Although online business-to-business (B2B) transactions currently account for a strong majority of all e-commerce revenue, a report issued Wednesday by Jupiter Media Metrix forecast that an increasing number of firms plan to use private trading networks (PTNs) for collaboration rather than sales over the next 12 months.
The study, released in Boston at a B2B forum sponsored by the research group, attributed the upcoming shift to a growing demand among traders to ramp up the quality and efficiency of their products and manufacturing, before meeting longer-range goals for cost-effective B2B transactions.
“Private trading networks represent a new tool to link the interests of buyers, suppliers and distribution partners,” said Jupiter senior analyst Tim Clark. “Initially they promise cost savings, but their ultimate value will come through effective cooperation that benefits all three parties.”
To compile data for its study, Jupiter surveyed over 400 purchasing managers from U.S. companies with revenues greater than US$500 million about their use of PTNs.
Specifically, the report found that more than a quarter of the executives interviewed said they will implement features to their networks within the next year that will allow companies to facilitate collaborative online activities, including inventory level monitoring and product design.
According to the study, 61 percent of B2B executives cited closer supplier relationships as the key driver of the networks, while almost half said that faster times to market and closer links to channel partners also were chief considerations.
Moreover, Jupiter projected that the integration of such collaborative features will outpace those of transaction-focused enhancements, with only 20 percent of those surveyed indicating that they will concentrate on procurement applications.
Despite the benefits of PTNs, the study concluded that they might face resistance from corporate users who are concerned about the privacy of their data.
For example, 36 percent of the study’s respondents said that sharing sensitive data with business partners was the main barrier to utilizing the exchanges. In addition, almost one quarter cited the integration of existing technology investments as a potential deterrent.
Looking for Leaders
To help lower these hurdles, Jupiter advised industry sponsored marketplaces, which are major customers of PTN software, to take a leading role in establishing standards that protect companies during the exchange of proprietary information.
“PTNs offer many great benefits to the buyers and sellers who use them, but they will not reach their long-term potential if they are used as stand-alone applications,” said Clark.
“The most strategic connection exists between supply-side PTNs that monitor inventory levels and demand-side PTNs that connect manufacturers to sellers or end users,” Clark added. “When combined, they can create visibility along the entire chain between buyers and producers and also have the potential to allow for sellers to anticipate demand.”