B2B forecast: $6.3 trillion by 2005
By Deborah Adamson, CBS.MarketWatch.com
Last Update: 5:20 PM ET Oct 2, 2000
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NEW YORK (CBS.MW) -- The U.S. business-to-business online
marketplace is expected to grow 20-fold to $6.3 trillion by 2005, according
to a study released Monday by an Internet commerce research company.
"We thought the business-to-consumer shift would
be dramatic. Fasten your seat belts; the
business-to-business shift will be even more
dramatic," John Katsaros, head of the
business-to-business research group at Jupiter
Research, told CBS.MarketWatch.com.
That's because it's both effective and efficient for
companies to use an online marketplace for business,
Katsaros said.
A business-to-business, or B2B, marketplace is an
online site where buyers and suppliers meet to
transact business. For example, Ford (F: news,
msgs) may buy anything from steels to wheels from
suppliers who bid for the business online, he said. It's
a one-stop shop for the automaker.
Not only does the streamlined process save the
companies money, it also speeds up their business
transactions, Katsaros said.
The biggest users of online marketplaces over the
next five years are expected to be the computer and
telecom equipment companies, with a projected $1
trillion in sales conducted over B2B sites, according
to Jupiter's "US Business-to-Business Trade
Projections" study. That's up from the present $90
billion.
The second heaviest users would be food and beverage companies, topping
$863 million in sales by 2005 from $35 million in 2000. The following
industries round out the top five: Motor vehicles and parts, to $660 billion;
industrial equipment and supplies, to $556 billion; and construction and real
estate, to $528 billion.
In the next 10 years, Katsaros sees as much as 80 percent of all business
transactions conducted online.
Forrester Research has a more conservative projection for the U.S. - to
$2.7 trillion by 2004. Globally, B2B trade is projected to rise to $6.3 trillion
during the same period.
Forrester credits several catalysts: The move by big companies into online
marketplaces that will force their partners, customers and competitors to
follow suit.
Commodity exchanges are drawing utilities and petrochemicals firms to the
Internet. Raw materials companies will go online to do business, replacing
phone-based brokering, according to Forrester.
Improved efficiencies in transactions are pulling food and logistics
companies online. These high-volume, low-margin industries will see the
Net as a way to save money and become more effective.
Finally, highly fragmented industries increasingly will move online as they
see advantages of a B2B marketplace, Forrester said.
In comparison, business-to-consumer activity -- such as shopping -- has
exploded in the past five years but it still only comprises 25 percent of all
such transactions, Katsaros said.
The B2C market isn't expected to outpace B2B.
"The business-to-consumer side will grow more slowly because the size of
transactions in business-to-business is larger and consumers have more
options" to shop, such as at the mall, by mail and others, said Steve Kafka,
senior analyst in e-business trade for Forrester. |
