B2B marketplaces slowly making it
- 01 December, 2000 13:01
Business-to-business electronic marketplaces started out with a bang but will stumble over such issues as overly ambitious plans, and the lack of venture capital and suppliers over the next few years. However, marketplaces will grow dramatically by 2005 as enterprises see a chance to improve their bottom line and streamline operations, as well as to bring in higher revenue, according to research from Gartner Group.
Gartner found that North American marketplace sales skyrocketed from $US153 million in 1998, to $US492 million in 1999, while the number of marketplaces rose from 30 in January 1999 to more than 300 by the end of 1999. "It's the big bang that happened 18 months ago," a Gartner analyst said. Sales will double next year to $US1 billion, jumping to $US5.7 billion by 2004, and approximately 1500 marketplaces will exist by the end of 2000, doubling to 3000 by 2005, he added.
The financial boom that marketplaces will bring has yet to truly boost participation from companies. According to Gartner, 66 per cent of 421 sellers surveyed aren't involved in marketplaces, while 17 per cent are considering participating and 17 per cent are participating, Seventy per cent of the 500 buyers surveyed aren't participating in marketplaces, while 15 per cent are considering their involvement another 15 per cent are involved.
Explosive growth in bandwidth demand
An Internet study prepared by leading telecom analysts RHK for Nortel Networks found that the demand for bandwidth from global networks could soar 300-fold in the next eight to 10 years. The boom in bandwidth demand will be driven by increased levels of high-speed Internet access to homes and businesses, dramatically growing Internet take-up rates outside of North America, and new disruptive technologies and applications that will take advantage of fast and cheap access to the network, the study found.
The current levels of investment in new networks worldwide will expand to meet coming demand for the optical Internet. The use of the Internet as a basic tool within the global economy suggests a larger role for telecom services and systems and revenue growth in all sectors. Clearly, the bandwidth capacity in place today is dwarfed by what we will need in a year or two, given the current rates of explosive growth.
The "third wave" of Internet access, which is what RHK calls the adoption of Ethernet-speed access in the home and gigabit Ethernet access for many enterprises and institutions, will drive even greater demand for bandwidth. An explosion in e-business and content management is likely to extend today's robust Internet traffic growth rate of 200 per cent per annum well into the decade. This would take traffic to 300 times the size of today's Internet by the decade's end, RHK observes, consistent with the traffic growth called for by deployment of new-generation access technologies.
Mobile device owners confident about m-commerceOne in four owners of mobile devices stops using m-commerce applications after the first few attempts, yet most of them believe that within the next few years, mobile devices that offer these services will play an important role in their daily lives according to a report released recently by the Boston Consulting Group. BCG found that there is a big gap between what the technology can do today and what the consumer has been led to expect. The good news is that these sources of consumer frustration - slow transmission speeds, difficult user interfaces and high costs - are being addressed by operators and equipment manufacturers. M-commerce players will need to move fast to improve the user interface and offer innovative pricing structures.
The report contains the results of BCG's first global survey of current and potential users of mobile commerce applications. Its findings show that m-commerce users often compare the speed and functionality of accessing the Internet via a personal computer against the relatively slower and more cumbersome "on-air" experience. They cite high costs, slow speeds, cumbersome navigation, the difficulty of typing in text using a phone keypad, and unreliable service as their top five dissatisfactions.
Despite the initial frustrations of these early users, consumers believe that once many of the glitches are worked out, mobile applications will become an integral part of their daily lives. Eighty-two per cent of current and potential users think that the mobile device will become their personal travel assistant within the next three years. Eighty-one per cent also foresee using these devices as part of their daily routine - for sending e-mails, getting news and information and shopping. More than half (61 per cent) expect these devices to become universal payment tools. Given this high level of consumer acceptance, BCG predicts that by 2003, m-commerce will be where the Internet was in 1998 in terms of transaction value. In the business-to-consumer space, total revenues generated by m-commerce will reach approximately $US100 billion, half of which will come from data transmission charges, e-mail subscription fees and advertising; the other half will come from the value of transactions related activities via mobile devices.
More, but not most, consumers shop onlineWhile more consumers are buying more products on-line, the vast majority of Americans have yet to make their first Internet purchase, according to a US survey conducted by The Conference Board. The report found that about 34 per cent of US householders made a purchase over the Internet in the last year, up from 24 per cent a year ago, and books, airline tickets and other travel-related items are the leading products being bought via the Internet.
More Americans in all age and income groups are buying on-line but Internet activity is still heavily driven by the young and the affluent reports The Conference Boards Consumer Research Centre. The nation's young adults (25-34) are the biggest Internet shoppers, with 55 per cent having bought something online this year, up from 40 per cent a year ago. The 35-44 age group is the next biggest segment of the on-line market, with 45 per cent having bought online, up from 33 per cent last year. Consumers 65 and over are the least likely to buy online, although 10 per cent of this group purchased something, up slightly from eight per cent.
Global online exports to soar
The Internet presents a wealth of opportunities to streamline international trade, according to a new report from Forrester Research. The researcher found that global online exports will surge to $US1400 billion in 2004, with cross-border e-marketplace trade surpassing $US400 billion. However, cross-border trade will not flow equally among nations, resulting in an emerging split between countries that actively export and import using the Net and those that do not. While B2B e-commerce is accelerating throughout the US, most businesses don't operate in domestic-only supply chains. Online trade will expand globally as firms use the Net to attack inefficiencies in today's international trade practices.
Forrester projects that Western Europe will lead all regions with $US692 billion in global online exports in 2004, driven by Germany's $US144 billion in online cross-border sales. In the same period, North America will see more than 23 per cent of its exports move online, led by the US with $US210 billion in cross-border e-commerce. Asia/Pacific, fuelled by $US57 billion in Japanese online exports, will reach $US219 billion in four yearsAccording to Forrester, global e-marketplace trade will reach $US408 billion in 2004. Petrochemical exports will propel Western Europe to $US215 billion. Denmark and Norway will lead the region - with each sending more than 10 per cent of their international sales via these venues. While sales through e-marketplaces within Canada and the US will reach $US1500 billion in 2004, only seven per cent of these online sales will flow across borders. Asia/Pacific exports through online markets will reach $US50 billion, driven by sales to North American firms.
"Mature" e-businesses bring improved efficiencyFor a fast-forward glimpse of life in the full-tilt New Economy, look at a technology company that has developed a mature e-business. Chances are, the e-business has fostered an array of critical improvements in corporate efficiency, employee skill sets, customer service, and revenue growth, notes PricewaterhouseCoopers. Similarly, it has probably drawn widespread support from employees, and from existing and new customers, alike. Yet despite these considerable accomplishments, management of some sponsoring companies remain uneasy about paths not taken and risks not explored when originally rushing their e-business to market.
Leaders of 24 per cent of technology companies with an e-business say theirs is now "mature". In the average of 48 months since these enterprises were launched, they have been widely credited with having had positive overall impacts on corporate efficiency (cited by 74 per cent); employee skill sets (71 per cent); customer service (71 per cent); and revenue (69 per cent).
A lot is being said about the stunning improvement in corporate productivity brought about by technology, and, in turn, the role that higher productivity has played keeping inflation in check reports PricewaterhouseCoopers. Those with well-established e-business are now suggesting that even more extensive benefits are on the way.