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eBay latest to tout its e-business ways

The online consumer auction giant's latest deal could be more a marketing strategy to tap the growing demand for business-to-business e-commerce.

2 min read
Think eBay and think auctions for books and baseball cards. But what about backhoes and bulk orders?

The online auction giant, long associated with individual consumers, announced today that it is opening a small-business exchange. But a closer look proves the move could be more marketing strategy than a shift in focus for the San Jose, Calif., company.

The recent interest

CNET TV: Business to business
CNET TV: Business to business
in business-to-business firms on Wall Street has boosted companies? stocks to record levels. At the same time, e-commerce stocks have cooled.

Amazon.com is down 40 percent from its December high and eBay's stock fell today to $189.50 a share, down 12 percent from its 52-week high. Meanwhile, business e-commerce stalwarts Ariba and Commerce One are both up more than 2,000 percent since their initial public offerings last June.

eBay's announcement is a reminder that while it is seen primarily as an e-commerce company, it is also a seasoned player in the suddenly hot "B2B" market, where companies set up exchanges or products targeted for businesses instead of individual consumers.

"Everybody in the B2B world looks at eBay as the progenitor of the whole model," Keenan Vision financial analyst Vernon Keenan said. "eBay is clearly the 500-pound gorilla in Internet exchange transactions today."

It?s not clear, however, whether eBay can maintain its position, as many other e-commerce companies are looking to move into the lucrative e-business market.

In the last two months, Priceline.com, investment firm CMGI and Beyond.com all announced proposals that were trumpeted as moving these e-commerce firms into the e-business sector.

"Last fall, everyone had to have a broadbrand strategy, regardless of whether it was necessary for their business model," Gomez Advisors e-commerce analyst Martin DeBono said. "Now they all have to play in the B2B space."

Part of the draw is the sheer size of the market. While Forrester Research projects that online retailing will grow from $38.8 billion this year to $184.5 billion in 2004, analysts estimate that business-to-business transactions will reach $2.7 trillion to $7.3 trillion by 2004 from about $131 billion in 1999.

Companies such as eBay or Priceline could do well in the business-to-business area, analysts say. Not only do they have established brands, their business models--pairing buyers and sellers through dynamic pricing--fit well with the concept of matching businesses and suppliers.

For eBay, Priceline and similar companies, emphasizing their e-business strategies could mean not only a boost in their stock prices but in their revenues as well, analysts say.

"If a company can mesh their core competency and vision into a B2B offering, then why not? It makes sense," Gartner Group e-commerce analyst Rob Labatt said.