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Study: Firms Still Bullish on B2B

By Nora Macaluso
Dec 13, 2000 11:03 AM PT

Despite reports of hard times in the business-to-business (B2B) e-commerce sector, executives remain confident about the outlook for online marketplaces, according to a survey released Tuesday by consulting firm Arthur Andersen.

Study: Firms Still Bullish on B2B

The survey, which builds on the findings of a similar poll Andersen conducted in June, found that one-third of company executives see B2B marketplaces as crucial to an overall business strategy, and that the role of online exchanges will "dramatically increase" over the next year, Andersen said.

Half of the executives surveyed see digital marketplaces as a "critical means of competitive positioning" in the next 12 months, the report said. Two-thirds of those surveyed have or plan to have an e-procurement system in place.

Potential barriers cited by the respondents included a lack of in-house resources, cost and supplier adoption.

More Involved

Andersen said that while executives' overall view of the importance of online marketplaces has not changed since the last survey, companies are now more likely to buy and sell products and services online than they were six months ago.

Forty-five percent of the executives surveyed said their companies offer products or services in one or more digital marketplaces established by other companies, an increase from 31 percent six months ago. On the buy side, 66 percent of the respondents said they purchase products or services over B2B marketplaces, up from 48 percent in June.

Initial Investment

"The challenges are mounting for digital marketplaces, including globalization issues and impending consolidation that could dramatically reshape the sector," said Kevin Costello, an Arthur Andersen partner and head of the firm's digital markets solutions business.

"Despite these considerations, companies are continuing to realize that these marketplaces will play a key role in the future of B2B," Costello said.

According to the Andersen survey, the biggest challenge for companies is the initial investment required, with 42 percent of the survey respondents saying they considered it a serious problem. Long-term viability and training were ranked a significant concern by 41 percent.

In the June survey, nearly half the executives surveyed said compatibility of infrastructure was the greatest hindrance. "It's clear that we have moved beyond the early-adopter phase, and that significant activity is taking place in the digital markets and e-procurement sector," said Costello.

Costello added, "What hasn't changed is the understanding that digital marketplaces will continue to be an intricate part of their e-business strategies in the future."

Return on Investment

Thirty percent of companies participating in digital marketplaces have realized a return on their investments, an average of 29 percent. Those that have not expect to realize returns on average 13 months from time of inception.

Echoing concerns consumers have about online retailing, the executives said customer service, ease of use and reliability were key services for online marketplaces. Half the respondents also said logistics, buyer/supplier adoption and inventory management were also key to the success of B2B exchanges.

Consolidation Benefits

Most executives, the survey found, believe consolidation among B2B exchanges will be a benefit. Fifty percent said consolidation will increase the success of online marketplaces, 42 percent said the trend will not affect success, and just 7 percent said it will "greatly decrease" prospects.

The survey, conducted for Andersen by KS&R, polled 105 high-level executives from large and mid-size companies, start-up dot-coms and high-technology companies in the United States.

Other studies also show a rosy outlook for the B2B sector. On Monday, research firm eMarketer issued a report predicting B2B will help e-commerce revenue rise to $4 trillion by 2004. B2B currently accounts for 79.2 percent of all e-commerce spending, a figure that will grow to 87 percent four years from now, eMarketer said.

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Salesforce Commerce Solution Guide
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