B2B Exchanges: Ready to Grow

In preparation for the upcoming report, Online Trading & B2B Exchanges, Steve Butler interviewed several B2B exchanges. The result? He found a quiet confidence in the future among all of them, something that should encourage businesses not yet involved.

Preview the E-Commerce Trade and B2B Exchanges Report

By Steve Butler

After speaking with several business-to-business (B2B) exchanges during the early months of 2003, eMarketer has realized that a common thread has emerged among them � they all share a quiet confidence about their respective futures.

It is important to note, however, that eMarketer has selected exchanges it perceives to be industry leaders, since the focus of its research has been to gauge where leading exchanges are in their development, and gain insight into some of their best practices. Indeed, some interviewees hinted that they believe there will be further consolidation among other, non-competing exchanges during the coming months.

As for the confidence in their own futures, for most exchanges this comes from the steady progress that they have made over the past few years. Many are now heading into their second or third full year of operations, and have completed the difficult work of establishing themselves as independent businesses. They have rolled out solid technology offerings, and they have enabled a core base of users.

Most exchanges now have steady, recurring revenues from their members, many of whom have committed to bringing hundreds of their trading partners online over the course of the next several months, if they have not done so already.

While most industry-sponsored exchanges were dismissed in the past as being nothing more than online auction hubs, a handful of leading exchanges have made steady progress in implementing integrated e-business processes between their largest members and key suppliers.

Evidence that B2B exchanges have strengthened their position during 2002 is confirmed in a recent study by eMarketect and the Open Network for Commerce Exchange (ONCE), which found that of the 21 active exchanges surveyed in January 2003, 67% met or exceeded their recurring revenue goals for 2002.

On the other hand, just 43% of these exchanges managed to meet or exceed their customer acquisition goals last year.

Respondents cited the tough economic environment as one of the main reasons for their difficulties in signing up new members, as many prospects either postponed or cancelled technology projects in 2002. A handful of respondents also mentioned the lingering stigma that prospective members associate with B2B exchanges, which often leads them to raise concerns about exchanges’ financial viability.

Returning to eMarketer’s choice of words in describing the status of leading B2B exchanges today, it is fair to say that some of these exchanges have been rather quiet in speaking out about the successes they have achieved.

Indeed, one of the key findings from the eMarketect/ONCE study is that B2B exchanges need to do a better job of communicating the benefits that their users have gained through their participation in exchanges so far.

As an advocacy group for B2B exchanges, ONCE is working to help its members develop case studies that educate the wider business community about the benefits of exchange membership.

Businesses should plan to take another look at the progress that B2B exchanges have made — the leading exchanges are certainly going to be around for a while

Steve Butler is a Senior Analyst with eMarketer and is currently working on the Online Trading & B2B Exchanges report. You can reach him at [email protected] with comments, questions or suggestions.

By gathering the latest research and news from over 1,000 sources, eMarketer has established itself as the world’s leading provider of internet and e-business statistics. eMarketer’s Web site is at www.emarketer.com