| Gartner Says North American B2B E-Market Maker Revenue Grew 171 Percent in 1999
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| -- Gartner Conference to Discuss the Future of Online Marketplaces and Exchanges --
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San Jose, Calif., August 31, 2000 — The nascent North American business-to-business (B2B) e-marketplace market grew 171 percent in 1999, propelled by "brick-to-click" distributors and established dot-com marketplaces, according to Gartner Group, Inc. (NYSE: IT and ITB). E-market maker revenue reached nearly $500 million in 1999, an increase from 1998 revenue of $183 million. |
| A B2B e-market maker is an enterprise that brings together buyers and sellers within a particular industry, geographic region or affinity group for the purpose of commerce. It provides content, value-added services and- often, but not always - commerce transaction capabilities. It is a market intermediary. This new market is quickly evolving to a highly competitive market that includes a variety of players with previously disparate business models, including software, portals, distributors, application service providers (ASPs) and business service providers. "Online operations of brick-and-mortar intermediaries like Ingram Micro dominated the market in 1999," said Leah Knight, research director for Gartner's e-Business Services. "This evidences the relative ease of migrating an existing customer base to an online model over building a new customer base from scratch, which many of the dot-com marketplaces have been struggling to do. It also shows the strength in many industries of the value-added business services model (for example, providing demand generation, quality assurance and logistical services) vs. the transaction fee model. Still, many of the brick-and-mortar intermediaries are facing challenges themselves due to margin." |
| Ingram Micro commanded a dominant market share of 26.4 percent. Tech Data and Arrow Electronics ranked No. 2 and 3, respectively. Grainger posted the strongest growth rate among the top-tier vendors with 633 percent growth. (see Table 1).
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Table 1
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North American E-Market Maker Net Revenue Estimates for 1999 (Millions of U.S. Dollars)
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| Company |
1999 Revenue |
1999 Market Share (%) |
1998 Revenue |
1998 Market Share (%) |
Growth (%) |
| Ingram Micro |
131.2 |
26.4 |
53.5 |
29.2 |
145.2 |
| Tech Data |
60.6 |
12.2 |
18.0 |
9.8 |
236.0 |
| Arrow Electronics |
59.1 |
11.9 |
25.7 |
14.0 |
130.0 |
| Avnet |
37.7 |
7.6 |
17.3 |
9.4 |
117.9 |
| Grainger |
37.4 |
7.6 |
4.9 |
2.6 |
633.0 |
| VerticalNet |
19.7 |
4.0 |
3.0 |
1.6 |
556.7 |
| FreeMarkets |
15.7 |
3.2 |
5.9 |
3.2 |
166.1 |
| Altra Energy Technologies |
15.0 |
3.0 |
9.0 |
4.9 |
66.7 |
| Others |
121.2 |
24.1 |
45.9 |
25.1 |
164.0 |
| Total |
497.6 |
100.0 |
183.2 |
100.0 |
171.0 | Source: Gartner (August 2000)
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As the market requirements drive market makers to intermediate increasingly complex buyer-supplier relationships and processes, marketplaces will constrain their focus, producing an environment populated by three unique marketplaces. |
| The commodity marketplace — This marketplace will support high-volume trade of products and services of commodity or near-commodity status, as well as financial instruments such as futures contracts. |
| Business service marketplaces — These marketplaces will be focused on supporting specific inter-enterprise processes, such as those related to logistics, financial services, and maintenance, repair and operations (MRO) procurement. |
| Integration service marketplaces — These marketplaces will emerge with a focus on linkages and process definitions, and between trading partners to facilitate process-to-process integration. |
| "Through 2005, the competitive landscape will be significantly transformed to a hub-spoke-Web model of inter-enterprise e-marketplace engagement among the three marketplace models," Ms. Knight said. "Marketplaces that try to support all three models will fail, but marketplaces that focus with rich software and services environments as required, and a strong base of partners, will dominate their segments." |
| Gartner analysts will examine the future of e-marketplaces during the upcoming Gartner B2B eMarketplaces conference, to be held November 6-8 in Boston, Massachusetts. The event will examine different business models and strategies, provide insight into the successes and stumbling blocks encountered by online exchanges in a variety of vertical industries, and discuss tactics to help companies survive the coming shakeout. To register for Gartner's B2B eMarketplaces conference, please call 1-800-778-1997 or 1-203-316-6757 or go to www.gartner.com/emarketplaces/usa. Members of the media can register by contacting Lisette Kwong at 1-212-320-2330 or lkwong@tsicomm.com. |
| Additional research and analysis on the B2B market is available to subscribers of Gartner's e-Business Services. These programs are part of wide range of Gartner services examining the e-business industry. These programs are designed to help senior executives, strategic planners and investors capitalize on emerging opportunities by providing research and analysis on electronic commerce and Internet marketplaces. Additional information on these programs is available on Gartner's Web site at www.gartner.com/public/static/home/ggebiz.html. To purchase this specific document or subscribe to these services, please call 800-419-DATA or 408-468-8009. |
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