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Marie Jeanne Becaus-Pieters’s initiative to create a virtual European marketplace for trading fish may be considered salutary as it provides equal chances to all participants and helps Northern supply meet Southern demand, at the same time. This idea subscribes to the electronic trend that businesses increasingly embrace nowadays because of several reasons among which time is one of the most important.
Thus, businesses have essential information at a mouse-click’s distance and therefore they do not need to travel to a certain supplier in whose offer they are interested.
Moreover, they can compare the offers displayed by several providers and find the bargain they’re looking for. This saves both money and time and results in higher profits. But these are just some of the major advantages that Becaus-Pieters considered when she decided to launch the PEFA website.
Despite being an excellent attempt to bring one of Europe’s most traditional markets to the 21st century, there are many challenges to which PEFA should respond in order to convince adherents of its conspicuous advantages.
One of these challenges is assuring the participants of the accuracy of the information displayed on the website. Obviously, for attracting a large number of buyers, PEFA posts details regarding fishing grounds, species, grading, quantity, quality etc. which guide buyers in their choice. In order to convince participants that such information is accurate, PEFA should make a very persuasive lobby by stating that all the details are up-to-date and have been thoroughly collected from the suppliers themselves.
For strengthening its commitment, PEFA must also designate personnel in charge of shedding light to any problems that a customer might have. Thus, when finding himself at a loss, a buyer could ask for details at a phone number indicated by the site. Additionally, PEFA could persuade participants by assuming its responsibilities loud and clear. Consequently, it will clearly stipulate in the contract and announce on the website that PEFA is perfectly aware of the importance of accurate information and therefore will assume the entire responsibility for the details posted online. If any transaction fails to be completed because of the inappropriate data on the site, PEFA guarantees paying damages to the participants involved.
Another issue that is highly susceptible to convince buyers of the precise information posted is the quality assessment system that has been developed in collaboration with renowned institutes like: Dutch National Institute for Quality (RIVO), the European Commission Directorate General XIV, the Sea Fish Industry Authority in the U.K., and Bureau Veritas in France.
The common efforts of all these organizations have led to a classification system encompassing: “E+” – live products, “E” – top quality unchanged, “A+” – best quality within the A class, “A” – medium quality A-class, “A–“ lowest quality A class, “B”-quality. According to the information posted on PEFA’s website, if, in the past, the quality was established by naming the percentage of a box’s contents that subscribed to one of the six levels above, the system has recently evolved to a Quality Index Method (QIM) that precisely stipulates freshness due to a total score which allows framing a box into a certain quality class (http://www.pefa.com/pefaportal/en/index.htm). Thus, PEFA should clearly emphasize the advanced technology it uses for assessing quality and the famous institutions that have played a major part in its development. This way, information will be much more credible to buyers and will determine them to massively join the network.
As Becaus-Pieters has decided, those buying from remote locations may ask for processing before delivery. Consequently, PEFA must be able to meet requirements by counting on a reliable processing network. The case study suggests, at a certain moment, that PEFA has encouraged local processors to meet high-quality standards and reduce transportation cots. This implies that the organization has already acted towards satisfying remote buyers by preparing a competitive processing network.
As for the distribution, PEFA has several alternatives.
First of all, if the buyer requires processing before delivery, the transportation could be operated by the processors themselves as distribution may be one of the many activities they perform. A second alternative could be leaving physical transportation to buyers. This means that after purchasing the merchandise, participants should send their special trucks or should make reservations on ships for the number of fish boxes bought.
Yet, most clients prefer to have the entire process performed by the auctions where they buy their fish from. This means that the member auction houses become responsible for delivering the respective merchandise. Moreover, as the case study implies, southern buyers can have their fish directly transported by PEFA if a sufficient quantity is bought. Otherwise, the network will look for the most convenient alternative to a pre-designated route which is often very long.
In conclusion, as there are several possibilities of delivering merchandise, buyers should be invited to opt for one of the four alternatives above by listing distribution alternatives and corresponding prices. Thus, the one who will make the decision will be the client himself.
In order to be successful, PEFA.com has to fight against mentalities, traditions, and behaviours that have been established during centuries of European fish trading in local auction marketplaces. This is one of the most difficult tasks facing PEFA as mentalities need time to change. Therefore, the network should think of a PR campaign persuasive enough for convincing participants to join the virtual market.
First of all, such campaign should address to potential buyers who complain about not being able to touch or smell the fish anymore. In order to assure them of the merchandise’s freshness, the organization should advertise its quality assessment system described when answering the first question.
Additionally, it should convince clients that this way of evaluating quality is more effective than the traditional one based on the “seeing is believing” concept as the customer could not touch and smell every fish in each box (especially when the amounts bought were large). Such empiric technique came under error to a high extent and could not ensure the certainty provided by PEFA’s system.
Secondly, the organization should lay a great stress on the possibility of not being physically present. This means that remote buyers don’t have to travel anymore as they are given the opportunity to purchase from their home or office. This will make them save time and money while achieving the same results as the ones obtained during a traditional auction.
