Special Report: Portal Directory

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What do you call an industry-oriented content aggregation site that now offers e-commerce transactions and services? How about an e-marketplace that has news, industry information and hyperlinks? It's a lexicographic quandary that's challenging industry players and analysts alike as content portals and e-marketplaces strive to emulate—and in some cases, partner with—each other in order to survive.

Content sites: Adding functionality key to survival

The giant consumer portals such as Yahoo!, MSN, Netscape and AOL were the first to add transaction applications—and with good reason.

Adding these commerce tools may become a neces-sity for portals' survival, said Dan O'Brien, senior analyst for Forrester Research Inc., Cambridge, Mass. And in the b-to-b space, it may even be more necessary.

"People's primary motivation on the Web is to get things done," O'Brien said. "When you refer to the business-to-business world, it's even more task-oriented since you are trying to get your job done."


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Any site that today puts content front and center is making a mistake, he said. "They should feature applications that really help people get their work done, and then at the appropriate points in that decision process, supply content that helps move that decision along."

There are also doubts about the long-term viability of the advertising-based business model of portals today, said Tim Clark, b-to-b senior analyst for Jupiter Media Metrix Inc., New York. "The appeal of becoming a portal where you could be only dependent on advertising is less than compelling," he said.

Even with these forces at work, the number of b-to-b portals striving to become e-hubs seems to be slight, Clark said. "The exception to that, I suppose, would be VerticalNet," he said, "which began as a publishing portal for industries and has been trying for several years to increase the amount of commerce that it does."

E-marketplaces: Providing info bolsters transactions

However, Clark does see evidence of e-marketplaces adding more portal-type features, primarily because most of them have had difficulty getting a lot of transactions. "They have tried to diversify and make themselves more essential by aggregating content and getting some characteristics that do look more like portals," he said.

This is why b-to-b portals have not fully embraced e-marketplace functions. "Even those people who started out doing transactions weren't that successful at it," he said. "So what are you emulating exactly? It is a model that has not been vastly successful."

This dearth of transactions, Clark said, may be due to a few factors, including b-to-b buyers being uncomfortable with the medium, and e-marketplaces focusing too narrowly on matchmaking—getting the buyer and seller together.

"A b-to-b transaction is a lot more complex than a b-to-c [business-to-consumer] transaction, where you make a choice, push a button and pay for it with your credit card," Clark said. "There would be probably 12 to 20 steps in a b-to-b transaction. Just getting them married and talking to each other is step one. And that is where too many of the marketplaces initially stopped."

Still, there are some success stories. Steve Butler, senior b-to-b analyst for eMarketer Inc., New York, praises eMerge Interactive Inc. "They are one of our so-called benchmark exchanges that we watch closely," he said. "Not only do they transact online, but they have a great information service for the cattle industry."

The new hybrid

Further clouding e-marketplace prospects are reports such as eMarketer's February 2001 "eCommerce: B2B Report," which projects a rosy outlook in general, but suggests that the total number of online

exchanges may have peaked.

This will also affect the marketplace vs. portal relationship. For starters, the lines between the two will blur, Butler said. "The marketplace will become the portal, to the extent that if some portals master content, they may have an opportunity to merge with some of the leading marketplaces that offer deeper transaction functionality."

Butler also sees industry marketplaces, and thus the marketplace-portal hybrids, evolving by adding additional services, charging subscription fees or licensing software applications. One example is AviationX Inc., Arlington, Va., originally planned as a marketplace for airlines. Now, Butler said, AviationX provides procurement software for small to midsize airlines.

All this crossover has become necessary, Butler said, because "at this point in the game, a lot of companies are trying to keep their heads above water. They need new revenue streams."

So the question remains: What will we call these entities? Eventually, perhaps within the next couple of years, Clark believes there will be one common classification. "We won't call them portals, and we won't call them marketplaces," he said. "The language will evolve."

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