More companies push into Net marketplaces

Ariba, Ford Motor, PSINet and ePlus are among the companies rushing to jump on the business-to-business bandwagon.

3 min read
The rush by companies to set up online marketplaces accelerated today with several deals.

Ariba said it is teaming with Buzzsaw.com to build a global site for building materials and equipment suppliers and sellers. Ford Motor and ZoneTrader.com said they are creating a way to dispose of a variety of surplus capital equipment, such as machine tools and office supplies.

In addition, PSINet and ePlus unveiled an agreement in which ePlus will provide the software for a new marketplace and PSINet will provide Internet hosting services to marketplace users.

These deals follow a laundry list of similar efforts by traditional and Internet companies rushing to jump on the business-to-business bandwagon. A growing number of manufacturers and technology providers have also joined the lucrative business-to-business e-commerce market, building marketplaces as well as trading exchanges that connect suppliers, partners and customers online.

The leading research firms have the business-to-business market pegged between $2.7 trillion and $7.3 trillion by 2004, up from about $131 billion in 1999. In comparison, Forrester Research projects business-to-consumer spending will reach $184.5 billion in 2004, up from $20.3 billion last year.

"There is a belief out there that business-to-business marketplaces are going to be the new business model," said Forrester analyst Laurie Orlov. Companies are scrambling to establish their online exchanges and marketplaces because they "do not want to be left out of this sweeping wave," she added.

The rapid growth of the market has raised concerns about the potential need for government regulation, an issue that could lead to bitter disputes over control of the multibillion-dollar industry. That said, the market shows no sign of slowing.

Industry analysts and at least one member of Congress are debating whether the Federal Trade Commission should establish some form of oversight for marketplaces, such as the recently announced agreement among Ford, General Motors and DaimlerChrysler. The venture will create a single automotive-parts exchange for their thousands of suppliers and dealers.

The FTC is currently reviewing some of the bigger marketplace deals and is expected to have comment by the year's end.

The new Buzzsaw.com marketplace will provide supplier information, catalogs and transaction services to contractors, architects, engineers, distributors, manufacturers, suppliers, wholesalers and brokers, the company said.

Under Ford's latest venture, ZoneTrader, a marketplace that handles transactions of refurbished equipment and office furniture, will manage the auditing of automaker's surplus goods, test and refurbish them, and sell them through its existing marketplace. Ford also said it will become an investor in the company. No financial details were made available.

Also today, Inc2Inc, a Texas-based start-up, said it plans to launch a marketplace by the end of the month that will target the food and beverage manufacturing industry, which Merrill Lynch estimates to be a $425 billion market.

The company will compete with a number of existing business-to-business exchanges in the industry, such as ecFood and Global Food Exchange, which offer auctions and transaction technology and services.

Whatever the industry, analysts say there is a mad rush by companies wanting to get their marketplaces running to transform existing business processes and make online connections with their partners, suppliers and customers.

"It's going to be the way of the world," said John S. DeSemone, analyst with the Delphi Group. "There is a scramble to establish marketplaces to get rid of inherent inefficiencies, like paper work and phone calls. Business-to-business facilitates that process, and marketplaces are the natural evolution of this process."