Reports Predict Dark Clouds Ahead for E-Marketplaces

By Doug Bartholomew Those lofty stock prices notwithstanding, business to business (B2B) electronic marketplaces may be looking at some heavy weather ahead. At least that's the view according to two recent reports on the future of B2B online exchanges. In its report, AMR Research, Boston, suggests that industry-led exchanges, which it calls consortium trading exchanges (CTEs), "are heading toward disaster if they don't kill the hype and face reality." One key shortcoming of these exchanges, the report finds, is that functionality that has been promised is a long way from being available. "AMR Research believes that for at least the next two years, CTEs won't be able to offer much more than auction, spot-buy, and excess inventory services." AMR Research also cautions that so-called collaborative commerce applications are years in the future. Members first must define new business rules and processes and figure out how to integrate these activities with existing systems. "Facing high expectations and delivering hollow promises, CTEs and their founding members need to build confidence and prove value and not set unrealistic expectations in a battle for mindshare," AMR concludes. In a similar vein, Deloitte Consulting, New York, in a new report called "The Future of B2B," predicts "a dramatic shakeout among existing e-marketplace players will occur, presenting significant opportunities for those who survive." Deloitte sees the current level of an estimated 1,500 e-marketplaces to be trimmed to 400 in the next three to four years. The consulting firm found that online transactions are not yet growing as fast as anticipated. Deloitte attributes the slowdown to the need for e-marketplace builders to do the "heavy lifting"-- i.e., develop the industry and technical infrastructure, service offerings, and expertise required.

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