Sales force still aces in b-to-b commerce

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New York--People still need people. Despite the projected steady growth of e-commerce cited by researchers, almost two-thirds (63%) of all b-to-b sales in 2004 will still come through person-to-person selling, according to Giga Information Group Inc.

That was among the findings cited by eMarketer CEO Geoffrey Ramsey at the Direct Marketing Association's conference in a presentation Wednesday on the state of e-commerce.

"A significant amount of business-to-business activity still requires face-to-face contact," said Steve Butler, a senior analyst at eMarketer.

That is especially important when it comes to big-ticket transactions. "You're dealing with a high-dollar relationship, and you want to know the people," said Andrew Bartels, research leader for e-business strategies at Giga. Bartels added that while the final contract will often still be closed face-to-face, "there is still an active role for the Internet in terms of both the research and the qualification stages of a buying decision." Giga will update its projections in early June.

Not surprisingly, eMarketer expects healthy growth in b-to-b e-commerce revenues. Online sales are expected to triple by 2004 to $1.0 billion, from $306 million in 2001, according to the research aggregator. Its projection is more conservative than those of Jupiter Media Metrix Inc., which predicts $4.6 billion in online sales by 2004, Forrester Research Inc. ($3.0 billion) and Giga ($2.5 billion). The differences, Ramsey said, can be attributed to different methodologies, differing definitions and "lots of extrapolation, interpretation and pure guesswork."

Companies have clearly recognized the value of buying online, but there's a disconnect between the buying and selling processes. Ramsey noted that while more than 75% of U.S. businesses bought indirect goods and services online in the fourth quarter of 2001, online accounted for only 9.5% of total indirect company purchases. Fifty-seven percent of companies bought direct goods and services online in the fourth quarter, while a mere 6.2% of all direct buying was attributed to online transactions. EMarketer derived its numbers from the Institute for Supply Management and Forrester Research.

"While between 80% to 90% of all U.S. firms will be buying online in the next couple of years, only 30% to 40% will be selling."

--Carol Krol

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