Boring Old B2B Steals E-Tail’s Thunder

So it turns out that amid all the teeth-gnashing about the future of e-commerce, business-to-business (B2B) online sales were cooking right along.

In fact B2B sales made up 90 percent of all online transactions during 1999, according to a new report from the U.S. Department of Commerce.

That’s great news, I guess. The only problem is that business-to-business e-commerce is, well, it’s boring. You can try all you want, but you won’t get me excited about a wholesale fish exchange or a hub that connects chemical users and suppliers around the globe.

Good ideas? Sure. Money-makers? Probably or potentially. But the imagination just doesn’t soar on the notion of a manufacturer buying a thousand spools of wire on the Web. It is dry, dull — just like old-fashioned business. Maybe it’s best for e-commerce if it continues to lie low.

Pomp and Circumstances

Let’s face it. The general population wants to hear about the big-name companies that it comes into contact with every day. Think of the frenzy that erupted when trading in Yahoo! shares was halted. To say that speculation was running wild would be a grave understatement. People went nuts trying to figure out what was going on.

Likewise with Amazon.com and Wal-Mart. That’s big news, and more important, it’s news that people can understand. They can see Amazon on their computer screen and they probably drive by a Wal-Mart in their daily lives.

But what does the average Internet user know about B2B exchanges and supply hubs? Not too much. It just isn’t sexy.

Even if you pump up the numbers, as so many analysts have done, to generate some heat over the business-to-business sector, the news just comes out flat.

Feed the Machine

The truth is that the Internet holds a lot more potential for business-to-business transactions than it does for those involving the consumer.

Example: If I buy a car online, that’s a sizeable purchase. If the online sales of automobiles takes off as expected, it will become a glimmering jewel in the e-commerce crown. But follow that car back through the supply chain and you start to see where the real upside is. That car is made up of parts bought by the automakers.

Take the stereo for instance. The automaker may have ordered the stereos online and the stereo manufacturer, in turn, may have bought the plastic, the electronics and the metal body all online. And those suppliers — well, you get the picture.

The transactional tree for that one purchase of a car just adds more and more B2B branches the further back you go.

Quiet Gains

The best part about the low-key, offstage nature of many B2B sectors is that it prevents the kind of feeding frenzy that took e-tail on the roller coaster ride from hell, and left dot-com bodies strewn about the tracks.

Yes, there was some excitement about business-to-business. It came shortly after the business-to-consumer wave crested. But it also lasted a fraction as long, and rather than going out with a hang, just faded.

The truth is that no fading occurred. What happened was the B2C shakeout took front and center and sucked up all the attention and hype. B2B has enjoyed something of a shield.

Apart from a few burnouts, and some incubators that bet on the sector having hard times, notably the Internet Capital Group, B2B has kept its head down and puttered along. Venture capital deals kept getting done in the sector, nice and safely hidden from the prying eyes of the public.

Slow and Steady

The fact is that B2B e-commerce will always be the boring cousin of e-tail and its flashy Web sites, household names and colorful executives who we recognize in a mugshot. B2B is a sector that is outside the scope of interest to most people.

That’s B2B’s biggest asset right now. The “irrational exuberance” that described both the tech stock market and the e-commerce run-up has been kept at bay. Without it, B2B can build the solid foundation necessary for a long, healthy life.

Boring? Maybe. But then again, there’s nothing boring about success, right?

What do you think? Let’s talk about it.