Study: Firms Still Bullish on B2B

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

The survey, which builds on the findings of a similar poll Andersenconducted in June, found that one-third of company executives see B2Bmarketplaces as crucial to an overall business strategy, and that the roleof online exchanges will “dramatically increase” over the next year,Andersen said.

Half of the executives surveyed see digital marketplaces as a “criticalmeans 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-houseresources, cost and supplier adoption.

More Involved

Andersen said that while executives’ overall view of the importance ofonline marketplaces has not changed since the last survey, companies are nowmore likely to buy and sell products and services online than they were sixmonths ago.

Forty-five percent of the executives surveyed said their companies offerproducts or services in one or more digital marketplaces established byother companies, an increase from 31 percent six months ago. On the buyside, 66 percent of the respondents said they purchase products or servicesover B2B marketplaces, up from 48 percent in June.

Initial Investment

“The challenges are mounting for digital marketplaces, includingglobalization issues and impending consolidation that could dramaticallyreshape the sector,” said Kevin Costello, an Arthur Andersen partner andhead of the firm’s digital markets solutions business.

“Despite these considerations, companies are continuing to realize thatthese marketplaces will play a key role in the future of B2B,” Costellosaid.

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

In the June survey, nearly half the executives surveyed said compatibilityof infrastructure was the greatest hindrance. “It’s clear that we have movedbeyond the early-adopter phase, and that significant activity is takingplace in the digital markets and e-procurement sector,” said Costello.

Costello added, “What hasn’t changed isthe understanding that digital marketplaces will continue to be an intricatepart of their e-business strategies in the future.”

Return on Investment

Thirty percent of companies participating in digital marketplaces haverealized a return on their investments, an average of 29 percent. Those thathave not expect to realize returns on average 13 monthsfrom time of inception.

Echoing concerns consumers have about online retailing, the executives saidcustomer service, ease of use and reliability were key services for onlinemarketplaces. Half the respondents also said logistics, buyer/supplieradoption and inventory management were also key to the success of B2Bexchanges.

Consolidation Benefits

Most executives, the survey found, believe consolidation among B2B exchanges will bea benefit. Fifty percent said consolidation will increase the success ofonline marketplaces, 42 percent said the trend will not affect success, andjust 7 percent said it will “greatly decrease” prospects.

The survey, conducted for Andersen by KS&R, polled 105 high-level executivesfrom large and mid-size companies, start-up dot-coms and high-technologycompanies 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. B2Bcurrently accounts for 79.2 percent of all e-commerce spending, a figurethat will grow to 87 percent four years from now, eMarketer said.

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