Vital Electronics

delivery of a wide range of electronic components,
RFID systems, IT service

Saint-Petersburg

+7(812) 325-97-92

Moscow

+7(495) 664-31-14

Publications

V.Elizavetenkov, M.Gudin, “Virtual marketplaces on the electronic components market”

Components and technologies” №8, 2003

Using Internet to purchase electronic components makes it possible to essentially reduce the expenses for communication, logistics and storage, broadens the choice of suppliers and facilitates the financial procedures.


Fig. 1. Internet as a tool of trade.

The major part of Internet-auctions of electronic components is held using online electronic marketplaces. This term – electronic marketplace or e-marketplace – means an Internet-site where bargains are concluded and financial transactions are carried out.

These marketplaces can be classified in two types according to their trading system: Business-to-Customer (abbreviated as B2С) and Business-to-Business (B2B).

A B2C marketplace is an online shop (being often the manufacturer’s website) where auctions are held within seller-buyer interaction. Using this resource, the client (usually a final consumer of the components) contents him/herself with proposals from a certain company.

Contrary to B2C, the B2B marketplaces are based on two-side interactions between sellers and buyers. Independent distributors or large manufacturers that consume electronics play the role of buyers here. The access to B2B marketplace provides a buyer by inventories from many companies all around the world.

According to e-BW figures, 94 per cent of suppliers engaged in online electronic components trading use Internet site of their own company as trading facility, while 65 per cent place their offers on B2B marketplaces.

The B2B marketplaces (see the table) are supported either by broker companies, or by companies that require paid access to their databases.

Marketplace Website Founded Access Stuff Suppliers
Usbid http://www.usbid.com

1998

free

70

>2000

PartMiner http://www.freetradezone.com

1993

free

550

>6000

Virtual Chip Exchange http://www.virtualchip.com/

1997

free

50

>150000

IC Mart http://www.icmart.net/

1998

free

23

> 8000

Trader First http://www.traderfirst.com

2000

pay

n/a

n/a

Net Components http://www.netcomponents.com

1997

pay

n/a

>1200

ChipsTrader http://www.chipstrader.com/

2002

pay

n/a

>3500

BrokenForum http://www.brokerforum.com/

1996

pay

n/a

>3000

IC Source http://icsource.com/

1996

pay

n/a

>3500

Hi-Tech Parts http://hitechparts.com/

2002

pay

n/a

>1200

Table 1. Basic virtual B2B exchanges in the market of electronic components.

The Usbid marketplace is a broker, that is, sells itself the components from its database. Using this marketplace, a client possesses the information about the geographical location of the needed components, while Usbid takes care of the delivery and the quality assurance. The database of this e-marketplace contains offers from more than 2000 sellers.

One of the oldest American independent distributors, Part Miner, is also a broker between the buyer and over 6000 suppliers around the world. Having registered on the website, the search can be performed over 20 greatest distributors and the access is provided to a library which contains the descriptions of over 15 million electronic components of more than 2000 manufacturers. Furthermore, there are additional services that provide the search by specific parameters, the information about discontinued products, the recommendations for components usage and detailed technical specifications.

The Virtual Chip Exchange supported by Consumer Electronic Company from Germany, is oriented on the intermediation between manufacturers and clients that consume chips and possess some excess inventories whose total cost the company evaluates as $30 billion. The database of this marketplace contains the information on the excess inventories for sale from 150,000 OEM (original equipment manufacturers). The annual turnover of the company is over $80 billion.

One more US marketplace, netCOMPONENTS, provides the paid access to the base of offers from more than 1200 franchising and independent distributors that store over 19 million items. The company provides a platform on which the clients are given the necessary information about the supplier, the exact name of a component, its manufacturer and the production date rather than support the sales.

The BrokerForum and IC Source marketplaces provide the service similar to NetCOMPONENTS, while their interface makes it possible to automate the process of setting the delivery conditions (prices, terms) with particular suppliers.

The access to the Broker Forum marketplace enables the search over the base with 11 million components of almost all manufacturers from more than 3000 suppliers. The Broker Forum marketplace provides the brokers and the distributors of electronic components the possibility of free download of complete access datasheets.

The IC Source marketplace possesses the proposals from more than 3500 suppliers of 14 million components. Unlike BrokerForum, the suppliers pay for storing their proposals in the database, which restricts storage of false information. Besides that, this marketplace supports the clients’ opinions on the registered suppliers, the quality of their work.

Fig. 2. Geography of the world semiconductor market. a) Production b) property of the company.

Last years the positions of Asian companies tend to strengthen. The growth of production and the property redistribution in favor of South-East Asia countries (Taiwan, Singapore, Hong Kong, Philippines, Malaysia, South Korea, Indonesia, China) was accompanied by the slowdown in North America and Europe, together with a tailspin in Japan (Fig. 2).


Fig. 3. Electronics companies participate in the electronic auction.

 

In 2002 the Asian electronic companies outran European ones by the activity in electronic trading (Fig. 3). The stable growth of the branch initiated the rapid growth of online marketplaces.

The leading Asian marketplace Trader First is located in Hong Kong. Together with the information about suppliers offering a necessary component, the registered user has access to additional services, which include the information about recently posted items and purchases in chronological order. The lists of hardly available, frequently requested and frequently browsed components and the datasheet of 13000 components with brief technical specifications.

Like Usbid, the South Korean company IC-Mart provides the user the search over the component name, then, having chosen an item, to send an allocation request, which is proceeded by the company. The database contains proposals from over 8000 suppliers.

A young Asian company ChipsTrader provides services similar to BrokerForum and IC Source and contains offers from more than 3500 suppliers. The company processes over 5000 requests per day.

One of the obstacles restraining the growth of virtual marketplaces is the problem of unfair suppliers. Anyone who buys electronics through online marketplace can face the breach of shipping terms, the price increase after the placement of order or low quality goods.

In order to prevent this disaster the Electronic Resellers Association International (ERAI) was founded by distributors in 1996. The ERAI members receive annual reports on information on problem accounts, situations and conflicts within the industry. They have access to problem history database. The Hi-Tech Parts marketplace was created by ERAI founders. Its members (over 1200 suppliers) are rigidly controlled by the Association from the point of view of professional ethics.

The Russian electronics market follows, although with a retard, the worldwide trends. At present time there are several B2B marketplaces on the Russian market and the majority of manufacturers and distributors have their own corporative websites.

The e-info marketplace consolidates more than 250 manufacturers and suppliers of electronic components. The interface of the marketplace does not allow querying the component needed and the major part of the information from the suppliers, unfortunately, incomplete or unfair.

The self-service system Interself provides the possibility to browse the component datasheets on the abroad storages of distributors, online marketplaces and manufacturers. The usage of this system within Russia is complicated due to language barriers, the low quality of connection and high prices on the distributors’ websites.

According to the international Courtney Consulting company who examined 17 greatest online marketplaces selling electronic components, the only marketplaces will survive who are able to provide fully-fledged functional chain of three elements: content, collaboration and commerce. Contents here means the support of a product database, which includes the specifications library, usage recommendations, search for exchange. Collaboration means providing a broad spectrum of consulting services in a broad scope from the reliability of supplier to shipping details.

Unfortunately, as experience shows, present Russian virtual marketplaces are mostly focused on the last link of this chain.