Today, big players in industries as diverse as utilities, health care insurance, and lawn and garden equipment revealed plans to form online exchanges.
Although such exchanges are in their infancy--and few are beyond the planning stages--interest is booming. Companies see business-to-business marketplaces driving down internal purchasing costs and streamlining connections between suppliers, partners and customers.
Today, 15 utility companies, including American Electric Power, Consolidated Edison, Edison International, Unicom, Reliant Energy and FirstEnergy, unveiled plans to jump on the business-to-business bandwagon in a deal to build an online marketplace.
The electric and gas companies hope to establish an independent company by June to run the portal, which will initially provide online auctions and equipment purchases. Financial details of the deal were not released.
PricewaterhouseCoopers has been enlisted to specify technology for the site and assist in its development, according to a statement issued by the companies.
In the health care industry, some of the largest insurance providers, including Aetna Healthcare, Cigna, WellPoint Health Networks, Oxford Health Plans, Foundation Health Systems and Pacificare Health Systems, are in talks to build a new health insurance system, according to Bloomberg News.
The system, intended to undercut online service providers such as Healtheon/WebMD and CareInsite, also aims to eliminate the massive amount of paperwork and telephone calls exchanged between doctors, patients and insurance providers. The project, dubbed MedUnite, will allow patients to enroll in health plans and choose doctors over the Internet as well as handle administrative services, such as processing payment claims. IBM and Oracle have been enlisted to build the exchange.
Business-to-business software maker Ariba today said it is teaming with U.S. Home & Garden, a maker of lawn care products, to build a marketplace for the lawn and garden industry.
Due to go live in June, Egarden.com will enable online supplier information and offer online transactions and auction services to lawn and garden manufacturers, independent retailers, specialty stores, contractors, landscapers and municipalities.
U.S. Home & Garden is a manufacturer of consumer lawn and garden products such as anti-weed landscape fabrics, fertilizer tools and landscape edging.
Several leading research firms have projected the business-to-business e-commerce market will be worth between $2.7 trillion and $7.3 trillion by 2004--a big driver for several technology providers, manufacturers and professional services firms that have recently made a push into the market.
The rapid rise and popularity of the sector also has obscured the serious hurdles faced by the industry. Some have voiced concerns about the potential need for government regulation over marketplaces that concentrate tremendous purchasing clout among a handful of large companies, opening the possibility of collusion. Others have noted that despite the tremendous attention the sector is receiving from investors, there are several pitfalls that need to be surmounted, including security and standards issues.
Bloomberg News contributed to this report.