
"We see considerable scope in Ireland, for Irish retailers to use our platform to access wider markets, and for Irish suppliers to sell their products to a wider audience," he said.
While there are obvious benefits to a system like this, with emarket taking a cut of the proceeds (2-6% fixed margin) and charging a membership fee (â‚¬1,000-â‚¬2,000 p.a.), why wouldn't retailers and suppliers simply deal directly? While Sharma says that these costs are minuscule in terms of the level of visibility that emarket provides (in that the platform brings people together), another huge part of the emarket proposition is trust.
"We meet members before, check their credit, their facilities, their ability to live up to the deals they make. Yes, we are the middleman, but we have to ensure that when people enter into transactions via our platform, they do so trusting that the transaction will run smoothly," he said.
This was echoed by company CEO Suraj Sharma, who said that the level of transparency enables far smoother and faster transactions. "The industry is fragmented and information tends to move slowly - with emarket 90% of the processes are automated - where before it might have taken a buyer a week to research a certain type of product and hunt around for quality information and pricing now they have it within seconds at a click of a button. There are tremendous opportunities to increase top line sales, cut costs and reduce operational inefficiency," he said.
For more information, go to www.emarket.com