techDaily.info :: Less than 200 B2B Exchanges Likely to Survive by mid-2003

Tuesday, January 06, 2009

Less than 200 B2B Exchanges Likely to Survive by mid-2003

Posted: 1/15/2003

Posted By:	Pembroke Consulting		Contact:	R Ryerson
Phone:	215-523-5700		Email:	rryerson@pembrokeconsulting.com

A new research U.S. study titled Shakeouts in Digital Markets: Lessons from B2B Exchanges tracks the amazingly compressed boom-to-bust cycle for Internet startups in B2B markets. The study was conducted by Professor George S. Day, Ph.D. of the Wharton School of the University of Pennsylvania and Pembroke Consulting President Adam J. Fein, Ph.D.

The study examined B2B exchanges in eight specific industries: Electronic Components, Food Service & Beverage, Health Care, Paper, Construction, Automotive Aftermarket, Industrial MRO, and Grocery.

“Our study of eight industries found only 43 percent of independent B2B exchanges survived between April 2000 and July 2002,” explained Fein. “B2B exchanges thought they had a great value proposition but actually misdiagnosed their advantage versus existing ways of doing business.”

According to the study, there were an estimated 1,500 B2B exchanges operating in 2000. However, the study suggests less than 200 of these B2B exchanges will likely survive through 2003 if the current shakeout trend continues.

“B2B exchanges were late movers - not first movers. They couldn’t replace longstanding relationships in the B2B supply chain between customers and their distributors,” added Fein. “Only a handful of exchanges, such as FreeMarkets and eBay, have capitalized on the breakthrough possibilities of the Internet.”

The paper suggests other winners will be adaptive survivors, who find a protected niche supporting existing B2B relationships, or acquisitive incumbents who buy the assets of pure-play companies at deep discounts.

The full results of the study will be published in a forthcoming edition of California Management Review, which is published by the Haas School of Business at the University of California Berkeley.

To read a full copy of this study visit this link and click the link for the PDF at the bottom of the page:

http://www.pembrokeconsulting.com/Shakeouts.html

Pembroke Consulting is a management consulting firm assisting senior executives from market-leading wholesale distribution, manufacturing and B2B technology companies. To learn more about the firm visit www.PembrokeConsulting.com.

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