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Comparison of Vertical and Horizontal B2B Hubs

Examples of Catalog hubs

This page contains a comparison of Vertical and Horizontal Hubs within the context of e-business architecture.

  Vertical Hub Horizontal Hub
Content and relationships Industry-sector specific Specializes in products and services that are not used directly in finished products Includes products and services that are often referred to as Maintenance, Repair, and Operating (MRO) inputs
Source Includes manufacturing inputs such as raw materials, components, or sub-assemblies for manufacturers within a specific industry sector Includes human resources or capital equipment
Critical success factors Existing non-eBusiness vertical supply chain is inefficient, but it can be made efficient through the introduction of catalogs and advanced search techniques Offers vast depth of content and expertise that has a great breadth of demand
Sub-classified Can be sub-classified into Catalog hubs and Exchange hubs Are not sub-classified


Vertical B2B marketplaces

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Vertical B2B marketplaces are industry based. Most are arranged to enable manufacturers to source key suppliers. The automotive industry, which purchases an estimated $240 billion worth of parts a year from thousands of suppliers, has created Covisint, a B2B marketplace which acts as a central supply hub for the industry. Covisint has been set up by some of the industry's largest players:
  1. GM,
  2. Ford and
  3. DaimlerChrysler.
They have all clearly seen the advantages from such a radical reorganisation of their supply network. E-steel, an electronic marketplace in the steel industry, has some 3361 members and reflects the vertically-integrated structure of the industry. Spread over 96 countries, its members include 208 steel mills, 636 service centres, 873 fabricators, 333 distributors, 598 trading companies and 329 manufacturers.

Horizontal B2B marketplaces.

Horizontal B2B marketplaces, rather than industry based, tend to be product or service specific. Office supplies, spare parts, airline tickets and services generally can be found in such B2B marketplaces. Mordus, a B2B marketplace set up to cater for the specific needs of small and medium-sized enterprises, is a typical example of a horizontal B2B marketplace. It has 175 000 members and offers them a wide range of goods and services, including printing, office equipment and training.

Vertical and Horizontal Hubs

Vertical Hub

A hub that caters to consumers within a particular industry (sometimes called a "vertical industry"). Vertical portals, also called "vortals," use Internet technology to offer the same kind of personalization tools that portals do. Another kind of vortal provides to other businesses rather than to an industry's consumers.
The B2C portal gave the B2B industry a model to work from and most business-to-business sites bill themselves as portals. We like to define business-to-business sites as vertical portals because they deliver content and services focused on their particular niche. Although many sites call themselves portals they are simply Web sites that use cookie and/or personalization technology.

Horizontal Hub

The process of automating a business function or procedure across a domain is known as Functional hubs.
Question: Which of the two, vertical or horizontal B2B marketplaces, is likely
  1. to offer the greater potential increase in competition;
  2. to pose the greater potential danger to competition?