Commerce Department: 1999 was a good year for B2B

A U.S. government survey released Wednesday found that e-commerce was dominated by business-to-business transactions in 1999. But the B2B segment is currently struggling with expansion problems and downturn.

A U.S. government survey released Wednesday found that e-commerce was dominated by business-to-business transactions in 1999. But the B2B segment is currently struggling with expansion problems and downturn.

The U.S. Department of Commerce released its first official snapshot of e-commerce activity in the manufacturing, service, and wholesale- and retail-trade industries. The survey found that while e-commerce in 1999 made up a small portion of the total economic activity in those sectors, a large share of that portion was made up of deals between businesses.

Although it is unclear now what the findings on business-to-business e-commerce will say in the future, the report comes at a time when the sector--like many other segments of the Internet economy--is struggling. Companies have been slow to adopt the business model and many online exchanges have failed to move beyond e-procurement, which has sparked layoffs and marketplace shutdowns. The Department of Commerce is currently surveying each sector **of the Internet economy** for its 2000 assessment, to be released next March. While the research for the 1999 survey was conducted during a time when e-commerce was entering its heyday, the business-to-business findings in the study--conducted by the U.S. Census Bureau, part of the Commerce Department--took government analysts by surprise.

"The B2B component was larger than many of us expected," said Thomas Mesenbourg, assistant director of economic development at the Census Bureau. "The size of manufacturing e-commerce was also larger than many expected."

Mesenbourg said the Census Bureau just released figures on 1999 because "we started focusing in on e-commerce seriously just 2 years ago."

"We wanted to provide baseline statistics starting from when e-commerce was just becoming significant," he said.

Activity in the manufacturing industry led the way, with e-commerce shipments in 1999 accounting for 12 percent, or $485 billion, of the total value of all manufacturing shipments, according to the survey. Merchant wholesalers were second, with e-commerce sales that reached 5.3 percent, or $134 billion, of total sales.

A special grouping of service industries formed for this report under the name Selected Service Industries had e-commerce revenue accounting for 0.6 percent, or $25 billion, of total revenue for these industries.

Though the retail industry has been "the focus of much e-commerce attention", the report said, it had e-commerce sales in 1999 that accounted for only 0.5 percent, or $15 billion, of total retail sales in 1999.

The survey reports the value of goods and services sold online whether over open networks such as the Internet, or over proprietary networks running systems such as EDI (Electronic Data Interchange).

Government researchers who took part in the survey said they may have missed a couple of areas, but they are happy with the results.

"We made fairly broad assumptions," said Judy Dodds, who conducts the annual survey of the manufacturing sector. "We know we may have...made some assumptions, but this is our best estimate."