Lots of dot-coms, especially those targeted at consumers, have been dropping like flies. So, what's the buzz in the B2B world? Things should get nasty in this part of the e-commerce arena as well, experts say.

E-marketplaces, which bring together groups of buyers and sellers in specific industries, are jumping like piranhas, says Forrester Research analyst Matthew Sanders: "They're all going after the market, but not all will survive."

"Of the thousands out there, only 200 or so will [still] be around by 2003," Sanders explains. That's because these e-marketplaces will have lost funding, failed to bring in enough sales or operated with faulty business models. (Sound familiar?)

The Opportunity

What are the e-marketplace piranhas and other B2B carnivores carrying on about? For one, they want a taste of global exports sold on-line, which are growing fast.

These exports should top $100 billion by the end of this year, according to Cambridge, Massachusetts-based Forrester Research. And this figure could jump to $350 billion in 2002, $775 billion in 2003, and nearly $1.4 trillion in 2004. That represents about 18% of total global trade.

E-marketplaces should grab about $408 million, or 30% of on-line global exports, in 2004, according to Sanders. The rest is expected to be handled by individual businesses taking traditional products and services on-line.

US exporters could carve out $22 billion of this internet-based business this year, and as much as $58 billion, $125 billion, and $210 billion in the following three years, respectively.

Beyond the export figures, companies expect B2B commerce to help them locate and work with non-US suppliers, track the flow of goods across borders, and speed up their supply chains, Sanders explains. This should mean greater efficiency and, hence, higher profitability.

"That's the beauty of the internet," says Don Etsekson, president and CEO of LiveListings.com, a Seattle-based exchange for aftermarket car parts. You can automate a lot of the commercial and logistics processes involved in taking buyers and sellers all the way through a transaction, he explains.

"You can have multiple trading partners sharing real-time information on a real-time scale," Etsekson adds. "That's what everyone wants to move toward. It's the value proposition in the marketplace. And it means streamlining traditional, manual processes."

To do that and do it right, experts say, takes a so-called "best-in-breed" mentality. In the case of e-marketplaces, "You have to have the appropriate mix of industry partnerships with large companies, an operational structure that's neutral to both buyers and sellers, appropriate services, and effective technology that ties into participants in the most effective ways," Sanders stresses.

For some global B2B sites, it's essential to work in multiple languages and take into account vast cultural, regulatory and other differences when planning software, site design, and other technical issues. Many sites, on the other hand, may not require-or be able to handle-all aspects of such "sophistication," or so-called "localization" efforts, from the get go.

How do you really turn e-commerce dreams into reality? Much of the global B2B world is still in its infancy, and, hence, doesn't have the complete answer yet. Still, a number of savvy players are starting to show what ingredients may really make a difference for B2B players who want to stay in the game.

Wide Connections Count

Transora (www.transora.com), based in Chicago, is a new e-marketplace for members of the global consumer packaged-goods industry. The site aims to streamline business between suppliers, manufacturers, wholesalers, and retailers world wide. The results, at least from two pilot programs, are cost savings of about 25% for buyers.

Taking warning from the failed "build and they will come" strategy of many B2C companies, Transora is constructing its plans around the support and input of 54 multinational corporations, which have invested about $240 million in the site. This includes Cadbury Schweppes, Heineken, Seagram, Nestle, Coca-Cola, Embotelladora Andina, Kraft, General Mills, Ralston-Purina, Sara Lee, Johnson & Johnson, and other companies that are fierce rivals in their respective fields, such as Colgate Palmolive, Unilever, and Procter & Gamble.

It costs a lot to find the supply and demand to run a business. E-marketplaces assemble manufacturing capacity into central locations so the cost goes way down. And they may piece together other aspects of a transaction-logistics and finance, for instance. This allows them to streamline processes that were previously cumbersome.

What does it take to win over such a host of household brands? In Transora's case, the aim is to improve supply-chain management through better procurement of materials, supplies, and services. The site is being built to handle on-line catalog-based purchases, bidding and price quotes, and on-line sourcing of raw materials and packaging suppliers, for instance. Later down the road, capacity and production planning, demand forecasting, and supply-chain transaction automation could happen at Transora.com

And this developing consumer-products e-marketplace isn't taking a US-focused model as its base, though the Grocery Manufacturers of America-an industry association-provided much of the initial impetus for Transora's creation. Much of this happened at industry meetings in March 2000, when Transora was basically put together in less than two weeks (talk about industry consensus!).

Several regional advisory committees have been set up to help make the site as globally inclusive as possible: Asia/Pacific, Europe, North America, and South America. The European and South American groups met last summer; the Asian group staged its first meeting in the fall.

Transora also has established a program that brings in executives from member companies for a time to work on the site's design and development. Unilever, for instance, might send an on-loan executive for three months to work at its offices in Chicago or Amsterdam, says a company spokesperson.

Complementing these efforts is a series of global meetings that aim to introduce Transora to the wider consumer-products community. Three of these info sessions have been held in the US, one in Vienna, Austria, and another in Barcelona, Spain.

"They wanted to make sure they had global participants, both buyers and sellers, so they could emanate a notion of neutrality," Forrester Research's Sanders says. "Transora believes very forcefully, as we do, that e-marketplace sites will only survive if they have this [balanced] mix. They have to provide an environment that's better than the traditional marketplace."

