While the darling of the internet market place in 1999 has been business-to-consumer e-commerce, internet analysts are predicting big things for B2B e-commerce in 2000.
"Business-to-business electronic commerce has been treated in the media and internet marketplace like the ugly stepchild to the more glamorous business-to-consumer electronic commerce," says Harry Tse, director of Internet Computing Strategies at the Yankee Group.
"But B2B e-commerce procurement activity, with its material bottom-line benefits, is spawning rapid adoption by buyers across many industries, which in turn is compelling more and more sellers to offer B2B e-commerce capabilities."
In fact, Forrester Research Inc predicts that the value of the business-to-business market will expand to US$1.5 trillion by 2004. And where the market is, so are the banks. Or are they?
It's just the beginning
Banks are only just beginning to step into the B2B e-commerce race. Citigroup and Commerce One announced plans to launch a B2B portal early in the new millennium. This follows hot on the heels of Citibank Commerce, developed by the bank's Global Cash and Trade group in Asia Pacific. Similarly, HSBC has only just stepped up to the plate with an alliance with bolero.net. So why are the banks hesitating?
Banks no doubt have a vital role as the trusted intermediary in faceless transactions. John Richards, CEO of QSI Payments Inc, explains that the process and hardware-intensive requirements ofásecure electronic transactioná(SET) have hampered the takeoff of B2B e-commerce in the past. Subsequently, Y2K concerns held the banks back from committing to any new systems or technology.
Security is of utmost importance, given the high volume, high value transactions that take place. Understandably, merchants are also nervous, calling for a secure co-ordinated process that will be able to take their trade from start to finish.
"The tendency is to "e" all the traditional processes, but that is an enormous task, given that every company dealt with along the chain of trade uses different systems and software and are in different stages of implementing e-commerce technology," says Steve Bennett of HSBC trade services.
"The other way of stepping into the market is to develop new products that give customers the same comfort of traditional products, but that will use the internet to streamline the transactions and cut down costs."
Bennett adds that banks must resist being swept upáby the tide of e-commerce service providers claiming to be in the B2B marketplace, as many may just be seeking to increase their IPO price.
The banks may be cautious with their approach and e-commerce activities, but there is no denying that B2B is the next golden child of e-commerce.
