Yahoo! Takes Aim at B2B Space

Aiming to broaden its array of offerings and tap new sources of revenue, Internet portal Yahoo! (Nasdaq: YHOO) on Tuesday launched a marketplace service targeting the business-to-business (B2B) market.

Yahoo! Industry Marketplaces launched with three specific industry areas: electronics, software and hardware. Additional subject areas will be rolled out over time, the company said.

Despite high hopes, however, Morningstar.com analyst George Nichols told the E-Commerce Times that Yahoo! is not likely to achieve any short-term breakthroughs in the B2B space.

“Although these are large market opportunities,” Nichols said, “it’s unclear how big a slice Yahoo! can get from this pie.”

While Yahoo! launched a B2B portal more than a year ago, other firms, such as VerticalNet, have been in the space much longer, Nichols noted.

Strong at Work

Aimed at decision makers inside corporations, especially those in charge of buying computer products, Yahoo’s new B2B sites offer white papers, current news articles and ways to reach electronics suppliers.

“Millions of business purchase decision makers are already are using Yahoo!,” said Shannon Ledger, vice president of production at the Santa Clara, California-based portal. The marketplaces, she added, “are the next logical step for us to better serve those users and add more depth to our business services.”

By launching the marketplaces, Yahoo! is hoping to leverage its high rate of use in the office. According to Nielsen//NetRatings, Yahoo! is the most visited site from work. A separate study from Mediamark found that 18.4 million corporate buying decision makers regularly visit Yahoo!.

Array of Services

The industry marketplaces are the latest effort by Yahoo! — one of the most popular sites on the Internet — to tap into the B2B market that Gartner Group has said will grow to US$7.3 trillion annually by 2004.

Yahoo! said that its electronics site includes a co-branded buying area with USBid, news headlines from Cahners Business Information and a Webcast center that will house product-release and training videos.

The software and hardware sites will feature industry information provided by Bitpipe and publisher IDG, as well as direct links to suppliers.

Diversity Sought

Last week, Yahoo! warned that its 2001 earnings will be lower than predicted because of a slowdown in online advertising spending, which makes up as much as 90 percent of the company’s revenue.

That announcement led to renewed calls from analysts for Yahoo! to find new sources of revenue as a way of protecting itself against the vagaries of the ad market.

“When it puts all eggs in one basket, even a well-run company like Yahoo! is subject to the shifting fortunes of a volatile industry,” Nichols said.

Last month, the company said that it would begin charging a listing fee for its Yahoo! Auctions site and seek other ways to charge fees to its 55 million users. Last week, Yahoo! announced expanded services at its careers and job search site.