BRIEFING.COM - Gregory A. Jones] --Weekend Special-- Time to crank up
our B2B series -- in the coming few weeks, we will be looking at the
subsectors and companies in the business-to-business world. As with all
things Internet, defining who is and who is not a B2B company is more
art than science. So before getting into specifics, we must first design
our plan of attack. We are aware of the confusion that surrounds the B2B
designation, so let's be clear on the Briefing.com rules of thumb. B2B
companies are those that do one or more of the following:
Develop software that facilitates B2B transactions
Create marketplaces for B2B transactions
Offer content that facilitates B2B transactions
Sell goods and services to businesses online
Some of the broader B2B definitions include companies
that sell software to businesses, even if that software is not used for
B2B purposes. Ask Jeeves (ASKJ) and Tibco (TIBX) are two examples. But
these companies do not directly or indirectly focus on B2B transactions.
The same is true of Internet services companies such as Viant (VIAN) and
Scient (SCNT). Both sell their services to business, but the services
they offer may or may not be related to B2B transactions. Let's be
clear on one point: it is the expected boom in online B2B transactions
which is producing the tremendous valuations of the few publicly traded
B2B pure plays. When Briefing.com discusses B2B companies, we will focus
on the companies that will benefit from these transactions.
Listed below are the B2B subsectors and the companies within each
subsector. And following each of these listings is a brief explanation
of each subsector.
CRM Commerce/Customer Service: Art Technology
(ARTG), BroadVision(BVSN),InterWorld (INTW),
Primus Knowledge (PKSI),
Silknet Software (SILK), Vignette (VIGN).
By facilitating ecommerce, the companies in the
CRM space are participating in both the B2B and B2C
(business-to-consumer) sectors. It is for this reason that we do not
consider them pure plays on B2B. But even though they are not
pure-plays, their stocks have clearly been participating in the B2B
boom. Soon to be added: Allaire (ALLR), once it releases its new Spectra
product that will compete with VIGN and BVSN. CRM Marketing/Email:
Broadbase Software (BBSW), eGain Communications (EGAN), e.piphany
(EPNY), Kana Communications (KANA), Net Perceptions (NETP).
These niche CRM players are even more dubious when it comes to a B2B
designation. Most of their software functionality is targetted at the
B2C market, but these companies nevertheless deserve a mention when
discussing B2B.
Horizontals: Agile Software (AGIL), Ariba (ARBA),
Clarus (CLRS), Commerce One (CMRC), Concur Tech (CNQR), PurchasePro.com
(PPRO), VerticalNet (VERT).
Now we enter the pure B2B realm. These companies develop content,
software and/or marketplaces that facilitate B2B transactions across a
wide range of industries. Soon to be added: FreeMarkets (FMKT),
following its IPO expected in December.
Verticals/Technology: Calico Commerce (CLIC),
pcOrder.com (PCOR).
Verticals are the same as horizontals in that they
develop content, software and/or marketplaces that facilitate B2B
transactions. But verticals target a specific industry; in this case
technology. Neither of these companies is a clear choice for this
subsector -- CLIC could be considered a CRM company, but most of its
business is B2B, while PCOR is expanding from the computer industry into
office supplies and may eventually become a horizontal.
Verticals/Healthcare: Allscripts (MDRX),
CareInsite (CARI), Claimsnet.com (CLAI), Healtheon/WebMD (HLTH),
TriZetto (TZIX).
A huge vertical, one that is hotly contested, and
one that will be very difficult to conquer given the current state of
affairs in the healthcare industry.
Verticals/Life Sciences: Chemdex (CMDX),
SciQuest.com (SQST).
This vertical is one in which knowledge of the
industry is crucial to success, and customers, once they are acquired,
are likely to remain loyal. Profit margins are low as these companies
both maintain inventories, but should rise over time as volume discounts
on purchases are achieved.
Verticals/Retail: Retek (RETK).
This HNC Software spin-off focusses on software to
promote supply chain collaboration -- in other words, it is not yet
benefitting significantly from B2B retail transactions. We have
nevertheless included RETK, as it is attempting to facilitate
transactions via its Retail.com portal.
Sales/Technology: Elcom (ELCO), Intraware (ITRA).
We differentiate between companies that develop
content, software, and transaction services in various verticals and
companies that simply sell products or services directly to businesses.
These sales companies are in the B2B space, but by not becoming involved
in the overall growth in B2B
transactions, their upside potential is more limited. In the technology
sector, we have Elcom (which is also working to become a vertical with
its PECOS procurement system) and Intraware, which sells software and
related services.
Sales/Employment Svcs: Headhunter.net (HHNT), HotJobs.com
(HOTJ), Tobjobs.net(TJOB).
Helping employers find employees is a big
business, but not one where any company can win much customer loyalty
and the pricing power that loyalty brings. In short, not a very exciting
sector.
Sales/Postage: E-Stamp (ESTM), Stamps.com (STMP).
Given the technological barriers to entry, selling
postage online may be a business with better profit margins than most
B2B sales sectors, but proof of concept has yet to be seen.
Miscellaneous Sales:
Printing: Imagex.com (IMGX).
Subscription Svcs: Rowecom (ROWE).
Legal Documents: Loislaw.com (LOIS).
Mortgage Brokerage: Finet.com (FNCM).
Accounting Management: ResourcePhoenix.com
(RPCX).
Travel: GetThere.com (GTHR).
Most of these speak for themselves -- not very
interesting areas given the generally low profit margins and lack of
pricing power, but some profitable companies will emerge from this
group.
You will note that we did not include many older
companies that are attempting to move into the B2B space, such as
Sterling Commerce (SE), Open Market (OMKT), Harbinger (HRBC), and HNC
Software (HNCS), to name a few. We are focussing only on pure plays. In
cases such
as Retek, which was a spin-off of HNC Software, we will include the
spin-off company if it is a pure, web-based company.
Now that we know the subsectors and the players, our
analysis of the individual companies can begin, starting with the CRM
companies. Stay tuned, much more still to come... |
