Mondus has developed a global, online business-to-business marketplace for small and medium-sized businesses. It is one of the first initiatives in the emerging B2B e-marketplaces sector to focus solely on SMEs.
The exploitation of Internet technologies to streamline the ‘request for proposal’ process sits right at the heart of Mondus. As a result, there are greater efficiencies for both buyer and supplier. Suppliers are able to achieve deeper penetration in the SME market, one that has traditionally been costly to impact successfully. Buyers too, without the clout of the big multinational organisations, are able to realise low-cost, high-quality services, and eliminate the inconvenience of identifying vendors and exploring bids.
Mondus’ business model is particularly sophisticated, as demonstrated by its decision to source a partner to design the Web site. This is a complex service requirement that ordinarily demands an understanding of technical and process requirements. The Mondus facility allows SMEs to outline information on both the supplier and the buyer accounts so that the marketplace can make a reasonable judgment as to which company would be best suited to their needs.
It is a measure of the success of the site, which has received $16.7m in investment, that 150,000 people have become registered users since October1999, and have made £32m of purchases in the marketplace. Nearly 700,000 unique users per month at the last count suggests there are substantial growth prospects for the future.
Mondus is the first European online business-to-business marketplace designed exclusively to meet the procurement purchasing needs of small and medium-sized businesses who don’t have extra time to do all the legalwork involved in researching and comparing products, or extra money to waste in making the wrong purchase decisions.
By August 1999, mondus com was valuated at US$60 million. In September 1999, the UK website mondus.co.uk was officially launched. One month later, the US website mondus.com became operational and another venture capitalist, Zouk Ventures, invested US$ 3 million. Since the local telecommunication company could not set up the Internet connection any earlier, the German website mondus.de started in November 1999. Two months later, an office was opened in Paris and mondus’ fourth nationl website, mondus.fr, became available just one year after the initial business plan had been submitted. The company’s original name was mondus.com ltd. On 19 May 2000, it was changed to mondus ltd. Its headquarters were located in Oxford, England.
Timing of case
The name mondus.com had already been registered in 1997. By August 1999, mondus com was valuated at US$60 million, after Eden Capital, a venture capitalist firm, committed US$12 million for the company’s expansion into the US and Germany. The company’s original name was mondus.com ltd. On 19 May 2000, it was changed to mondus ltd. Its headquarters were located in Oxford, England.
Objectives
Mondus was a horizontal web-based B2B marketplace that refers to an application that was offered to a wide range of industries. It aimed at offering a one-stop procurement solution to small and medium sized enterprises by matching buyers and sellers through its website.
The strategy was to register through various marketing tools as many users as possible in order to make the product known to the market.
There were three objectives in creating partnerships: to attract traffic to the mondus site, to complement their services and to support it with technical services. Mondus tried to cooperate with Internet companies that had strong brands in their markets.
From the very beginning mondus focused on its international expansion
Resources (apart from ICT)
Mondus only charged sellers a fee on successful transactions settled through mondus. All services provided to the buyer were free. Initially, sellers were also charged for submitting quotes, but mondus changed its policy to motivate vendors to quote and to increase the number of quotes submitted per RFP.
The transactions fee charged was 2% of the transaction volume. Though originally mondus planned to apply different percentages depending on the product category, it finally preferred to charge a flat fee.
Activities
The mondus’ business model was that B2B markets were mainly buyer driven.
- Multi-catalogue models
- In reverse auctions
- Seller-centric models
- The RFP model (request-for-proposal) was the most flexible solution since it allowed vendors to compete on price and any value added feature.
The matching of buyers and suppliers was a three-step procedure.
Firstly, the buyer placed a request. Secondly, one or more supplier replied to the request by submitting a quote. Thirdly, the buyer viewed all the quotes, if necessary negotiated with the sellers, and accepted or rejected the received quotes.
The above process was facilitated thorough the modus homepage, which was divided into a buy and sell section
In the buy homepage, buyers requested the product or service they needed. In the sell homepage, sellers could view the requests currently submitted and place quotes. All users of the system had a personal noticeboard (my mondus) that informed buyers through the buy noticeboard about their quotes.
Outputs and results
The number of worldwide customers had increased significantly since mondus launched its first Web site in October 1999. As of 8 May 2000, there were 86.892 customers registered World Wide, 76% of whom were buyers. The average number of orders per active buyer was 1.9 (this percentage should be taken qualitatively only since some sellers had also placed RFPs). Active sellers had placed, on average, 9.7 bids.
The average volume of quotes was about US$3000 worldwide; there was data variation from week to week due to the different transaction volumes in the various product and service categories.
Buyer benefits:
- Streamlining the procurement process
- Convenient and easy procedure
- Low investment and costs
- Customisation
- Confidentiality and safety
Seller benefits:
- Access to online trading and new market opportunities
- Using the mondus brand
- Gaining a competitive advantage
Lessons and conclusions
There was a lot of interest in the mondus concept but some quotes were not price competitive and sometimes customers did not get enough quotes.
Most vendors complained that they never got feedback on their quotes. Other suppliers stated that they did not have the time to go through all the RFPs and send quotes for each of them.
It was important to mondus to ensure that sufficient quotes were submitted on RFPs. The idea was to have a lot of power suppliers, which are suppliers that agree to quote on a competitive level and with which mondus develops relationships. It believes that there would be more quotes as the number of sellers grew and customers used the system more frequently.
A major problem was that buyers and sellers only used mondus to get in contact with each other.
