Business-to-Business Ventures Prospering Online
The Internet and B-to-B outfits continue to be a match made in heaven, according to research by ActivMedia, Goldman, Sachs, and the Direct Marketing Association.
Nearly half of the business-to-business online e-commerce sites surveyed by ActivMedia that have been online for three years are currently profitable, according to a report.
ActivMedia’s report “Real Numbers Behind the Online B-to-B Industry” found that 42 percent of business-to-business e-commerce sites that have been online for three years and 27 percent of the sites that have been online for less than one year are realizing profits.
In 1998, the average income for all first-year B-to-B e-commerce Web sites actually seeking revenue was just under $94,000. Those B-to-B programs seeking revenue in their third year or better of e-commerce took in nearly $30 million on average. These figures include the 30 percent of programs that intend to, but have not yet earned any revenue.
“The B-to-B sector continues to demonstrate that online e-commerce is a viable sales transaction vehicle,” said ActivMedia’s VP of Information Services Chris Anne Wheeler. “As you can see based upon this study’s results, experience plays a big role in how successful their e-commerce program becomes. In time, we expect that e-commerce between business will far surpass that of consumer-oriented sites.”
| Profitability of B-to-B Sites by Years Online | ||||
|---|---|---|---|---|
| All Sites | 1 year | 2 years | 3+ years | |
| Profitable now | 34% | 27% | 32% | 42% |
| Within 12 months | 18% | 27% | 15% | 14% |
| Source: ActivMedia | ||||
According to Goldman, Sachs, by 2004 B-to-B e-commerce revenue will reach $1.5 trillion, up from an estimated $39 billion in 1998. In 199, B-to-B e-commerce revenue will reach $114 billion.
Research by the Direct Marketing Association (DMA) and The WEFA Group found that the Internet is the fastest growing business-to-business direct marketing medium.
Direct marketing b-to-b sales growth continues to outpace overall US business growth. From 1994-1999, direct marketing sales to business grew 11 percent per year, almost twice the growth of total annual US business sales growth of 5.6 percent.
“Direct marketing is being revolutionized by business-to-business marketing on the Internet,” said H. Robert Wientzen, president and CEO of the DMA. “While B-to-B sales are growing in each of the major direct marketing media at a very healthy clip, this growth pales in comparison to business sales generated specifically by the Internet. Clearly, direct marketers have been quick to successfully employ the Web as a sales and marketing tool to business.”
