B2B markets: good prospects, few survivors

Predictions that there will be thousands of e-marketplaces within the next four years are greatly exaggerated, according to a study by researcher IDC.

Despite the almost daily announcements about new exchanges across the world, IDC said it is taking a conservative viewpoint and believes the market will settle in the hundreds rather than thousands of online trading places.

Leo Lipis, a senior analyst at IDC, said: "E-marketplaces are just one segment of the business-to-business ecommerce landscape."

According to Lipis, many of the e-marketplaces announced will not actually be built and many of those that are launched will not survive. Those that will survive will be consolidated into "super e-marketplaces", he added.

IDC defines an e-marketplace as a web-based broker of goods or services within a community of sellers and buyers. It must have an open structure and a level playing field for all participants.

Although IDC believes the number of e-marketplaces will be finite, it is convinced that opportunity will still exist for service providers. The limited number of e-marketplaces means there are a small number of contracts on which to bid, but it "does not mean the prospects around contracts for e-marketplaces is small", said Lipis.

IDC predicts that service contracts for e-marketplaces will be quite lucrative - the largest will top tens of millions of dollars and the total market will exceed $10bn in 2004.

To make the most of the e-marketplace service opportunities, vendors should act quickly because there will be only a limited number of contracts with e-marketplaces.

Furthermore, IDC said service providers should be reminded that e-marketplaces are just one of several prospects from the internet. The integration of buyers and sellers into e-marketplaces, e-procurement, e-distribution, intranets and wireless integration with websites are a few examples of others.