Recently, we announced that GLASS has been selected by the U.S. Federal Government's General Services Administration (GSA) for a multi-billion-dollar e-commerce initiative. Dive into this blog to delve deeper into commercial e-commerce portal models, essential for gaining insight into GSA's vision.

The GSA is a cornerstone agency of the United States Government established in 1949, playing a crucial role in supporting government operations by providing essential services and resources to Federal agencies. Mandated by Congress in 2017, the GSA partnered with the Office of Management and Budget (OMB) to establish The Commercial Platforms Program, an initiative set to modernize and simplify the procurement of commercial products through E-Commerce portals.

As it was mentioned before, the GSA’s estimated $6 Billion addressable market for the E-Commerce channel represents a substantial opportunity for U.S. Federal agencies to leverage E-Commerce capabilities for strategic analysis of spending data, supply chain risk mitigation, and enhanced internal controls.

Building upon this groundbreaking e-commerce initiative, the GSA endeavored to gain a deeper understanding of the distinctions in capabilities among 3 commercial e-commerce portal models. This effort aimed to discern which model or models could best serve as an effective platform for testing the concept of a "government-wide commercial e-commerce portal program," aligning with prevailing government requirements:

1. E-Commerce Model: 

When it comes to this model, GSA understands that: “Providers use an online platform to sell their own proprietary items or wholesale products. These platforms do not include products sold directly by other companies - all offerings are part of the provider’s inventory. The provider is responsible for the fulfillment of product orders, including invoicing and delivery. E-commerce businesses in this model generate profit mainly from product prices that they directly manage and control.”  

2. E-Marketplace Model: 

Furthermore, the GSA considers that “E-Marketplace models connect buyers online with a portal provider’s proprietary products, third-party vendors, or both. Portal providers and third-party vendors are generally responsible for fulfilling orders for their respective products with some exceptions where the portal provider may complete order fulfillment for additional fees. Competition occurs in the e-marketplace model given the access to both proprietary and third-party products. Portal provider profits in this model are mainly derived through commissions on products sold by third-party vendors, supplier-listing fees, service-upgrade fees, or a combination of these fees.”

3. E-Procurement Model: 

Finally, the GSA says that “The E-Procurement model is a software-as-a-service model that is managed by the buying organization, and often has workflows connecting the internal procurement organizations to financial systems. The portal provider does not sell products in this model; instead, contracted suppliers are responsible for fulfilling orders — many from outside marketplaces — thus allowing for a larger supplier pool and horizontal price comparisons. Portal provider profits in this model are mainly derived from a combination of transaction fees and tiered subscription fees. These tiered subscription fees generally increase as the volume of transactions on the platform increase; however, most portal providers also cap transaction fees to encourage a high volume of transactions.”

We identified the differences among the three models:

In the E-Commerce model, providers utilize an online platform to exclusively sell their own proprietary items or wholesale products; they do not host products from other companies, and all offerings are part of the provider's inventory. The provider bears the responsibility for order fulfillment, including invoicing and delivery. 

On the other hand, the E-Marketplace model serves as a connector between buyers and a portal provider's proprietary products, third-party vendors, or both. In this case, both the portal provider and third-party vendors fulfill orders for their respective products, with exceptions where the portal provider may handle order fulfillment for additional fees.

While in the E-Commerce model profits for e-commerce businesses primarily stem from the direct management and control of product prices, in the E-Marketplace model profits for the portal provider are mainly generated through commissions on third-party vendor sales, supplier-listing fees, service-upgrade fees, or a combination thereof.

Furthermore, the E-Procurement model is not an online platform. Instead, it operates as a software-as-a-service managed by the buying organization, often integrating workflows connecting internal procurement departments to financial systems. Portal providers in this model do not sell products themselves; instead, contracted suppliers fulfill orders, many sourced from external marketplaces, thus allowing for a wider supplier pool and horizontal price comparisons. In this model, profits for the portal provider derive primarily from a blend of transaction fees and tiered subscription fees, which typically escalate with transaction volume.

Click here to learn more about GSA’ Commercial E-Commerce Portals. To learn more about our Government E-Commerce platforms, our Supply Partners programs, or how we are helping government agencies streamline and leverage procurement operations across the US, visit www.commerce.glass or contact us here.