B2B E-COMMERCE: How far has it really come?
Why investigate B2B e-commerce now?
- Following the withdrawal of venture capital funding in the B2B e-commerce market, analyst predictions and opinion about this sector have been scarce. The jury has been out over which models will really work in which industries, and the best ways in which to attract buyers and suppliers to transact on the web;
- In recent months, however, reports from Forrester, Line56 Research, McKinsey and the Aberdeen Group have sparked fresh debate about the likely prospects for this sector.
From hype to reality
- Most of the predictions about B2B e-commerce from 2000 have turned out to be wildly inaccurate. Through extended case studies of three public e-marketplaces - Covisint, Goodex and Phonetrade - this report examines how some players have survived and considers their strategies for growth.
Private v Public
- One of the focal points of recent debate about the B2B e-commerce sector has been the relative merits of ?public? e-marketplaces which connect multiple buyers and sellers, and ?private? e-marketplaces which are established by one player - usually a major buyer of supplies - to handle interaction and transactions with hand-picked suppliers;
- Public e-marketplaces are fraught with political difficulties since they are often developed by consortia of competitors, or at least involve competitors in an environment where they may learn more about each other?s purchasing strategies;
- With private e-marketplaces, one player must shoulder the development costs and it can be difficult to attract suppliers to an environment where only one buyer makes the rules. However, roll-out can be swift and there are considerable advantages in terms of integration with back-end purchasing systems.
Where does content sit?
- B2B content providers saw an opportunity to exploit strong brands by building e-marketplaces, but retreated from this position when the difficulties of attracting buyers and suppliers to transact on exchanges became clear. It remains to be seen what kind of synergies there could be between vertical communities built around content and those built around transactions;
- Credit information players have also seen an opportunity to sell their data into environments where major transactions can take place between companies who have no existing relationship, though no major deals of this kind have yet been made.
- B2B e-commerce companies face a ?cultural mission? to convince different kinds of players to shift business on to the internet. Most are all too aware that they must add considerable value around the transaction, as well as providing convincing ROI arguments for those making the necessary IT investments.
- In the medium to long term, web services standards and the UDDI project will play a key role in B2B e-commerce;
- In the short term, public e-marketplaces such as Covisint regard the dissemination within their sector of standard processes for transacting on the web as central to their role.