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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: puborectalis who wrote (77306)	2/21/2000 12:57:00 PM
From: puborectalis	Read Replies (1) \| Respond to of 108040

B2B is THE hot zone for the next several years.......ZDNET:"All of the B2Cs are looking for elements of their business that are B2B," says Mark Rowen, a senior analyst for the Internet retail sector at Prudential Securities in New York. Why the sudden focus on B2B? It's simply a matter of economics. Internet companies are making the switch to cut costs, observers say. "B2B has the potential for lower marketing costs per dollar of revenue because the average order sizes are bigger," says Perry Boyle, an analyst at the New York merchant bank Thomas Weisel. "It's also cheaper to send 1,000 widgets to one customer than to ship one widget to 1,000 customers. On the flip side, businesses tend to be tougher on price negotiations than consumers." "In B2C our current cash would last one year, but we will have this thing turned around in three months now," he says. "You have to have a path to profitability." Neely also notes that Wall Street is no longer funding start-ups that cannot show progress toward profitability. Funding plays a major role in the trend. David Cooperstein, director of online retail research at Forrester Research in Cambridge, Mass., confirms that the well has dried up for consumer-oriented "dot coms." "B2C is out of favor," he says. "B2B is where all the venture money is flowing these days - along with the public markets. The weakness of start-ups with no assets other than a business plan is what has soured interest in the B2C market." Funding for B2B Web companies is available because vulture capitalists are drooling over the size of the B2B market. Estimates of total B2B online revenues within five years vary from $1.5 trillion (The Goldman Sachs Group) to $2.8 trillion (The Boston Consulting Group). Other researchers are somewhere in between. At the start of 1999, only two or three B2B firms were publicly traded, according to Eric B. Upin, B2B analyst at Robertson Stephens in San Francisco. By the end of the year, 10 to 12 had gone public, and their market capitalization had risen dramatically - from $25 billion in September to $90 billion at the end of 1999. The combined market capitalization of B2C companies at the same time was $700 billion, Upin says. He expects the number of publicly held B2B companies to rise to 25 to 75 by the end of this year. While start-up and development money is still pouring into B2C businesses, most venture capitalists say the big money will be invested in B2B companies in the next year or two. The success of early B2C com-panies attracted too many entrepreneurs. "Me-too ideas and crowded categories are driving interest into newer opportunities," Forrester's Cooperstein says.