Electronic transportation marketplaces

Industrial Marketing Management 32 (2003) 187 – 198

Electronic transportation marketplaces: a transaction cost perspective Thomas J. Goldsbya,*, James A. Eckertb,1 a

Fisher College of Business, The Ohio State University, 554 Fisher Hall, 2100 Neil Avenue, Columbus, OH 43210, USA b Haworth College of Business, Western Michigan University, Kalamazoo, MI, USA

Abstract Electronic transportation marketplaces (ETMs) are Internet-based mechanisms that match buyers and sellers of transportation services. With claims of reducing the administrative costs of transportation procurement to virtually nothing, the allure of ETMs is considerable. Shippers (transportation buyers) must therefore determine whether to pursue the new-founded opportunity and buy transportation services through an Internet-based intermediary or to buy services in a traditional manner. To date, there has been little structured thought on the topic to guide managers. Transaction cost economics (TCE) provides a robust framework toward this end. The TCE framework is adapted to present the procurement decision as one of ‘‘make’’ versus ‘‘buy.’’ The analysis is designed to help firms navigate their own determination to use an ETM and, when considered, the most appropriate form of ETM. The merits and caveats of ETM adoption are presented in the article. D 2002 Elsevier Science Inc. All rights reserved. Keywords: Electronic transportation marketplace; Transaction cost economics; Business-to-business

1. Introduction The Internet’s provision of low-cost, efficient interconnectivity among people has had a dramatic influence on the way in which business is conducted. Business logistics has not been absent from this Internet revolution. In fact, logistics and supply chain management are viewed to be among the most promising areas of application for Internet technology [1]. The maturing of the Internet has created opportunities for new logistics services and intermediaries in the supply chain. Among these

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While the six TCE components cannot be easily measured and quantified, the logic presented across these six components can help the prospective customer in this ‘‘make’’ versus ‘‘buy’’ decision. The summation of evidence presented in this paper suggests that shippers who value relationships with specific carriers will seek to avoid neutral, public ETMs as a first option for transportation procurement services. The Internet offers substantial savings for assembling information, bargaining, and execution support, but represents a good value in total only when execution consistently meets expectations. 198 T.J. Goldsby, J.A. Eckert / Industrial Marketing Management 32 (2003) 187–198 Jim Eckert is an Assistant Professor at Western Michigan University (Kalamazoo, MI) and owner of Partner Building, a firm specializing in sales and relationship management training and consulting. He received his BA and PhD in Marketing and Supply Chain Management from Michigan State University. In addition, he has researched and published on such topics as adaptive selling, managing conflict in buisness-to-business relationships, customer service, and effective teaching methods in sales. [23] Morgan RM, Hunt SD. The commitment – trust theory of relationship marketing. J Mark 1994, July;58:20 – 38. [24] Anderson JC, Narus JA. A model of distributor firm and manufacturing firm working partnerships. J Mark 1990;54(1):42 – 58. [25] Schwartz B, Live wired logistics. Transportation and Distribution [online edition] (August 2000). [26] Stank TP, Goldsby TJ. A framework for transportation decision-making in an integrated supply chain. Supply Chain Manag: Int J 2000; 5(2):71 – 7. [27] Closs DJ, Goldsby TJ, Roath A, Eckert JA, Swartz S. An empirical comparison of anticipatory and response-based supply chains. Int J Logist Manag 1998;9(2):21 – 34. Thomas J. Goldsby is an Assistant Professor of Marketing and Logistics at The Ohio State University. He received his PhD in Marketing and Logistics from Michigan State University. Dr. Goldsby also holds a BS in Business Administration from the University of Evansville and MBA from the University of Kentucky. Dr. Goldsby’s research interests focus on logistics customer service and supply chain integration. He also has interest in the development and implementation of environmental, or ‘‘green,’’ business practices.