Multi-Channel B2B E-Commerce to Exceed $5.2 Trillion in 2004 - electronic business-to-business sales will reach more than $5.2 trillion in 2004 - Brief Article - Statistical Data Included

Information Superhighways Newsletter, July, 2001

According to Giga Information Group, electronic business-to-business sales will reach more than $5.2 trillion in 2004 through several different e-channels, including Internet e-marketplaces, traditional electronic data interchange (EDI) networks, hybrid EDI/Internet electronic trading networks (ETNs), Internet company-to-company links, extranets, and private e-markets. This compares with an estimated $3.3 trillion B2B e-commerce sales forecast for 2000, mostly through traditional EDI networks.

This growth underscores the dramatic need for corporations to create a strong channel management strategy, as the variety of customer interactions will become increasingly complicated.

"As business-to-business e-commerce matures, there will be no single 'magic channel' that meets all companies' needs," said Andrew Bartels, a Giga Information Group vice president and research leader following the e-commerce market who co-authored the research. "The B2B e-commerce market - which will account for approximately 38 percent of all B2B sales in 2004 - will get complicated because there will be a need for a variety of electronic interactions, each with its own set of strengths and weaknesses, particularly in the areas of reliability, security, customizability, and cost. Because the lines between traditional EDI and Internet channels are dissolving, companies now have the flexibility to use different e-channels for different customers or suppliers based on strategic business goals."

Corporations will need to match the right channel to the right customer or supplier. Key strategic relationships, for example, should use more secure and reliable channels, such as private EDI networks or electronic trading networks for the foreseeable future. The most strategic of these should use more customizable channels like extranets or EDI Direct, even though they are more expensive. Smaller customers or suppliers could be migrated to lower-cost e-channels like Web-EDI or public Internet e-marketplaces.

"The need for multi-channel B2B e-commerce will increase the overall complexity of relationships," said Ken Vollmer, a Giga Information Group director who follows electronic trading networks and a co-author of the research. "The economics of the Internet will continue to dramatically influence B2B sales, but just as there always will be a need for face-to-face contact and brick-and-mortar stores, there will be a need for a mix of the long-used EDI and newer Internet-based methods of businesses-to-business commerce. The nature of the product or actual sale will dictate which channel needs to be used. As a result, successful companies will assess their B2B channels and begin to implement a multi-tiered electronic channel management program."