E-commerce middlemen face a booming future

E-commerce middlemen face a booming future

Although it's a common belief that the Internet eliminates the need for intermediaries in business-to-business transactions, the opposite is true, and companies that fail to recognise this risk commercial failure, according to a study by analyst Dataquest released last week.

"There is a meaningful place for intermediation" in the Internet economy, said Brett Azuma, vice president and worldwide director of e-business at Dataquest, during a press conference here this afternoon at GartnerGroup's Symposium/ITxpo '99.

Dataquest, a GartnerGroup subsidiary, calls these e-commerce middlemen "e-market makers" and defines them as facilitators of online transactions that have a Web site devoted to business-to-business transactions for companies from a particular region or industry.

Far from being on the fringe of Internet-based commerce, these e-market makers are right at the centre of the business-to-business action and in a position to revolutionise this market, Azuma said.

These players will initially steal transactions from traditional online commerce hubs, such as Web stores and extranets, by providing services such as the creation and management of purchase orders and invoices, but, eventually, they could compete against software vendors and distributors, he added.

There are more than 200 "e-market makers" now, and in 1998 they facilitated about $US12 billion in online transactions for non-financial products and services. The figure rises to $170 billion if the financial arena is included, Azuma said.

Dataquest groups these companies into four categories:content and community portals, which provide product information and generate revenue through advertisements and subscription feeschannel enablers, which provide the computing infrastructure to channel members to engage in e-commerceefficient commerce networks, which manage a trading network with things such as suppliers' cataloguesdynamic marketplaces, which mediate online auctions among buyers and sellers.

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