Report: B-to-B E-commerce Exploding

FRAMINGHAM (03/24/2000) - A report released by E-Offering, a San Francisco-based online investment banking firm, says the Internet and information technology are changing the way companies communicate and conduct business as well as traditional supply chains. The report also says growth in the business-to-business marketplace is far outpacing and exceeding business-to-consumer e-commerce.

According to Stamford, Connecticut-based Gartner Group Inc., the worldwide business-to-business e-commerce market will exceed $7 trillion by 2004.

In the report, John Ederer, E-Offering vice president and senior research analyst, said advanced technologies are increasing companies' access to new markets. According to Ederer, companies that create online marketplaces to bring together sellers and buyers are also creating more efficient operations that move beyond merely automating commercial transactions.

Last year, most business-to-business applications focused on companies' internal operations, the report says. Now, however, the emphasis has shifted to automating processes between companies and applying technology to entire industrial supply chains.

The report says the Internet is altering traditional commerce by streamlining existing processes and creating entirely new types of products.

In a traditional one-to-one supply chain, goods move from the raw materials provider to the manufacturer to the distributor, then to the retailer and finally to the end user. However, the Internet has enhanced the information flow of the supply chain, developing electronic marketplaces that have the opportunity to create trading environments with more information about supply and demand, more dynamic pricing, faster transactions and more efficient and cost-effective e-commerce.

In addition, through online marketplaces, business-to-business e-market companies can reach new customers as well as potentially lower sales, marketing and purchasing costs.

"We are in the beginning of the next wave of technology adoption as companies shift their focus from internal operations to industrywide supply-chain automation," Ederer said in a statement. "While the underlying mechanics still remain varied, the notion of an electronic marketplace - where buyers and sellers can gather to exchange information and trade goods and services - is beginning to take hold."

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