Dear Mitchell,

I appreciate your emails and open panel discussions.

In regard to the B2B marketplace and the shaky markets, I believe the following:

The evolution of the Internet as we know, is the quickest economic revolution in history. If you think about it in domestic terms, the Internet's evolution was the equivalent of having a map of North America and casting all roads, highways, air and railroad routes over it within a 2 or 3 year period. One can not assume that all businesses and services could set up viable operations in such a short time. Traffic studies, consumer behavior, location analysis, fulfillment, real estate, financial institutions, utilities etc. would all need to be figured out. The early Internet businesses have had to figure this out at breakneck speed. Major adjustments had to occur. B2B exchanges will help much of this. Just getting the consumer to your business is tough enough; to figure out all supply and distribution channels is a whole other problem.

When railroads chose which cities to have hubs in, the decisions made or broke certain cities. The same goes for airports. This took America 100 years to figure out. When highways were replaced with interstates, many small towns collapsed, forcing mom and pop stores out of business. Slowly, interstate exits got basic services like gas stations, lodging and restaurants. Banks and real estate followed to handle transactions. Trucking firms and distribution centers evolved to supply goods. Utilities were needed also.

Therefore, people went ahead and set up shops on the Internet; not knowing if they had the bandwidth (transportation arteries) to even get people to their businesses. They did not know how to get signage (search engine and directory placement) to attract customers. The certainly had no idea how to advertise and create a brand awareness. Much less, they did not have any idea of how to manage staffing to provide customer care, fulfillment and delivery. Clearly, the financial support systems (banks, credit card processors) were not there for them. In short, a correction was inevitable. If you think about it, given every location in North America, where would one choose to set up their business? Would it have everything one needed to operate efficiently? Probably not.

On top of all this, VC's were throwing money after these businesses with unreal expectations. As these businesses failed, they left a string of unpaid bills to companies. Investors lost millions. A massive correction was inevitable.

Where does that leave us? First, B2B exchanges will work out most of the logistical issues. Bandwidth will catch up and make this possible. Consumer sectors and tendencies will be analyzed to make advertising more targeted. Viable business models will survive and we will see this cause an overall upswing in successful, profit-producing Internet operations. I think we will begin seeing signs of this in the 2nd quarter of next year. In five, years I think we will see a mature Internet economy that increases the overall global economy a thousand fold, if not more. People need to be patient. The sky is not falling; just the positioning of business in relationship to the sky is taking place. Consumers are going to benefit dramatically. Businesses will benefit too. Their margins will be less but this will be made up in volume.

Certain wireless sectors are in their infancy. Media have no idea how to converge. These sectors will bring on a whole other windfall.

In conclusion, I feel we all must just hold on, because the roller coaster ride is only in its second or third turn. Hysteria and quick reactions reflect ignorance. Many people thought TV would never survive. The malls of the 70's died out, only to be replaced by highly profitable mega malls. The railroad and shipping industries, true B2B industries, have gone through up and downs since the 1600's. The economy will survive and prosper.
(Kevin Maris, President, Beanstalk, Inc., 8411 Preston Road, Suite 820, Dallas, TX 75225, Voice 214.219.7620, Fax 214.219.7625)

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I think B2B is starting to really take off. B2C is very difficult since most retailers won't be able to compete against K-Mart or other big players who have an existing infrastructure and better economies of scale. Growth rates are difficult to estimate, but certainly in the 50 - 100% annually. B2B will further grow on the information side, not only on the pure transaction side.
(Patrick Stark, Data Comm)

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The April correction impacted mostly B2C, determining the burst of the dot.com "bubble". Now dot.coms need to show profitability, and B2Bs do that. The B2B market has a tremendous potential, one that is probably still underestimated. Based on the B2C experience, I think that purchases over internet are most likely to happen if:

• it is a repeat purchase of a previously owned item (i.e. apparel)
• it is a known item (i.e. book, CD)
• the user can physically test the product in a shop (i.e. car)
• the user can buy from a remote shop location (i.e. buyer in us/seller in Europe)

B2B business, generally, has all 4 of the above characteristics, therefore B2B can only be successful and grow! Procurement (through creation of e-marketplace, reverse auction, auction for excess of material, optimization of stock size, collaborative design...) will be the main area of development in the next few months (see Covisint in the automotive industry).
(Alberto Griffa - San Jose - CA)

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Do you expect the B2B exchanges to start demonstrating significant cost savings and increased liquidity? If so, please explain and give an example or two.

One of the most 'hyped' e-marketplaces - Covisint - has traditional rivals throwing aside their traditionally competitive practices for the lure of the dollar. Industry figures show that Ford spends around $80 Billion every year with suppliers, GM around $87 Billion and Daimler Chrysler around $80 Billion. Their cumulative 'spending power' has resulted in a B2B e-marketplace trading hub. The hub is still in its embryonic stage and no real figures are available, but GM has already stated that it expects to handle $50 Billion of transactions in the first year.

The outcome will be very interesting as it brings together fierce rivals, and exposes one of the fundamental hurdles of e-marketplaces - having to sit down with your traditional competitors and put aside a history of rivalry. Sometimes, no matter how good the business plan looks on paper, the thought of watching your main competitor for the last 4 decades, assume the mantle of 'lead dog' is just too much to swallow.

The mistake of assuming that a suitable platform can be provided by anything less than totally integrated front-end to back-end processes can be potentially fatal. Very quickly, B2B ventures realize that if the back-end is not smoothly joined with the front-end, all cost-saving predictions start to evaporate. The minefield of 'stovepipes' created through multiple legacy systems, duplicated data entry, and islands of information can create huge bottlenecks and inefficiencies. Practice is showing that businesses are significantly underestimating the amount of time and effort that is required to transform their 'traditional' procurement processes into effective B2B processes.