B2B E-Commerce Headed for Trillions

Worldwide B2B e-commerce will total $823.4 billion by the end of 2002, eMarketer found, and the strong growth will continue through 2004.

According to eMarketer’s “E-Commerce Trade and B2B Exchanges” report, Internet-based B2B trade will reach nearly $2.4 trillion by 2004.

“Despite last year’s difficult economic climate, many companies pressed on with their e-business initiatives, continuing to lay the foundation for e-commerce trade,” said Steve Butler, senior analyst at eMarketer. “Leading EDI vendors and industry-backed exchanges are currently helping large enterprises bring their smaller suppliers online, setting the stage for significant e-commerce growth.”

EMarketer estimates that online e-commerce accounted for slightly less than 2 percent of all U.S. B2B trade during 2001. In early 2001, there were over 2,200 Internet-based marketplaces worldwide, and there’s evidence the market has plenty of room for growth. Only 11 percent of corporations report fully implemented e-business strategies.

The B2B e-commerce projection from International Data Corp. (IDC) is more ambitious than eMarketer’s. IDC expects the total worldwide value of goods and services purchased by businesses through e-commerce solutions will increase from $282 billion in 2000 to $4.3 trillion by 2005.

According to IDC, the United States will remain the largest region for B2B e-commerce, with purchases increasing at a compound annual growth rate of 68 percent from 2001 to 2005. Close behind is Western Europe, where B2B purchasing will increase at a compound annual growth rate of 91 percent from 2001 to 2005. Asia-Pacific is the growth leader with a compound annual growth rate of 109 percent during this time.

There is also some evidence that improvements to the way B2B e-commerce is conducted will provide an even bigger lift. According to a study by Giga Information Group, Inc. and Booz Allen Hamilton, most companies are disappointed with the performance of B2B exchanges, but still expect to use them for a greater portion of their future business spending.

Nearly half of the respondents to the survey reported that exchanges have “mostly” or “absolutely” failed to meet their expectations, and only 10 percent of the respondents felt exchanges met expectations. Those surveyed agreed that organizational changes, such as standardizing and developing new procedures, improving and introducing technology systems and introducing integration technology, are needed to capture benefits from exchanges.

A study done in Australia by Dun & Bradstreet (see Australian Biz Loving or Leaving Internet) found a slump in e-business activity and growing distrust in B2B transactions. Many of the concerns expressed by Australian executives centered around the security and reliability of e-commerce. While the number of executives who perceive electronic B2B transactions as being “not at all” secure and reliable has risen from 14 to 26 percent, the number who see it as being “very secure and reliable” has also risen, from 22 to 29 percent.