Hitmetrix - User behavior analytics & recording

Three’s a Crowd in the BTB Market

The ocean is filled with fish. So if you want to make a living as a fisherman, just buy a boat, toss a line overboard, and you’ll be in business in no time, right? Wrong. A fisherman needs to know a host of issues to turn a one-person business into a successful enterprise.

The same is true in business-to-business e-commerce. The idea that one could set up a Web site and become a global business power has been put to rest. An intimate understanding of a specific marketplace best positions a company to capitalize on the emergence of Internet technology. And although conducting business in the virtual world may have a slightly longer learning curve than fishing, there are already a multitude of lessons that can be learned by the business community.

“One, two or out,” the adage of General Electric chairman/CEO Jack Welch, has never been more true than in BTB marketplaces. If there are already strong competitors in your target market, don’t go there. The honeymoon of big e-commerce ideas has come to a quick, unceremonious end. Someone else either has thought of your idea or can instantly copy it.

Therefore, to give a BTB e-commerce proposition legs, you need to establish a sustainable unfair advantage. Here are a few key elements a company needs to consider when conceptualizing a BTB model:

* History repeats itself. Are you identifying a business that is made up of buyers and sellers with a unique culture from other industries? Businesses that have been conducted the same way for decades or longer are not about to radically move into an unfamiliar structure.

* Look for discrete market expertise. Do you have the ability to replicate and enhance the way business is conducted today in the chosen industry?

* Address industry-specific risks. User identity, logistics, product quality and price negotiation are unique to any given industry. Have they all been tailored for your marketplace?

* Build relationships and contacts. Do you have a team of lobbyists or a bunch of software salesmen? The Internet moves too fast to cold-call your way through building a business. To gain traction early, you need a staff that can walk the walk through doors they’ve already opened.

* Go beyond the Rolodex. Will your business bring together buyers and sellers who normally don’t have access to each other? Do you have value propositions designed specifically for this audience?

* Do you have what others don’t? Does your bricks-and-mortar reputation and domain expertise lift you above a sea of competing solutions?

If you’ve been able to answer all of these questions with a resounding “yes,” then you have a fighting chance. But taking your ship to sea doesn’t necessarily mean you’ll weather the storm. Even the fastest real-world company moves at only a fraction of the speed of an Internet company, and this changing landscape is making first generation BTB players seasick.

In BTB marketplaces, we’ve already seen three generations of business models in just four years. The first generation was companies with a cookie-cutter approach to numerous industries, focusing on mostly content and community, not commerce. These veterans took the approach of “build it, and they will come.”

The second-generation BTB players continued with a horizontal approach and added an offline sales force to help populate their sites with more products than their predecessors. However, the key element they missed was an industry specific reputation and expertise derived from traditional bricks-and-mortar experience. This is proving to be the undoing of our BTB e-commerce pioneers.

Third-generation BTB businesses are vertical market makers with industry-specific heritage combined with offline sales forces made up of experienced industry professionals. In retail, for example, a successful sales force must be filled with ex-buyers and manufacturing representatives with years of industry experience.

If you want to win in BTB, one size doesn’t fit all. Those companies that are poised to drop a permanent anchor on industry specific opportunity will be those companies that have been comfortable swimming with the big fish for a long time.

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