As the nation faces unprecedented challenges related to the COVID-19 pandemic, federal agencies are finding that e-marketplaces offer practical solutions to fulfilling the government’s critical procurement needs. Unlike traditional stores and some e-commerce sites that involve a single business selling its own products, e-marketplaces allow multiple third-party sellers to reach consumers and promote sellers ranging from individuals to large-scale manufacturers of goods. Amazon, eBay, Overstock and Etsy are all popular examples of these virtual marketplaces.
E-marketplaces also can direct limited, critical supplies to those who need it most, including front-line medical staff, state and local governments, and emergency responders. Amazon Business, for example, has created a COVID-19 supplies section on its online store directed to frontline medical personnel and emergency response organizations exclusively, so they can obtain hard-to-find protective equipment. Teams of category experts were able to provide agencies with N95 masks, ventilators, digital thermometers and hand sanitizers when traditional government channels failed. This demonstrates the ability of e-marketplaces to rapidly recruit suppliers, source products, onboard buying customers, and streamline the purchase and delivery process, to more efficiently match large-scale supply and demand. Going one step further, several online marketplaces have agreed to eliminate or reduce their profits on certain pandemic supplies, waive seller fees, or have incorporated charitable donation opportunities into their online stores.
Outside of the COVID-19 pandemic, the federal government has recognized the value of e-marketplaces. Section 846 of the 2018 National Defense Authorization Act mandated that the General Services Administration create a program in which the government could purchase certain inexpensive, commercial products through an e-commerce store. The GSA took a major step toward implementing this Congressional mandate on June 26, 2020 when it announced that it had selected three companies—Amazon Business, Fisher Scientific and Overstock—to participate in an e-marketplace pilot for federal government micropurchases. The pilot is anticipated to launch soon and is expected to last up to three years.
While the federal government is in the early stages of setting up a dedicated online marketplace, states are already making strides in that direction. These state e-marketplaces are uniquely positioned to facilitate pandemic-related purchases. For example, Virginia’s online marketplace, eVA, provides emergency procurement information related to COVID-19, connecting vendors and suppliers with state purchasing contracts. Similarly, Delaware’s MyMarketplace Procurement Portal has a special COVID-19 section in which vendors can offer supplies, capabilities, and resources to the state.
Although price gouging and counterfeit goods are legitimate concerns during a national emergency, e- marketplaces have protections in place for purchasers to report unscrupulous sellers. They also protect purchasers by offering generous return and refund policies for unsatisfactory goods. In doing so, online marketplaces have assumed the risks for items offered on their stores—rather than passing that risk along to purchasers. For example, Amazon’s Project Zero initiative uses cutting-edge technology to continuously scan its offerings to ensure that counterfeit materials are not being sold through its online store. Etsy has started cracking down on misinformation associated with coronavirus merchandise in an effort to prevent sellers from making unprovable medical claims about their products. Additionally, online marketplaces have built sophisticated end-to-end supply chain solutions, ensuring the speed and reliable delivery of items purchased on their sites. With so many traditional retail operations closed, this is an invaluable asset.
Finally, as much of the world remains under some state of social distancing and work-at-home arrangements, online marketplaces offer a safe, limited-contact way for business consumers to obtain needed items, address the medical needs of the pandemic, and prepare to safely reopen. Online marketplaces are an increasingly valuable part of society, even outside of a global pandemic. During a time of crisis, however, it is apparent that their integration with government and business purchasing systems will expedite the provision of critical supplies to first responders. Without question, online marketplaces are transforming the public procurement process and will serve as a model for streamlining the process in the future.
Robert A. Burton is a partner in the Government Contracts Group at Crowell & Moring LLP in Washington, D.C. He is the former deputy administrator of the Office of Federal Procurement Policy in the Executive Office of the President.