Exchanges proliferated during the early years of e$-$commerce. Today, many exchanges provide vertical markets for a single industry, such as food, electronics, or industrial equipment, and they primarily deal with direct inputs.

Why have many exchanges failed?

ANSWER

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Exchanges are Net marketplaces that connect thousands of suppliers and buyers for spot purchasing.

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Many essential direct purchases are not conducted on a spot basis because they require face$-$to$-$face transactions.

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Suppliers were reluctant to participate because the exchanges drove prices down and did not offer any long$-$term relationships with buyers.

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Exchanges became prediction markets where peer$-$to$-$peer betting inflates the actual value of products or services.