Market-makers are companies that create place, rules and infrastructure for trading. Stock exchanges and auction houses are examples. On the Internet, we find similar companies like eBay. Market-makers provide value by way of supply chain integration, transaction cost savings and offering a payment gateway. They earn revenue from transaction fees, mark-ups, subscription, data sales and systems integration consulting. In order to become successful market-makers, Indian companies have to match the value created with the revenue generated.

The success of companies like eBay and Amazon has baffled many pundits. In the wake of the dotcom bust, most analysts predicted doom for online businesses. Looking at the large number of companies that bit the dust at the turn of the century, it was expected that e-commerce was also destined to follow the path of other fads like Business Process Reengineering (BPR). However, some companies have survived the crash, with profits. Many have changed their business models, including Amazon. In the Business-to-Business (B2B) space, more companies have stepped in and are making money. In India, the success of companies like metaljunction.com has enthused the promoters to venture into Business-to-Consumer (B2C) retailing with their new venture, Straight Line. It remains to be seen whether these initial ventures will survive the euphoria and make profits. However, a proper study of what we call as `market-making' may help the new entrants to understand the dynamics of this new business space. Market-makers like Amazon or eBay (Exhibit 1) differ significantly from online retailers like walmart.com or futurebazar.com in their nature and function.

This function is not different from medieval markets that sprouted along the Silk Route or Europe. Groups of traders used to select a physical place to carry out trading. The Arab souks are examples of these. Today, the Internet is the new trading place and websites hosted by the market-makers enable people to browse and buy online.

Online markets, Systems integration consulting, Business Process Reengineering, BPR, Business-to-Business B2B, Business-to-Consumer B2C, Payment gateways, Consumer-to-Consumer, C2C, e-Bay market makers, E-commerce, Online businesses, Supply chain integration.