Thirdly, they have access to a wider range of products than before. Consequently, they can compare and choose the desired species, amounts and prices. On the other hand, a PR campaign should also focus on sellers. In this case, PEFA should be able to convince fishermen that they can widen their coverage to the entire Europe, thus obtaining higher profits. Moreover, they should be told that PEFA will assist them in their transactions and that they will have more time to spend with their families because they will not have to sail to other harbours for getting a better price for their catch.
With respect to traditional payment methods, fishermen should be told that even if they will not receive cash, there are other serious and effective ways like bank accounts or credit cards they do not have to fear. In order to make all these persuasive actions possible, PEFA must address to the auction houses across Europe that have traditionally been used by local fishermen, collecting centers and so forth. These should be endowed with comprising leaflets to be offered to participants, and banners displayed during auctions. Furthermore, auctioneers should be asked to verbally announce the PEFA.com alternative as a viable contemporary opportunity. Another way of fighting mentalities could be the presence of PEFA representatives at various auction houses where these could interact with buyers and sellers for advocating their virtual marketplace.
PEFA could also charge lower fees to the first participants in order to make its offer enticing enough and to determine starters recount their positive experience to other business partners. PEFA could also resort to placing banners in the main harbours or to inserting TV advertisements during the talk-shows preferred by the target audience.
At present, PEFA.com’s position on the market is not significantly threatened by competitors as it is the only virtual fresh fish auction that Europe has. For instance, Schelfbout has come up with a stand-alone electronic system that doesn’t operate virtually, the French Agro Marches Internationaux takes pride in transmitting information to various harbours via satellite, while the North-American site Gofish.com, despite operating in the virtual environment, is dedicated to trading frozen fish through a less interactive system matching the offers and demands posted by suppliers and, respectively, buyers.
Yet, this situation will soon change and PEFA will have to face competitors acting within the same market niche. An item of major importance in fighting against competitors consists of offering qualitative products at reasonable prices. In conclusion, the network will have to pay high attention to the accuracy of the information provided as credibility induces brand loyalty.
PEFA could also win the battle against competitors by offering its clients certain facilities such as: lower fees for loyal customers, cheaper and direct transportation for buyers purchasing large amounts of merchandise. It could also be superior to other similar organizations by providing buyers with easy-to-use software and by offering them the opportunity to interact with some of the most renowned auctions across Europe having exclusive contracts with PEFA.
On the other hand, the site could bring into the lime light the qualitative merchandise which is due to exploiting some of the most prolific fishing grounds, the wide range of fish displayed etc. In order to be able to boast such features, PEFA should also stimulate sellers to join the network. Therefore, it could offer lower fees to those that are constant participants or to those who have brought the most considerable transactions. Moreover, suppliers could be stimulated to bring their merchandise to PEFA.com by the idea of having a larger demand pool encompassing major buyers who are ready to offer a higher price for the fish they buy.
Another possibility for PEFA.com is to show a greater interest in the suppliers and buyers who take part in the auctions it organizes. This means that the website must indicate contact details of persons who are always ready to help participants when these find themselves at a loss.
The key value proposition behind PEFA was market transparency or as the case study mentions:”a network of electronic fish auctions spread across Europe, equally accessible to all market participants” (Collins, Bechler, 2001). The opportunity to have an equal chance regarded both buyers and sellers. Thus, on one hand, suppliers could obtain higher prices for their merchandise and, on the other hand, buyers could choose from a wider range of species while having the same chances as their colleagues physically present at the auction. In other words, this meant fair competition for both sides of a transaction.
The virtual marketplace could be considered a salutary idea as it succeeded in making the Northern supply and Southern demand meet. This change was a major step to a competitive environment because it managed to definitely ban the market opacity existing so far.
The history of fish auctions that the case summarizes shows that, in the beginning, fishermen landed their catch in their home harbours as they were convinced that the local auction house fairly pays them. Additionally, after being at sea for so many days, they wanted to spend more time within the social and religious communities they belonged to. Still, the idea of not having a large number of customers capable of paying a fair price highly impacted their revenues.
This was the natural result of a local market confronting a large number of fishermen who were eager to sell their perishable catch with a limited number of purchasers who afforded to choose out of a generous offer and pay a relative low price. Consequently, fishermen began to move towards harbours situated close to the fishing grounds in order to get better prices for their catch. Yet, this search aimed at identifying optimal alternatives was an empiric one because suppliers didn’t have a broad, overall perspective on European markets. This is why the prices they finally obtained were not very far from what local action houses offered them.
On the other hand, buyers had to be present at the auctions in order to find the best quality-price ratio. This implied focusing on the announcements shouted by the auctioneer, and later, on the electronic clock’s display that was placed behind each catch in the main hall of the action house. This was a difficult task because purchasers had to move fast among boxes for timely seeing the display and pressing the button to indicate acceptance.
This practice often generated confusion as the hall became crowded and noisy. Those who managed to see the clock’s face could consider themselves lucky while the others who failed to take a look at the famous machinery didn’t succeed in getting the best merchandise. Moreover, as no quality assurance system existed, buyers often took their time to open the boxes for testing the fish’s freshness.
