The popular CBS television show Survivor might have ended, but a new game of survival of the fittest has only just begun among business-to-business Internet marketplaces.
Some analysts have been projecting the number of these online exchanges to grow to more than 10,000 in the next few years. But now analysts like Deloitte Consulting expect the more than 1,400 marketplaces that exist today to shrink drastically in the next two years leaving as few as 400 marketplaces to survive.
Already, a handful of business-to-business sites have failed. In June, Equipp.com, an online exchange for industrial equipment shut down after running out of money. M-Xchange.com, an online exchange focused on minority supplier relationships shut down July 17. And IndustrialVortex was unable to get its second round of financing so it went belly up in July.
B2Beventures.com, a Palo Alto online marketplace, also went kaput before it could get off the ground, according to Deloitte Consulting.
The Silicon Valley start-up announced plans in February for developing a network of more than 300 B2B vertical trade communities targeting English- and Spanish-speaking business users. The network of B2B hubs was supposed to provide industry-specific information, forums, news, shopping and auctions.
According to a recent research report issued by Boston Consulting Group, B2B purchasing in the United States will grow to 33 percent per year reaching $2.8 trillion in transactions value by 2003. "Our company wants to be positioned to serve not only businesses in the United States but those in Latin and South America," said Chief Executive Daniel Bryan.
But that was six months ago. So much has changed since then. And B2Beventures.com is part of Internet e-commerce history.
Dozens of other Internet marketplaces have also been acquired by competitors as the consolidation within the industry continues.
"You don't have to wait for the next chapter in the Star Wars saga to find out about the Clone Wars,'' said Len Prokopits with Deloitte Consulting. "They are going on right now in the galaxy known as B2B. And chances are they're going to be as exciting - and explosive - as anything George Lucas could dream up.''
In the next 18 to 24 months, a Darwinian struggle will leave some e-marketplaces and their member companies with a powerful competitive edge, it will leave others scratching their heads and wondering how they managed to miss the boat.
The emergence of business-to-business e-marketplaces marks a radical change in the evolution of buyer-supplier relationships. In just a few short years, industry structures that had stood the test of decades of competition - and untold waves of innovation - are being completely redefined. Second-tier players and even once fearless market leaders have teamed up with former rivals, while eager third parties have announced bold plans to mediate between buyers and suppliers.
In many cases, these crucial decisions were made and announced in little more than a week - driven largely by a vision of what could be and a fear of being late to the party.
No one knows how many of these marketplaces ultimately will survive but it is clear that the consolidation has already started to occur and more of it will unfold as companies with shaky business models file for bankruptcy or close up shop.