Saturday, April 7, 2001

North America Drives Over Half of B2B Transactions

North America continued to drive more than half of B2B Internet commerce transactions in 2000, but other regions of the world are expected to grow at a faster rate, according to Gartner, Inc.

In 2000, worldwide B2B Internet commerce surpassed $433.3 billion, and in 2001 that total is projected to reach $919 billion. North America accounted for 59 percent of the worldwide total in 2000, with B2B Internet commerce totaling $255 billion, and in 2001 it will represent 52 percent as it hits $480 billion. By 2005, worldwide B2B Internet commerce will be more than $8.5 trillion, and the North American region will total $3.6 trillion, which will be 42 percent of the overall market.

"There has been a lot of talk about the Internet as the enabling technology for globalization for some time now, but over the next five years, as obstacles to global trade are overcome, we'll witness the power of the Internet as a unifying technology to spur global trade," said Lauren Shu, research director for Gartner's e-Business group.

B2B Internet commerce in the Asia/Pacific region (including Japan) reached $96.8 billion in 2000, which was 22 percent of the worldwide total. In 2001, the Asia/Pacific region is on pace to have B2B Internet commerce reach $220 billion, or 24 percent of the total. By 2005, Asia/Pacific will account for 28 percent of the worldwide total, with B2B Internet commerce transactions of $2.4 trillion.

"Businesses in Asia/Pacific will use this opportunity to reduce exposure to overseas markets impacted by the economic downturn and focus on building private regional marketplaces with familiar partners," said Lane Leskela, research director covering Asia/Pacific Internet commerce for Gartner's e-Business group. "The first wave of eMarketplace development in Asia/Pacific was pushed by overseas buyers' eProcurement initiatives. The next cycle is characterized by private investment and consortia-funded supplier marketplaces working to shorten manufacturing and delivery time and aggregate total market demand on a global scale."

"The leading Asian e-marketplaces began in electronics manufacturing and consumer and industrial durables supply chains. During the next five years, we will see an increasing number of Asian marketplace participants from energy supply, paper, utilities, food, pharmaceuticals and petrochemicals manufacturers and intermediaries," said Leskela.

European B2B Internet commerce reached $72.5 billion in 2000, representing 17 percent of the worldwide total. In 2001, the European segment is projected to reach $188 billion and account for 20 percent of the overall total. By 2005, Europe's share will be 21 percent, with B2B Internet commerce exceeding $1.7 billion.

"In Europe, Internet commerce initiatives proved to be longer and more difficult than people expected. Uncertainty about legislation, as well as language and currency differences, complicate the situation and are major inhibitors to Internet commerce taking off," said Evelyn Cronin, research director covering European Internet commerce for Gartner's e-Business group. "Enterprises' Internet commerce solutions must support every country's language, currency, international trade duties and regulations, to support intercountry regional commerce. This is so complex that today, few do. Additionally, the inefficiencies in the telecommunications and Internet backbone in Eastern and Central Europe have stalled Internet commerce."

Gartner defines B2B Internet commerce as the sales of goods and services for which the order-taking process was completed via the Internet. This includes purchases via Internet EDI, e-marketplaces, extranets and other sell-side initiatives, but excludes activity over proprietary networks. Gartner's forecast is based on the value of B2B nonfinancial goods and services sold, resold and brokered over the Internet through establishments every time they are turned over. This is significantly higher than forecasts based on worldwide GDP, which includes only the value-added that establishments put into goods and services as they are sold and resold through supply chains.