Forecasters Fuel Feeding Frenzy on B2B Projections

With companies in nearly every industry developing online business-to-business (B2B) marketplaces, a feeding frenzy of optimistic reports is coming from research firms to hail the major new market.

The latest report, from research firm GartnerGroup, projects that worldwide B2B e-commerce revenues will reach $7.29 trillion (US$) by 2004. This projection is consistent with other firms that projected U.S. revenues only.

In mid-December, The Boston Consulting Group predicted that U.S. online B2B activity would generate $2.8 trillion in transactions by 2003. Extending that theory a year further, the B2B market would be worth $3.7 trillion in 2004.

Last fall, Forrester Research predicted that B2B activity in the U.S. would be worth $800 billion by 2002 and pass $1.3 trillion in 2003. Projecting that a year further would put the 2004 estimate in the $2.1 trillion range.

Online B2B To Reach Seven Percent of Global Sales

The Stamford, Connecticut-based GartnerGroup sees the online B2B market reaching seven percent of a predicted $105 trillion in total global sales transactions.

“The B2B explosion is imminent, fueled by a combustible mixture of investment financing, IT spending and opportunistic euphoria that is being funneled into start-ups and brick and mortars’ e-commerce initiatives,” said GartnerGroup analyst Leah Knight. “Collectively, they will drive short-term economic disruption but long-term business efficiency across industries and geographies.”

E-Market Makers Driving Force for B2B E-Commerce

The study reports that companies who develop B2B marketplaces — so-called “e-market makers” — will be a key driving force for B2B e-commerce. As previously reported in the E-Commerce Times, companies like Commerce One, Chemdex and VerticalNet have recently been highly active in creating B2B marketplaces to put buyers and sellers together.

By 2004, GartnerGroup predicts that these “e-market makers” will be responsible for $2.71 trillion in e-commerce sales transactions, representing 37 percent of the overall B2B market and 2.6 percent of worldwide sales transactions.

Brick-and-Mortar B2B Firms Will Also Be Active

Just as storefront retailers have responded to the challenge of online merchants in the consumer sales world, brick-and-mortar commerce facilitators will jump into the B2B online marketplace, the report says.

Examples include companies like GM, Ford and DuPont. These firms have been influential in driving traditional B2B transactions using fax and EDI, and have already staked out their territory in cyberspace to promote transactions on the Internet.

“Valuation envy has already sped up e-commerce adoption in the chemicals and electronics components industry, where traditional brick and mortars are under pressure to keep up with fast-moving virtual competitors,” Knight said.