Transora's pilot projects are, perhaps, its most impressive achievement. One was the development of an on-line basic-item catalog for US buyers. The second involved the indirect on-line auction of printed materials and a separate auction of honey.

Honey buyers in North America and Europe, including H.J. Heinz Co., saved about $1 million on a $4 million order, Transora says. More than 25 North American suppliers participated in the bidding process.

The auction of printed materials entailed the use of an on-line multicurrency tool supplied by eBreviate, so suppliers from seven EU countries could place 450 different bids in their own currencies. Transora claims the resulting $2.3 million order saved Sara Lee, P&G, and Heinz some 22% to 25% of average costs for such supplies.

In addition to its main technology vendors, Ariba and i2, the site's pilot projects also benefit from technical input provided by UCCnet, Metro AG, Global NetXchange, and others.

Different Views on Lingua Franca

With all its VIP, corporate, and high-tech allies, does Transora need to give its site multilingual capabilities? Apparently so. Plans include French, Spanish, German, Italian, Dutch, Portuguese, and Japanese versions, as well as pages dedicated to individual countries.

The bulk of this multilingual work on the core site should be completed by the end of March 2001. Special content, such as industry reports and benchmarking studies, may be translated or posted as is on the site.

"Inclusion has been a priority and also a huge challenge," Sanders explains. "They have a long way to go and are doing their best to bring together various tools to meet those challenges." Language is just a small part of the broader issue of dealing with the vast differences in business practices worldwide, he notes.

Some other sites, though, don't think this is they way they have to go in the race to streamline global industries (while making a buck) on-line.

Take flowergrower.com of Miami. The site brings together production and pricing information with some 20 growers in Ecuador and 10 in the Netherlands. It adds on a few fees for trading, payment guarantees, shipping, handling, advertising, and other expenses, and then passes the info onto about 120 floral shops in the US And bingo: floral and gift stores get products of better quality, variety, and pricing, says Chief Marketing Officer Rutger Borst, in as little as three days of harvesting.

Why no Spanish-language version for floral farmers in Latin America? It's not needed, Borst says. "It's not a B2C site," he explains. "Farms [there] have marketing divisions dedicated to this work." What they really want, he says, are new sales avenues.

For their part, retailers want choice. "We can offer them 500 types of flowers, while the average wholesaler has 150," Borst says. The site's success-about 20 retailers are joining up each week-will ultimately come down to the industry relationships and experience of its leaders, he insists.

The Devil's in the Details

China Premium Food Corp. (www. chinapremiumfood.com) of North Palm Beach, Florida, is making its B2B site bilingual (in Mandarin and English). But its prime focus to date has been on getting its traditional operations-supplying and distributing US-made food and beverages in China-into tip-top shape to put itself on the e-commerce map.

"Our challenge is to support the site with proficient sales and services, mainly distribution, in a timely manner," says CEO Roy Warren.

Through ties with local players such as Mandarin Fine Foods, the company hopes to attack the upscale Chinese hotel, restaurant, and retail markets on-line through a site launched in February 2001. Chinese consumers-and the expatriate community-are ready, willing, and, in a growing number of cases, able to by US products there, Warren says. It's just that China's cumbersome supply chain is holding them back.

Sound like the perfect scenario for business growth? Hold on, experts say. As the internet brings disparate players together, it also asks them all to act alike.

"Small guys have to stretch the standards and make sure everything is in place," says Rosemary Coates, senior director of Answerthink Inc., a high-tech consulting firm in. In other words, companies such as China Premium Food and its partners need to make sure that much more than the taste of their products is finalized before pushing their on-line business in any big way.

Suppliers are responsible for handling just-in-time inventory, technical specifications, and certain international requirements, says Jerry Pacheco, head of the Albuquerque-based consulting firm Global Perspectives. "Through the internet, a lot of issues are being pushed down to suppliers," Pacheco says. This is especially true in the auto-parts sector, for instance, he points out.

And even the big guys-whether they're on the supply side or the demand side-have to watch their backs. If you apply internet technology incorrectly, you can end up making very costly mistakes, says Darren Maynard, vice president of strategy for NextLinx in Silver Spring, Md., an on-line supplier of global trade information and services. This can lead to large fines for tariff violations, for instance.

Moreover, many technical, legal and international trading standards are still on the drawing board. "Some things are still being sorted out by [e-marketplace] exchanges," stresses John Medellin, a technology leader of global air-transport consulting for PriceWaterhouseCoopers in Dallas.

Watching what others do, and waiting to see which players are on the first big B2B casualty list (and why), may be the soundest strategy to take for the moment. wt

sidebar: Easier & Quicker on the Web

The internet has created a new type of "middleman"--one who makes doing trade and transportation easier. Some of these companies are the following:

GoCargo.com (www.gocargo.com) notifies carriers of shipper needs and the carriers can then bid on the contract.

Worldbid.com (www.worldbid.com) provides qualified import/export trade leads, B2B auctions, and catalog postings.

Openshop Internet Software(www.openshop.com) creates software for B2C and B2B web-based enterprises.

nPassage (www.npassage.com) connects manufacturers, distributors and B2B trade exchanges with freight service providers.

E-Transport (www.etransport.com) lets shippers, carriers, and intermediaries negotiate, buy, and sell transportation services over the internet.

--Charles Wesley Orton