the Web Watch, Part Two: B2B

If Shakespeare were crafting a play about e-commerce in 2001, he most likely would reword his famous line from "Hamlet" to read, "To B2B or not to B2B ... there is no question!"

Clearly, the attraction of B2B from all sectors of the sporting goods industry is as hot as the romance between Romeo and Juliet. According to a survey conducted by the SGMA in February, 40 percent of manufacturers and 46 percent of retailers have purchased products online from factories or suppliers. Last year alone, worldwide B2B revenues hit $185 billion, according to research site eMarketer.com, with forecasts rising to $2.7 trillion by 2004. Key findings of eMarketer's "eCommerce: B2B Report" released in February include:

? US B2B will reach $854 billion by 2003, rising to $1.42 trillion by 2004.

? North American B2B (USA & Canada) will account for nearly 58 percent of global B2B revenue by 2004.

? Seventy-two percent of small businesses will engage in e-commerce by 2002, expanding to 80 percent by 2003.

? Thirty-four percent of total B2B e-commerce will flow through non-proprietary B2B exchanges by 2004.

The latter statistic points to the growth potential of marketplace exchanges for a majority of suppliers. "Few large retailers/manufacturers can afford the estimated $50 million to $100 million price tag of building their own exchanges, therefore these consortia models remain a good prospect," comments Steve Butler, B2B analyst for eMarketer. "Despite the fact that most remain in the pilot stage, by the third quarter some success stories from leaders will begin to emerge."

The wide array of B2B offerings has many in our industry confused, to say the least. In the past two years, we've seen the following tout themselves as the "next great B2B service":

A. Exchanges/Marketplaces?eB2B Commerce, iCongo;

B. Online Auctions?SportingAuction.com, FairMarket;

C. Liquidators?RedtagBiz, TradeOut, Liquidation.com, retailexchange.com;

D. Specialty Exchanges?SportBuyer.com, HealthClubDirect.com;

E. Industry Consortiums ? World Wide Retail Exchange (WWRE);

F. Solutions Providers/Supply Chain Management?i2 Technologies, SAP, ClickCommerce, Escalate, Plum River Technology;

G. Solutions Providers/Allianced with Sports Trade Assns?SPS Commerce/NSGA, Sporteum/SGMA;

H. Private Trading Networks?Callaway-Connect, adidasB2B.com;

I. Online Training/e-Learning Providers?KnowYourStuff, Sports Business University.

Clearly, all these services have found a niche audience among suppliers, distributors and retailers ... but do we need them all?



WHERE ART THOU, ROMEO?

When the B2B buzz began, online marketplaces offering "a central hub" such as eB2B.com and iCongo.com were the leading ladies; are they now the damsels in distress? Despite the rosy predictions by eMarketer.com for non-proprietary exchanges, one supplier at the recent NSGA Management Conference noted his company had only processed one online order via its marketplace provider after a full year, and therefore was severing the relationship in favor of building his company's own private B2B site.

So what went wrong? Several retailers blamed vendors for failing to join exchanges en masse to make them viable. Alternately, vendors claimed the price for entry to these exchanges was too expensive and inflexible to integrate into existing legacy systems. Some also cited the concern that B2B players at the time lacked the maturity, infrastructure and financial backing to make good on their promises.

Indeed, the talk lately within the sporting goods trade is of the PTN (Private Trading Network?another name for corporate extranet). Major suppliers already on stage include Adidas, Russell and Callaway, among others, with Nike claiming it will complete its entire supply chain by year-end.

So, will retailers and distributors be doomed to jumping from one corporate network to another to place orders? The situation is not that grim, according to Irwin Cramer, CEO of iCongo.com. The sports marketplace provider has a solution to alleviate all the "puddle-jumping" aspects of corporate extranets.

"We can set up a private trading exchange for suppliers seamlessly using our back-end technology, plus also allow them to participate in our marketplace exchange, limiting access to specific retailers of their choice," comments Cramer.

He also notes that iCongo.com has had success with smaller suppliers that can't afford to build their own private networks, yet want their customers to have access to products online. "When you look at the sporting goods industry, these suppliers make up the majority of the industry," says Cramer. "The smaller companies really have nothing to lose by going on the public exchanges."



EDI, TAKE II

At the esports report conference held during The Super Show this past January, industry speakers noted EDI has been around for over 15 years and is predicted to remain in place for another decade. Ironically, only 10 to15 percent of the sporting goods supply chain (primarily large suppliers and retailers) currently use the system, they claimed.

One speaker, Mike Bisner, channel advisor of Plum River, mentioned that companies maintain EDI due to massive infrastructure investments already made to existing back-end systems. To solve this dilemma, technology now exists for suppliers to translate retailer files to work with their EDI legacy systems. "As people change formats, they'll need 'middleware' to adapt to customer needs," commented Bisner. "At this point, you don't have to throw out your old system, just let it adapt."

Thus, technology and the Internet have made it possible to extend the benefits of B2B down to the small-to-medium enterprises?called SMEs, which generally consist of suppliers, distributors and retailers, via ease of integration and lowered costs. Clearly, 2001 is the "curtain call" for B2B.



SPOTLIGHT ON COLLABORATION

Moving forward, "Collaborative Commerce" will take the lead role, as supply chain management solutions link together the entire manufacturing process, from factories to retailers. The concept of "futures" will be singing its swan song, as predicted by technology gurus familiar with the sports industry, giving way to joint long-range planning between buyers and sellers via PTNs.

The goal is to deliver the right product, in the right quantity, to the right market, at the right time, at the right cost. In fact, a new report by Jupiter Media Metrix noted that 26 percent of B2B executives said they would add features to their PTNs within the next 12 months to enable collaborative online activities. These enhancements include closer supplier relationships (61 percent); faster times to market and closer links to channel partners (46 percent); monitoring supplier inventory levels (17 percent); joint planning, forecasting and replenishment (15 percent); and product design (11 percent). As such, industry experts predict that B2B will evolve to be less about buying product and more about strategic planning.

"Most B2B buyers view PTNs as an opportunity to gain closer relationships with suppliers, not to facilitate transactions," states Tim Clark, senior analyst with Jupiter. "This will result in faster ramp-up to manufacturing for buyers and more efficient and predictable inventory levels for sellers."



ON WITH THE SHOW

Though the sporting goods players in the B2B troupe are still rehearsing, it appears the stage is set for future success. As Shakespeare once wrote, "What light through yonder window breaks?"