Saturday, March 10, 2001

B2B Buyers To Move Online Despite Slow Growth

Jupiter Media Metrix, the global leader in market intelligence, reports that most business to business (B2B) buyers will eventually move online even though purchasing agents are planning to conduct just 20 percent of their transactions via the Internet by 2002. According to a new Jupiter B2B report, 60 percent of purchasing agents say the chief barrier to buying online is that their preferred vendors do not transact via the Internet. Despite current barriers, however, Jupiter analysts found that buyers understand the benefits of transacting online and will do so once suppliers meet their product and education needs.

"Purchasing agents understand why they should be using the Internet for their B2B purchases, but they're not quite ready to move online. They will get there once suppliers that they currently purchase from move online and educate them on how to use their system," said Jean Gabriel Henry, senior Jupiter analyst.

Key findings and forward looking analysis from the latest Jupiter B2B report, "Getting Procurement Agents To Buy Online," will be discussed at Jupiter's Ground Zero 5 Forum, May 22-24 in Boston, and include:

- Jupiter analysts found that two distinct B2B markets will surface - one for buyers seeking existing suppliers, and one for buyers seeking new suppliers. Due to the dissimilar needs, values and requirements of the two markets, sellers will have to target one market at a time and be armed with an understanding of the specific needs of that buying audience.

- According to a Jupiter Executive Survey, 55 percent of purchasing agents say lack of knowledge about net markets prevents them from moving online. Lack of trust (45 percent) is the next most common reason given for the slow growth of online B2B transactions. Jupiter analysts have found that sellers will overcome these barriers as agents become more educated on how digital commerce works and more experienced online.

- Purchasing agents understand the benefits of digital commerce. According to a Jupiter Executive Survey, 71 percent of the queried agents cite lower product costs as a primary benefit of transacting online while 56 percent cite faster product finds.

- Jupiter analysts predict that 85 percent of online b-to-b transactions will be made between existing buyers and sellers, compared to 95 percent among offline purchases.

"The market for existing customers will be the bigger opportunity for sellers because they have already established trust with buyers - many of whom are waiting for their favored vendors to move online," Henry said. "The market for new customers is smaller but will grow over time, largely because Internet search capabilities will assist buyers in finding vendors."

Advice for B2B Sellers
Jupiter analysts recommend the following actions for sellers in the online B2B space:

- Treat existing suppliers and new suppliers as separate markets. Each has distinctly different wants and needs.

- Address the issues of logistics and education. Buyers who want to go online view them as two essential pieces of the equation that will result in their move online.

- Recognize that most buyers prefer to continue doing business with their current suppliers and they won't transact online significantly without them. Wise sellers will leverage existing relationships before seeking new ones.

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