From: Linda (joelinda1@home.com)
Date: Thu Jul 20 2000 - 02:50:42 PDT
More on B2B's, and one of the few articles I've come across that tries
to estimate actual B2B revenues.
--Linda
________________
http://www.upside.com/texis/mvm/ebiz/story?id=396b5b090
http://www.upside.com/texis/mvm/ebiz/story?id=396b5b8b0
[snip]
The b-to-b play is being written with a new script, in which auctions,
exchanges and hubs all function with awesome efficacy and the dominant
b-to-c theme of "stickiness" is but a minor role player.
B-to-b is seen by most investors as a totally different character than
b-to-c. It is a more fully evolved species; the technology is more
sophisticated; the barriers to entry are greater. Critical mass is
achieved with greater difficulty and business models are more
defensible.
It's almost as if b-to-c were a primitive life form, a baby step on the
learning curve toward the more mature efficiencies of b-to-b.
The difference is perhaps best captured by Steve Kafka, analyst with
Forrester Research (FORR): "B-to-c is all about getting consumers to
spend time on the site so you can sell advertising or so you can
cross-sell them into other products. But b-to-b is fundamentally about
saving time. It is a 180-degree difference."
So, in this increasingly aggregated business environment where price
comparisons are so easy, what is left to distinguish one offering from
another? Perhaps that is the next frontier of b-to-b: enabling
technologies to incorporate more sophisticated back-end integration
systems, financing options and logistical support.
But there we go again. Is something being lost in this b-to-b
transformation, where the magic of eye contact slowly yields to the
mystique of eyeball acquisition? Where are we ultimately headed?
In the face of the numbers it seems almost futile to raise these
questions. For the numbers in today's economic climate are the anchors
and ultimate weapons.
And so here are the numbers
To put things in perspective: Taking Forrester Research's estimates,
b-to-b will amount to $2.7 trillion by 2004 ($1.4 trillion if we exclude
extranets).
The Gartner Group (IT) is even more bullish, projecting $3.9 trillion by
2003, while Merrill Lynch and International Data Corp. are more
conservative at $2.5 trillion and $1.4 trillion respectively for 2003.
Yes, these are impressive numbers, but how do they translate into
revenues? The best way to think about that is to make some assumptions.
Typically, b-to-b marketplaces charge anywhere from .5 percent up to 2
percent in transaction fees. So taking the midrange of say, a 1 percent
fee, and using Forrester Research's projections, we're talking about
approximately $27 billion in total revenues for the entire b-to-b space.
By our count, more than 500 companies are competing for a piece of this
pie -- trying to get traction in every kind of infrastructure play and
vertical marketplace from used ballroom equipment to fish.
Do the math. Let's assume that out of the chaos 50 vertical marketplaces
emerge with two primary competitors in each. We're talking $370 million
in annual revenues on average per e-marketplace and its infrastructure
providers by the end of 2003.
Forrester Research's interviews have revealed that 93 percent of all
firms expect some of their business to flow over the Net in 2002.
Forrester's interviews also show that a quarter of all firms expect most
of their online revenues will flow through e-marketplaces in 2002.
All this is nothing to dismiss lightly. But does it justify all the buzz
that has surrounded b-to-b?
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