E-marketplaces are a booming business in Europe, says IDC

European business-to-business (B2B) Internet commerce will increase in value from 61 billion euros in 2000 to over 1.5 trillion euros in 2005, according to new IDC forecasts. E-marketplaces will be responsible for the majority of this growth in the mid to long term.

According to IDC, B2B e-commerce will be driven by numerous factors. "Companies wish to optimise the flow of information within the supply chain. The Internet is an excellent platform for this as the infrastructure is there today. The desire to implement e-commerce solutions may also be spurred by business partners that are interested in maintaining an electronic dialogue with their clients and suppliers," said Mikael Arnbjerg, IDC`s lead analyst in European B2B and E-marketplaces research. However, B2B has to overcome some barriers along the way including security concerns and, in certain industries, a lack of understanding of what the Internet can do. "The discouraging experiences of the dot-com shakeout may still have a negative effect on B2B e-commerce initiatives, although this should not be such a negative correlation," Arnbjerg said.

IDC distinguishes three types of B2B Internet commerce: e-distribution, e-marketplaces, and e-procurement. E-distribution accounts for the majority of B2B Internet commerce transactions today. Although the volume of goods sold via e-distribution is growing, growth will slow over the next few years as buyers and sellers turn to other types of B2B e-commerce models. E-marketplaces are the fastest-growing segment in e-commerce and will continue to grow rapidly over the next five years. The growth of e-procurement is almost as impressive, but e-procurement is mostly interesting for larger companies that will dominate this segment.

> From the perspective of novelty business models, e-marketplaces will be the most interesting to watch. "E-marketplaces will position themselves through a combination of commerce and other services. In terms of revenue, e-marketplaces may opt for a transaction fee-based solution, but this may not work well in all industries. An alternative solution is membership fees. Industry-specific content may help the e-marketplace obtain a better position in the quest to become a market leader," Arnbjerg said. Additional services, such as e-business consulting, may also develop into a revenue stream for e-marketplaces.

European B2B and E-marketplaces 1999-2005 - Forecast and Analysis (IDC #EM01G) presents a sizing and a forecast for the Western European transaction volumes derived from three types of B2B Internet commerce: seller-governed e-distribution, community-governed e-marketplaces, and buyer-governed e-procurement. In addition to the forecast, the report presents e-distribution success factors and discusses the business case of electronic marketplaces including the implications for sellers and buyers. This report identifies the trends in B2B e-commerce and details which countries and segments will become more lucrative over the next couple of years. This report is available to purchase from your local IDC office.