E-hubs opening doors to opportunity, competition

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The lead story in this issue of Btob is on electronic marketplaces--how they work, why buyers and sellers are rushing to join them and what they'll look like in the future.

Editor at Large Rich Karpinski takes this important, complex topic and expertly dissects it; more important, our Special Report provides context, perspective and advice. (Read Rich's column on the facing page for more insights, including his observation that successful e-marketplaces continue to rely on tried-and-true marketing concepts.)

The profusion of planned and already-established e-marketplaces is fascinating for many reasons, not the least of which are the benefits for participating buyers and sellers.

The hullabaloo also should remind us why the Internet is making such a huge difference in business. Remember electronic data interchange (EDI)? As a concept, 20-year-old EDI has sought to deliver many of the same advantages of current e-hubs. Both use electronic networks to mediate the interaction between trading partners. But EDI has never achieved critical mass and depth. Specialized EDI networks have been proprietary, point-to-point and expensive. All the things that Internet exchanges aren't.

Just last month, Delphi Group's survey of 200 evaluators of b-to-b technologies found that "50% of transactions they conduct online will flow through a B2B marketplace by 2003."

But like all explosive phenomena, e-hubs will be dangerous for some. For the providers, the clear danger is that a glut of perhaps several thousand e-marketplaces will put downward pressure on their revenue models, now almost entirely based on transaction fees. Imagine transaction fees dropping to zero and you get the picture. For businesses that participate in hubs, the risks revolve around a likely consolidation of the hub universe in a year or two. Apart from the headaches that often follow such mergers and acquisitions, what does your business do when its favorite dot-com e-marketplace is purchased by your direct competitor?

Brainteaser, strategic questions like these are the sort that consulting firms grapple with day and night. No wonder consulting outfits have been scrambling to capitalize on the e-marketplace craze with Internet-focused units. This week, Btob reports on the latest firms to dive into the b-to-b waters with a Page 1 story by reporter Philip B. Clark.

Consulting on a grand scale is the mandate of IBM's GoGlobal, which will advise Fortune 500s and dot-coms on doing e-business internationally. Watch as IBM launches GoGlobal today; Btob's coverage of the news is on Page 3.

As I've said before in this space, American business is woefully provincial. This myopia misses opportunities for exploring new markets and new customers. More ominously, it surely will catch many U.S. businesses flat-footed when they wake up to find that their most aggressive, sophisticated competitors are half a world--but only a browser click--away.

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