Study says b-to-b value to explode

By Gopika Vaidya, InfoWorld |  Business

A NEW STUDY released by Jupiter Research predicts tremendous growth for business-to-business commerce in the United States over the next five years. B-to-b commerce will increase from $336 billion this year to $6.3 trillion in 2005, dominated largely by the computer and telecommunications sector, Jupiter found.

In keeping with this, businesses are advised to adopt new models for online trade, as online b-to-b commerce is likely to increase from 3 percent to 42 percent of total b-to-b domestic trade over the next five years, according to Jupiter, a division of Jupiter Media Metrix.

"We urge companies to invest in infrastructure to meet the needs of the future," said John Katsaros, vice president of Jupiter Research. "This investment is likely to be larger than any other investment they make, and they need to budget for it."

Katsaros predicted that companies that do not keep up with the changing trend are likely to be dropped from the supply and value chain that interlinks businesses.

The study, "U.S. Business-to-Business Trade Projections," analyzes the trading patterns of 12 major industries and concludes that five of them will play a major role in future online b-to-b trade. The five -- aerospace and defense, chemicals, computer and telecommunications equipment, electronics and motor vehicles, and parts -- are expected to conduct more than half their total b-to-b buying and selling online by 2004.

Jupiter forecasts that the computer and telecommunications field will become the largest online b-to-b market, with sales topping $1 trillion in 2005. The other four industries are expected to cross the $500 billion mark each by 2005.

The study addresses the benefits of online trading and examines predominant online trading models, such as legacy electronic data systems and Net markets.

The Jupiter report was conducted during three months using a set of online commerce factors, including readiness and fragmentation of markets, which were applied to each market to arrive at the figures. Jupiter is currently working on a global study that it expects to release within the next few months.

"The United States is a very strong market for Internet commerce and works as a trendsetter for the global picture, which we plan to study next," Katsaros said.

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