In conclusion, the PEFA.com concept has managed to solve all these inadvertencies by offering equal opportunities to all participants. Furthermore, sellers have the chance to place all their catch regardless of the species because different European regions have different preferences. For instance, if Spanish consumers rave about the langoustines from Troon and sole from Zeebrugge, Belgians and French prefer the large Dover sole. Consequently, the virtual marketplace excellently succeeds in satisfying the various requirements and tastes of European customers.
PEFA.com is a network comprising both suppliers and buyers. In order to have access to the virtual marketplace, each participant is charged a fee. This consists of 2% of the transaction cost in the case of purchasers and 0.2% of total sales for member auctions. This is a fair rule because participants are charged fees only when they operate transactions. If no buying or selling occurs, no fee is charged.
Secondly, the virtual marketplace doesn’t eliminate the local markets. Thus, those who want to physically take part in a local auction don’t have to pay anything. The fee is established only for inter-regional transactions. Consequently, PEFA.com is a major intermediary helping buyers and suppliers meet. Its organizing should encompass two sides: the front-office side (i.e. the virtual user interface) and the back-office one (i.e. the backstage operations performed in order to complete transactions).
The interface is represented by the site itself which must provide accurate, concise information that can be easily read and understood by users. No adornments, banners and other similar items should be posted on the site as these are redundant and might hinder users from focusing on the details that interest them. The site must offer the software bought by participants that should be easy to download and operate. Additionally, contact details of certain PEFA employees should be posted in case any problem occurs.
As far as backstage activity is concerned, this encompasses the logistic necessary for transporting the merchandise if the customer chooses this alternative, a network of processors ready to meet the clients’ desire, and other operations like handling, sorting, grading, packing and so on. As for the rightness of the incentives received by stakeholders, one could state that these are fair as higher prices and wider choice from remote locations seems to best motivate sellers, and, respectively, buyers.
As the case studies implies, PEFA.com was a pioneer in virtual European fish markets because no other competitor made use of an intranet network in order to organize auctions. Even though many other companies or organizations will soon try to imitate this model, the major difficulty they will encounter is represented by the interactive virtual clock that PEFA boasts. This means that the site has unique software that has been exclusively developed for PEFA. In other words, if a competitor wants to fight against Becaus-Pieters’s virtual marketplace, it should come up with an innovative system as effective as the PEFA clock.
Undoubtedly, if a company has a large budget for research and development, it could hire valuable IT specialists to study their rival’s method and imitate or even enhance it. Yet, this implies having large sums of money to spend on developing similar software and organizing impressive marketing campaigns in order to convince PEFA’ s loyal participants to move to another network. The latter could prove extremely difficult if PEFA’s clients are satisfied with its products and services and refuse to leave a network they have accustomed to.
To conclude with, I’d say that the model could be imitated but this wouldn’t be an easy process. It will claim money and time and eventually could fail to acquire the desired market adherence if most buyers and sellers decide to remain loyal to PEFA.com.
According to the information in the case study, PEFA’ s customers fall into four major categories: wholesalers which buy for their account and afterwards sell the merchandise to fishmongers without having previously processed it; processors which perform several operations like filleting, portioning, packaging fish in order to meet the requirements of supermarkets, restaurants and other similar entities; retail chains which buy fish on their account and sell it as pre-packed or fresh over the counter; intermediaries which buy merchandise on the behalf of other companies.
In order to attract consumers, PEFA should put a high emphasis on several issues. First of all, it must stress the advanced quality assurance system which guarantees the veracity of the merchandise’s assessment. Secondly, it could highlight the wide range of species that consumers have access to, and, implicitly, the chance to satisfy their preferences.
Thirdly, buying from remote locations is an advantage that shouldn’t be neglected either. Additionally, in order to encourage trail, PEFA could offer some fee reductions when joining the network, free transportation and processing when the amount bought reaches a pre-established level, a lower bank guarantee for starters or the possibility of a higher overdraft.
For Because-Pieter’s initiative to be successful, the PEFA.com must meet a sum of requirements in terms of functionality, reliability, and security. First, the software used by participants must be easy to understand and operate. This has to perform at optimal parameters on the hardware that participants possess. In this context, speed is essential as the clock’s countdown and the buyer’s pressing the button must occur in real time for a transaction to be completed. Otherwise, participants would accuse PEFA of not complying with contractual stipulations and will certainly leave the network.
Second, the information displayed must be reliable. If buyers conclude that there are discrepancies between the data posted and the merchandise received, they will never do business on PEFA.com again and will surely tell other people about their negative experience, thus impacting the network’s image and credibility.
Thirdly, security requirements are a must nowadays when so many hackers dedicate themselves to breaking codes, databases, and reading secret information. Consequently, PEFA should have an efficient password theft prevention system which will allow only real buyers to download and operate the software. Additionally, the information displayed and the databases should be highly protected in order to hinder intruders from modifying the details posted and from finding out backstage details about participants and their transactions.
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