Look for Auto Sector to Lead B2B Rebound

Online commerce will account for 36 percent of all U.S. B2B spending by 2006, despite the sluggish growth in the B2B e-commerce sector, according to Jupiter Media Metrix. B2B commerce will total $5.4 trillion in 2006, and Jupiter analysts think the automotive industry will lead the charge as B2B spending makes a comeback.

“The current sluggish growth in online B2B goods commerce can be attributed primarily to a slowdown in spending on discretionary software and services by the global 2000 companies,” said Jon Gibs, an analyst at Jupiter Media Metrix. “Manufacturers should look to the automotive industry to see growing trends in B2B commerce. Evolving Internet technologies, the slowdown in new car sales and fierce competition among automakers are forcing manufacturers to connect electronically with their trading partners and end customers to stay competitive.”

Considering the decrease in discretionary software and service spending (DSSS) and the decline in the overall economy, Jupiter has downgraded its earlier B2B spending projections of $6.3 trillion in 2005 to $5.4 trillion in 2006. For 2001, Jupiter predicts that B2B commerce will reach $466 billion, and $793 million in 2002.

DSSS and B2B infrastructure spending will rebound, however, as the U.S. economy turns around. According to a Jupiter Executive Survey, 70 percent of companies view online B2B commerce as a competitive advantage, while 62 percent see online B2B commerce as an important way to save money. Only 13 percent of companies did not see value in online B2B initiatives. Companies are aware of the advantages, but Jupiter analysts still expect to see sweeping changes throughout industry sectors.

The computer/telecom equipment, aerospace and defense, motor vehicles and parts, metals and mining and chemicals industries will see the strongest share of their commerce shift online by 2006. The automotive industry will conduct nearly 50 percent of its B2B commerce online in 2006. Jupiter analysts have found that while saving money on operations is critical in a weakening economy, using the Internet to get to market faster with the right product mix is paramount for automotive companies as consumer demand continues to rise.

“Industries with consolidated supply chains should see a fairly even growth in B2B commerce through 2006,” Gibs said. “However, industries that are more fragmented, such as chemicals and computer and telecom equipment, will see a more gradual growth. Once a critical mass of B2B infrastructure is reached in the more fragmented segments of those supply chains, it will force offline laggards toward a fast adoption of online B2B commerce in order to stay competitive.”