B2B marketplaces heading for a big shake-up, analysts warn

A BIG shake-up of business-to-business e-marketplaces is just around the corner, according to consultants Gartner Group.

The latest analysis produced by the worldwide IT and internet specialist suggests that the rash of business-to-business start-ups are facing a race against time to generate traffic through their various trading sites.

The report warns that new start-ups face the prospect of dwindling venture capital and the launch of rival consortia sites by the older bricks-and-mortar companies that are actually taking part in trading and procurement.

Escalating operating costs – and the fact that the technology involved is not expected to mature for several more years – are further adding to their perilous position.

Gartner predicts a viable long-term future for only three e-business marketplace models – those providing business services, commodities trading or integration services. It expects these models to account for 95% of B2B marketplaces by 2005.

Business services marketplaces will add buyer-supplier value by giving focused support to both sides – such as logistics or financing options.

Commodities marketplaces will survive by virtue of allowing speculation on forward prices and by cutting inefficiencies in existing markets.

Online integration services sites are set to provide the tools and technical support needed to enable businesses to operate in the online world – for example applications software.

Gartner believes, however, that it is extremely unlikely any single marketplace could be all three of these and survive.

Instead, it recommends that they concentrate on dominating their particular sector.

Carl Lenz, a Gartner research director, said: `If they are to survive, e-marketplaces must overcome increased operating costs and provide an extremely compelling reason for moving tightly integrated business processes to a marketplace.’

He said that the complexity of enabling suppliers to participate in a marketplace had been overlooked. `Functionality and participation are currently limited, but by 2005, over 500,000 companies will participate in a marketplace as buyers, sellers, or both.’

www.gartner.com

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