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The
four laws of B2B
In
our blind enthusiasm for the web did
we completely lose the plot with B2B
e-Commerce site? Now that reality
is starting to sink in. Or rather
the overreaction in the other direction
is sinking in, suddenly everyone is
bad mouthing B2B. Don't believe the
hype, B2B is big now, and it is going
to get a lot bigger.
B2B
is now and will continue to be a fundamental
part of business purchasing. But not,
it turns out, in the simplistic way
we thought. So often the projections
for B2B numbers, and for the ease
of building B2B sites and companies
seemed as easy as falling off a log.
It's not that easy. As a lot of B2B
investors have learned, expensively.
Watching the rise and fall and rise
again of B2B, and the sorting out
of what works and what doesn't, I've
discovered what I think are four immutable
laws of B2B.com.
1.
Big companies don't need little companies.
Big companies are not stupid, and
they need little companies much less
than little companies need them. We
thought dot-com A and dot-com B, and
so on, would set up online markets,
where the Fords, American Airlines,
General Electrics, and other big companies
would come to buy everything they
need from their suppliers. The dot-coms
behind these B2B sites would rake
off a small percentage of each sale,
and would, almost overnight, make
their shareholders rich beyond imagination.
Not so! Turns out the auto companies,
airlines, and so on know perfectly
well how to hire people to build B2B
sites for themselves, and they aren't
about to give up those small percentages
to anyone else. Sure, they might hire
an Ariba or Commerce One to build
a site or perhaps license some software,
but any savings to be had are going
to stay in the pockets of the big
companies themselves. We forgot the
underlying principle of the Web: It
leads to disintermediation, or the
elimination of unnecessary middlemen
- not the creation of new ones.
2.
Exchanges are not enough.
To make a real success of B2B, you
need a real marketplace, not just
an exchange. The difference is critical:
not just a trade exchange where company
A says what it wants to buy and companies
B to Z step up with steadily declining
bids, in a reverse-bidding process,
but a true marketplace, where things
are available for sale all the time.
We forgot that big companies have
their purchasing procedures down to
a pretty fine science, and they don't
want to play start-all-over-again
just for the novelty of getting to
fiddle around on the Net every morning.
3.
No one survives on just "buying
and selling"
Providing more than just buying and
selling attracts even more buyers
and sellers. VerticalNet is a B2B
company that creates and runs online
B2B marketplaces--it calls them "communities"--in
many areas, from chemists' lab supplies
to bakeries' needs.
Recognizing
that making its sites "must-read"
information centres for people working
in those areas would increase sales,
VerticalNet has built an editorial
team for each site, with up-to-the-minute
stuff people need to get their work
done and keep their careers going.
We forgot that none of us, company
or consumers, live by buying and selling
alone
4. If you help start the sale, you
must help close the sale.
Credit
checks are an essential part of commercial
transactions, yet very few B2B sites
have any kind of support for either
party to the transaction, in terms
of qualifying buyers and providing
credit histories, guarantees, and
so forth. We forgot that it is a tough
world out there, and when people start
dealing with people they've never
met, over evanescent electronic links,
they want some assurances. Don't let
the naysayers persuade you that B2B
was a bad idea, or even an unimportant
one. Using the Net to buy or sell
materials will shortly be as common
for businesses as buying a book at
Amazon.com is for consumers. We just
didn't understand what B2B really
meant. And predictably, we overestimated
the ease of pulling it off
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