B-to-B Buyers Waiting for Vendors to Go Online

Most business-to-business buyers will eventually move online even though purchasing agents plan to conduct only 20 percent of their transactions via the Internet by 2002, according to research by Jupiter Media Metrix.

The research found that 60 percent of purchasing agents say the chief barrier to buying online is that their preferred vendors do not transact via the Internet. But despite the barriers, Jupiter analysts found that buyers understand the benefits of transacting online and will do so once suppliers meet their product and education needs.

“Purchasing agents understand why they should be using the Internet for their b-to-b purchases, but they’re not quite ready to move online. They will get there once suppliers that they currently purchase from move online and educate them on how to use their system,” said Jean Gabriel Henry, senior Jupiter analyst. Seventy-one percent of the agents surveyed cite lower product costs as a primary benefit of transacting online while 56 percent cite faster product finds.

Two distinct b-to-b markets will surface, Jupiter analysts found: one for buyers seeking existing suppliers, and one for buyers seeking new suppliers. Sellers will have to target one market at a time because they will have dissimilar needs.

According to a Jupiter Executive Survey, 55 percent of purchasing agents say a lack of knowledge about Net markets prevents them from moving online. Lack of trust (45 percent) is the next most common reason given for the slow growth of online b-to-b transactions. Jupiter analysts expect sellers will overcome these barriers as agents become more educated on how digital commerce works and more experienced online.

Jupiter analysts also predict that 85 percent of online b-to-b transactions will be made between existing buyers and sellers, compared to 95 percent among offline purchases.

“The market for existing customers will be the bigger opportunity for sellers because they have already established trust with buyers — many of whom are waiting for their favored vendors to move online,” Henry said. “The market for new customers is smaller but will grow over time, largely because Internet search capabilities will assist buyers in finding vendors.”

Jupiter advises sellers in the online b-to-b space to address the issues of logistics and education and recognize that most buyers prefer to continue doing business with their current suppliers and they won’t transact online significantly without them.