Success in European B2B Trade Requires the Right Investments
A report published in May says online
business-to-business (B2B) trade has major potential in the years ahead.
And, by 2005, the research predicts, the online market will account
for about one-third of all B2B sales in Europe.
To keep momentum in the marketplace, however, the study says that
online firms will have to make a significant investment in the "sell
side" of e-commerce, as well as stomach relatively high labor costs.
The Forrester Research report, entitled "ROI of Europe's eCommerce
Sites," found that labor costs will consume more than 50 percent of
online B2B companies' budgets.
Forrester analyst Charles Homs said that for a typical Europe top
100 firm to tap into trade opportunities, they will have to invest more
than 11 million euros ($9.72 million) to get the service rolling.
Homs added that the cost of integrating the applications will eat up
half the firm's IT investment in the first year, but, once the
required infrastructure is up and running, the labor costs will start
to climb as well.
As if this wasn't enough to give the financial director a headache,
Homs said that the B2B commerce site will also need a marketing
program, just like any other type of business.
"After the initial launch, these costs will catapult to 15 percent of
ongoing spending to keep the trade site up, but the return on
investment will be worth it," he said.
Homs cites the example of a top European 100 transportation company
being able to generate 33 percent of its total trade through its
online B2B services.
Before this sales bonanza can happen, Homs sees a need for many firms
with existing e-marketplaces to overhaul their systems and invest in
what he calls "sell side commerce sites."
"Today's approach to B2B Web sites is focused on features, not
functionality," he said, adding that there is now a definite need for
site overhauls in many cases.
"European firms are failing to deliver because a wealth of features
don't generate extra business," he said, adding that poor access to
applications results in an inability to transact online.
Forrester's report concludes that focusing on B2B commerce sites will
allow firms to benefit from improved sales at lower costs and
For this to happen, the research firm says that B2B commerce sites
must mature sufficiently to include collaboration and ensure
accessibility of business processes to their customers.
The report says that they must also improve overall profitability
to ensure that business process re-engineering efforts make
e-business investments pay off.
For its research, Forrester says it interviewed 42 European executives
responsible for their firms' B2B sites.
--Reported By Newsbytes.com, http://www.newsbytes.com .