What's the need for NEMs?

What has I.T. done for the biggest sellers?

Behind a blizzard of TLA’s (Three Letter Acronyms), the technology industry has built unprecedented facilities for their corporate clients. A large enterprise selling goods or services can now operate with extraordinary efficiency in the way it allocates resources, anticipates demand, locks-in attractive customers while marginalising others, deploys its staff and maximises revenue with complex price construction rules.

Corporates who have achieved this can be highly enticing to buyers. Take for example Wal-Mart’s ascendancy which was built on innovative supply chain technology. Once a big seller has effectively harnessed the full might of I.T. they can steamroller through a sector. The technology involved is largely invisible to customers but it is a constant presence driving websites, retail operations, logistics, employment patterns, mailshots and call centres making buying enticing and ultra-convenient.


What has I.T. done for very small sellers?

Auction sites allow you to sell things; a Beanie Baby, a pair of shoes, a car, even a house. But what most of us have to sell is time; hours when we are willing to work or the hire of a resource we own such as a spare room, a road trailer or some formal wear.

Online technology has done very little for time markets. Typically they revolve around listings, lists of possible sellers who may be available, contactable, willing, qualified, trustworthy and in the right locality to meet your needs as a buyer. The list is a starting point but it’s way behind the click-click-buy simplicity that makes buying say books, stocks or music downloads so efficient online.

Some listings services include further functionality, Singapore’s www.cozzee.com for example will text message potential plumbers on your behalf but you still then have to vet them, set up the transaction and construct the price between you. If all the work of constructing a transaction can be avoided elsewhere, that’s probably the route buyers will take.

eBay is a great site, but don’t let the hysteria kid you that it has fulfilled the full potential of micro-sellers online.


What are the consequences of this disparity?

Think of the last time you purchased in a marketplace where (a) you had no existing relationship with a seller and (b) the sector was one you’d expect to have low barriers to entry. Perhaps food delivery, coach travel or cut flowers. Did you end up buying from Tesco.com or Smith’s corner stores? National Express or Joe and his minibus? 1-800-flowers or Nora who sells carnations in her greenhouse near to your intended recipient?

Statistically, in each case you ended up at the first option probably because they were easier to find, you assumed you could trust them, you knew they’d have the capacity to meet your needs and took it for granted their pricing would be broadly competitive

Smith’s, Joe or Nora could have met your needs better. But you didn’t have the time or energy to look up multiple web sites, plough through listings, work out who you could trust, call or email a range of providers to explain your needs and research the market to establish fair pricing. Understandably, nor do the majority of buyers.

We call this the Market-Access Divide. Small sellers may have been serving customers diligently for decades but they can’t compete with the brutal efficiencies that I.T. has given the mega sellers in their sector. If established small businesses increasingly can’t even get in front of buyers, micro-sellers certainly can’t (the exception to this is a handful of ultra-tight niches that are of little interest to corporates).

That’s a problem because, as the UK’s New Economic Foundation has so exhaustively detailed:

	Big sellers are job killers
	Big sellers siphon their earnings upwards, small sellers circulate cash in the local economy
	The taxpayer picks up the tab for so many of the problems that result from market inequalities
	Small sellers are a force for innovation and variety in markets

This is not a criticism of corporates. Their function is to maximise profits by making themselves as low-cost and buyer friendly as possible. Of course their corporate boards are going to embrace technology that enables them to do that better. The problem is, nobody is doing the same for the very demanding markets in which micro-sellers could become a powerful force. Listings sites have nothing like the ability to drive down transaction costs, generate detailed opportunity information, protect the seller and make buying so convenient that big enterprises take for granted.

That market inequality can now be corrected. The economics of computing have reached a stage where sophisticated processing can be routinely applied to fragmented low-value transactions across multiple marketplaces. But, only government can do for small sellers what corporate HQ can do for big sellers in terms of aggregating activity and providing authority for a market. (More on that contentious point elsewhere on this site.)

The result would be a system of marketplaces that were truly universal (even for those with no Internet literacy) that had a status, level of sophistication in the programming and convenience for users that made them unique.





© Guaranteed Markets Ltd (UK) 2005. Some of the technology disclosed is patent pending. "NEMs" and the chained faces logo are trademarks used with permission. All rights reserved.