1. VerticalNet Presentation Date: 29 th November, 2000 Group: 2F (L2) Members: Chan Man Ying, Mandie Cheng Wing Lam, Angie Hui Wai Shan, Charis Leung Chung Yan, Joey Or Pui Yin, Doris Siu Ngai Yan, Careen

2. Outline Background Information VerticalNet’s Business Model and it’s sources of Revenue VerticalNet’s main competitors VerticalNet’s competitive advantages, capabilities and competencies Recommendations Q&A

3. VerticalNet’s Background Information  established in 1995  the Internet’s leading business-to-business e- commerce enabler  owned and operated more than 50 industry- specific websites  open to both large and small sellers

4. VerticalNet’s Background Information  Missions:  strives to build and manage dynamic, industry- focused communities  provide the most innovative online information resources communication vehicles, and e- commerce channels for industrial, professional and technology-based companies.

5. VeticalNet's Business Model Brokerage Model - operates in more than 50 vertical communities

6. VerticalNet's Business Model In 1998 and 1999: major source of revenue from storefront small proportion of revenue from e- commerce

7. VerticalNet's Business Model Methods of earning revenue: operates storefronts which offer linkage to advertisers' websites provides limited extent of e-commerce services

8. VerticalNet's Business Model 1999 onwards major source of revenue from e-commerce small proportion of revenue from storefront and advertising

9. VerticalNet's Business Model Method of earning revenue: charges fees for transactions facilitated by its website

10. VerticalNet's Business Model Effect of change in source of revenue: increase in revenue need for additional resources and technology - through acquisition and strategic alliance

11. VerticalNet’s Competitors Direct competitor: Office.com (http://www.office.com)http://www.office.com Business Model: Business Trading Community Content: 17 Communities -- office supplies Source of revenue: Advertising, sponsorship

12. VerticalNet’s Competitors Under the brokerage model, there are different forms which are in direct competition with VerticalNet. E.g. 1) Buyer aggregator 2) Vertical Distributor

13. VerticalNet’s Competitors Buyer Aggregator Bringing the individual buyers together as a group to purchase  empowering small buyers to obtain the same discount Source of revenue: Sellers pay a small percentage of each sale on a per- transaction basis.

14. VerticalNet’s Competitors Example: Mercata ( http://www.mercata.com )http://www.mercata.com Operation: “PowerBuy” System, allows the customers with common purchasing interest to achieve a discount.

15. VerticalNet’s Competitors Vertical Distributors Bring multiple buyers and multiple sellers together through a catalog-type operation. Source of revenue: Advertising fees from the seller, the commission fees from the transaction.

16. VerticalNet’s Competitors Example: Manufacturing.Net (http://manufacturing.net)http://manufacturing.net Content: 5 communities focus on manufacturing industry Operation: Support each stage of the buying cycle with its comprehensive SuperCatalog

17. Competitive Advantages Culture First to enter the industry  first-mover advantages Reputation Strong brand name

18. Competitive Advantages Company size Sufficient funds  large company size  replicate existing resources for new communities Get into a portfolio of businesses  enjoy economies of scale & scope  spread out risks  share common resources between different functions

19. Competitive Advantages Relationships Good relationships with content providers  ensure high quality  create customer value Good relationships with manufacturers, distributors and customers

20. Competitive Advantages Understanding of customers’ needs Understand customers’ preferences Specialized services to specific customers e.g. tailor-made websites or storefronts Offer comprehensive distinguishable information Customized websites (easy to use) Localized websites e.g. VerticalNet Japan, VerticalNet Europe

21. Competitive Advantages Market entry decision Strict criteria Transform markets rather than create  avoid extra costs Focus on markets less satisfied by traditional channels

22. Competitive Advantages Acquisitions and alliances Strategic e.g. Isadra, Tradex Human resources Experienced and skillful staff e.g. management, IT specialists, sales reps

23. Recommendation Mark Walsh (VerticalNet CEO ) - Two choices of strategies for VerticalNet - Doing more of the same: to continue in building vertical communities - Doing more than it currently does: to expand into the e-commerce business by creating and managing transactions

24. Recommendation Choice of strategy: should do more than it currently does

25. Recommendation To be a Technology Service Provider Reasons: * Established resources & familiarity with the B2B marketplace * A leader in the existing business * Can make money through providing technological services

26. Challenges 1. Needs help from technological expertise > BUT this can be overcome by: * Strategic Alliances e.g. Microsoft * Reputation

27. Challenge 2. Needs to persuade traditional businesses to create B2B marketplace > BUT, VerticalNet can overcome this: * Professional Sales People * Focus on Businesses which have an interest and need for a B2B marketplace * Act as a Pilot Test

28. Challenge 3. Maintenance and Technological support > BUT, this can be overcome by: * Gain support from the Strategic Alliance (technological expertise) * Set up a group of staff to work with technological expertise (Can learn and develop own technological knowledge)

29. Conclusion  background of VerticalNet  the Business Model  the competitors of VerticalNet and their relevant business model and sources of revenue.  VerticalNet’s capabilities, competence and competitive advantages

30. Q & A