B2B to quadruple by 2004, study says

Business to business e-commerce should quadruple by 2004, according to a new report from the Boston Consulting Group. The BCG study predicted that B2B e-commerce, which it pegged at US$1.

Business to business e-commerce should quadruple by 2004, according to a new report from the Boston Consulting Group.

The BCG study predicted that B2B e-commerce, which it pegged at US$1.2 trillion this year, will hit US$4.8 trillion by 2004. That figure includes dollars generated from proprietary Electronic Data Interchange networks as well as Internet-related revenue.

Companies such as Commerce One , Ariba and VerticalNet have been racing to build exchanges and B2B storefronts.

"B2B e-commerce is advancing quickly is advancing quickly in terms of penetrating the total procurement market, but at the same time, remains fairly immature in its development," BCG vice president Andy Blackburn said in a release.

And while electronic marketplaces have been all the rage lately, traditional selling methods will linger for some time, the study found.

Blackburn said that online purchasing will account for 40 percent of total purchasing, although only 11 percent of all purchases will involve online price negotiations.

"In the near term, B2B e-commerce may not be as disruptive to many traditional buyer-supplier relationships as originally thought," BCG vice president Jim Andrew said, pointing out that almost half of those surveyed said standard sales methods are used almost all the time. "One emerging message is, don't sell your golf clubs."

But an increasing reliance on online selling will eventually put pressure on prices. Half of those surveyed said they expect to experience incremental price pressures in the near future.

That doesn't mean the marketplaces will go away. But BCG definitely sees a shakeout coming.

"A limited number of broadline marketplaces will exist in any given category," Blackburn said, adding that between half and three-quarters of the companies surveyed said they will work with one or a few marketplaces, not many.