Yahoo, AOL Detail Business-to-Business Plans

SAN MATEO (03/21/2000) - Online titans Yahoo Inc. and America Online Inc. both detailed business-to-business plans Monday.

Yahoo's B2B Marketplace is a directory that offers equipment, inventory, and product listings from e-commerce sites including FreeMarket.com's AssettExchange, an exchange for industrial parts, raw materials, and commodities; Imark.com, an exchange for used equipment; and Liquidation.com.

The Yahoo B2B Marketplace offers features including fixed and variable pricing, pricing comparison, options search capability, tracking and monitoring of listings, and integration with certain Yahoo features.

America Online's business-to-business ploy involved a three-year strategic alliance with PurchasePro.com to co-develop a business exchange for business users across AOL, AOL.com, CompuServe, and Netscape Netcenter. Users from companies of any size company will be able to source, bid, negotiate, buy, and sell their products and services across multiple vertical and horizontal markets, with the exchange interfaces tailored specifically to the size and type of business, according to AOL.

"The key will be how AOL negotiates these vertical marketplaces. When you're talking about vital goods -- the steel industry, the food industry -- people are not going to turn to AOL ... I would rate it highly unlikely that people would set up vertical marketplaces like plastics, chemical or steel or food [or] agriculture with AOL," said Shawn Willett, an analyst at Current Analysis.

Willett said neither AOL nor Yahoo present real competition to the larger b-to-b exchanges because despite their branding, they simply do not have the experience necessary, such as setting up supply chains, linking in to back-end solutions, and professional and consulting services, to attract enterprise customers to these new offerings.

"It's [Yahoo and AOL's b-to-b offerings] good for buying non-essential goods like office supplies and travel for smaller to midsize companies ... [But] you're not getting process efficiency like you would in purchase procurement software, or with an Ariba or a CommerceOne," or even best pricing, as you would with a buying consortium, Willett said.

Under the agreement, AOL and PurchasePro.com will share advertising and transaction revenue, and AOL will have the opportunity to earn performance-based warrants, according to AOL. The co-branded marketplace is expected to roll out by the end of the second quarter.

Geneva Sapp is an InfoWorld reporter.

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