To: John Pitera who wrote (448 ) 3/11/2000 2:37:00 PM From: John Pitera Read Replies (2) | Respond to
VERT-B2B ECommerce-- with MSFT Buying into them and the SoftBank alignment, you have to like VERT.VerticalNet {VERT} operates a business-to-business (B2B) Internet portal, not a business-to-consumer (B2C) portal. B2C e-commerce initially drew the most attention from Wall Street while B2B e-commerce was largely overlooked by investors because they did not fully understand B2B e-commerce model. In addition, the B2B industry is not terribly sexy at first glance. How times have changed. Now B2B stocks as a group are among the most desired issues on Wall Street, while investors have largely soured on B2C e-commerce stocks and Internet portals. The B2B business model is simply superior to the B2C model. Whereas the B2C industry is characterized by low or negative profit margins and little loyalty from consumers, the B2B industry enjoys significantly higher profit margins; each company has garnered loyalty within its supply chain. Simply put, B2B has a more economical business model than B2C. VerticalNet has taken the portal model and transformed it into a means of displaying different industrial communities to attract various industry professionals. The company hosts 55 community Web sites including beverageonline.com, fiberopticsonline.com, wirelessdesignonline.com, and autocentral.com. Each Web site has a search engine, a product center, auctions for used equipment and surplus goods, the latest headlines in various industries, a professional center for jobs in these industries, and an editorial section in which each industry is analyzed by an editor who has extensive knowledge of the particular industry. This type of customized content gives industry professionals a strong reason for constantly returning to the site. Moreover, sales leads are generated by the product center section of each Web site and the storefronts within the Web site that VerticalNet hosts for each of its members. communities minimize the possibility of bogus sales leads because businesses in the community deal with one another, not unknown individuals. In addition, VerticalNet is very restrictive about which industries get their own communities. The industry is comprised of at least 3,000 companies with at least 40,000 buyers in those companies. VerticalNet also requires that the industry have at least $10 billion in domestic sales. With these strict requirements, VerticalNet is substantially improving its percentage of successful communities. the leading B2B portal should continue to thrive in its well-protected niche. It is considerably harder to set up a myriad of different communities and storefronts than it is to simply add free email, a search engine, and chat rooms. With the breadth and purchasing power of each industry, VerticalNet could be sitting on a gold mine over the long term.
