From TigerInvestor.com discussion boards:
B2B Market Research - March 3, 2000
Author: Tae J. Kim
Description
Internet B2B eMarketplaces (trading hubs) provide venues for businesses to procure supplies and trade their products. Buyers benefit by receiving lower processing and product costs, shortening the procurement cycle, and getting a larger selection. Sellers benefit by receiving access to larger markets, having a shorter sales cycle, lowering inventory costs, and improving customer service.
Market Size
B2B Trade Off-line and Online
ú Annually $20 trillion of trade in U.S. goods and services. $17 trillion is B2B (on and off-line), 85% of total. Worldwide B2B constitutes $60 trillion out of $80 trillion overall Source: U.S. Census, Robertson Stephens
ú Huge vertical markets in B2B
o Paper $300B
o Energy $340B
o Food $350B
o Printing $250B
o Construction $800B
o Steel $700B
o Chemicals $1.6 trillion
o Telecom $900B
ú 8 million small businesses, 23 million SOHO
B2B Ecommerce
ú Forrester Research estimates U.S. B2B ecommerce will grow from $109 billion in 1999 to $1.8 trillion in 2003, $2.6 trillion in 2004. $1.4 trillion (53% of this trade) will flow through eMarketplaces in 2004
ú Gartner Group forecasts B2B ecommerce will grow from $145 billion in 1999 to $7.3 trillion in 2004 ? 119% CAGR
Online B2B Trade Growth by Industry
Major Players
VerticalNet (Market cap $8B ? 2/2/00)
ú Creator and operator of 51 vertical trade communities attracting over 2 million monthly visitors
ú Provides content, community, and commerce
ú Services include editorial content, career center, and online marketplace
ú Bought NECX and LabX to bolster ecommerce capability. Licensed TradeX trading community platform
Ventro Corp. formerly known as Chemdex (Market cap $7.4B ? 2/2/00)
ú Marketplace for $15 billion life sciences product and $68 billion specialty medical supplies market
ú Central buying location with real-time product listings and prices for highly fragmented market (2000+ buyers and 5,000+ suppliers)
ú Improves efficiency and reduces orderings costs by up to 40%
ú Enable buyers to implement their own purchasing rules and obtain volume discounts
FreeMarkets (Market cap $7B ? 2/2/00)
ú Provide customized online B2B auctions for large buyers of industrial parts, raw materials, and commodities
ú Conducts more than $1 billion in transactions per year
ú Creates auctions for 1,800 suppliers in over 50 product categories
ú Delivers savings of 2-25% to customers
ú 30 Fortune 1000 customers
Ariba ($29B ? 2/2/00)
ú Provide B2B ecommerce platform and network for buying operating resource supplies
ú Manages buying process over a network of suppliers
ú Provides catalog and content management, order transaction routing, and transaction information sharing
ú Lowers the cost of procurement by dramatically reducing processing and product costs
Commerce One ($16B ? 2/2/00)
ú Provides trading platforms for large enterprise purchasing / selling with catalog aggregation and content management capabilities
Internet Capital Group ($29B ? 2/2/00)
ú Internet venture/holding firm that provides resources and guidance in strategy/operations for B2B startups & companies
CMGI ($29B ? 2/2/00)
ú Internet venture/holding firm. Started $1 billion CMGI@Ventures B2B fund focused online B2B companies
ú 65% of CMGI@Ventures invested in B2B companies such as Chemdex, Silknet, Promedix.com, Intelligent/Digital, BizBuyer.com, and OneCore.com
Trends
ú Overlapping of different business models: Exchanges, aggregators, auctions, content & community, software/technology
ú Increasing growth in going ?online?. Currently 54% of firms do online transactions, which will grow to 93% by 2002
ú Key Factors Driving Growth
o Intense competition drives the need for cost savings
o Comfort with web technologies, process, and infrastructure
o Increasing stickiness in B2B applications as network growth starts to scale
ú Within five years, buyers will make decisions based on real-time analysis of nonprice factors like quality levels, availability, delivery time, service contracts, financing, and insurance as B2B ecommerce gains critical mass
ú Consolidation will result in a few ?powerhouse? eMarketplace companies, as trading thrives on liquidity & selection |
