ONLINE TRENDS: Little interest in portals…

Jul 01, 2000 9:30 PM  By

B-to-b catalogers see little benefit-or threat-from e-marketplaces

Some e-commerce and business-to-business experts believe that b-to-b portals – also known as electronic marketplaces – are the future in b-to-b direct marketing. Cambridge, MA-based Forrester Research estimates that b-to-b portals will reach $2.7 billion in sales and account for 53% of all online b-to-b sales by 2004. Boston-based AMR Research reports that more than 600 b-to-b portals exist now.

But for b-to-b catalogers, the jury’s still out on just how portals will affect their future online or in print. Right now, most of the catalogers contacted perceive no benefit, or threat, from these marketplaces. “We were invited to be part of a portal, which needed revenue to get going,” says Kathy Hecht, vice president of marketing for Monterey, CA-based Earlychildhood.com, which produces the Discount School Supply catalog. “But we decided against it, because we don’t believe they’re going to find, attract, and market to the kinds of people we can’t already reach.”

Rather than viewing a product-specific b-to-b portal as a way to grow marketshare, Earlychildhood.com believes some portals could have an adverse affect on catalogers’ marketing costs. “B-to-b portals often appeal to consumer customers who may buy just one thing, then never buy again,” Hecht says. “Meanwhile, we would mail catalogs and wind up losing margins and money on them.” At the same time, while Earlychildhood.com has its own site, “I don’t believe any portal is going to get to more people than I can with the million-plus catalogs I mail a year,” she adds.

National Hospitality Supply, a $7 million mailer of hotel and restaurant supplies, also has no immediate plans to join any portals. “A portal called Purchasepro.com landed American Hotel Register – one of the largest distributors of hotel supplies – then it came to me promoting the same program,” says National Hospitality president Michael Hans. “But I didn’t go for it. For the $200 a month it would cost to participate, I could send a postcard to the 60,000 hotels and motels out there to advertise my site.”

George Mosher, president/CEO of $115 million National Business Furniture, feel that portals could result in information overload for business furniture customers. “People will be overwhelmed by too many product and price comparisons,” he says. “In b-to-b furniture, it’s mostly about time savings.”

Like it or not, they’re coming

But many still believe portals will dominate in some business categories. Unlike b-to-c portals, which are more like online malls driven largely by brand and shopping experience, b-to-b portals are driven more by price, “power, and negotiated relationships,” according to Leah Knight, a research analyst with Stamford, CT-based GartnerGroup.

Although Knight says that b-to-b portals are more likely to first develop in fragmented industries, such as plastics, chemicals, and steel, in which the sellers lack power, “ultimately e-marketplaces will develop in all substantial vertical and horizontal markets – and they’ll drive efficiencies in most markets.”