To B2B or not to B2B: It’s no question

Internet marketplace guru Kevin Jones has one word of advice for Australian B2B entrepreneurs – seafood.

An early evangelist for business-to-business (B2B hubs) and exchanges who has parlayed his insights into a A$75 million (US$40 million) personal fortune, Jones admits he doesn’t know much about Australia. But he believes the time is ripe for someone here to emulate the success of online U.S. seafood exchange GoFish.

According to Jones, one way of picking a Net market opportunity is to identify a point of friction in the trading process and then provide the grease for it. In GoFish’s case, the opportunity came from friction caused by disputes over shipments of bad fish and the solution was a payments system, which eased the problem.

The best is still ahead for Net markets, Jones told a recent First Tuesday gathering of digital entrepreneurs in Queensland. Money from bricks-and-mortar stalwarts is flooding into the area and unlike venture capital funds, “industry money is more patient and deeper”, he said.

Jones, 50, is a former newspaper and business magazine publisher who launched his company, Net Market Makers, in 1998 to track and analyze B2B trends, before selling it this April for $US40 million to Jupiter Communications.

He says there are more than 50 Web sites set up by coalitions of bricks-and-mortar industry heavyweights such as the auto giants. About 80 per cent of them are buying consortia and the rest function as combined sales channels

Global 2000 companies are betting heavily that these kinds of markets are how they will come to the Net and learn to do business there, according to Jones.

In a different category from the bricks-and-mortar coalition sites are independent markets set up by pure-play e-commerce companies. Their intellectual property consists of “a sort of industry-specific operating system or process which enables that industry to be far more efficient”, says Jones. An example is PaperExchange, an e-commerce environment for the pulp and paper industry.

Jones dismissed reports of teething problems at corProcure, the purchasing hub used by a coalition of 14 large Australian corporations, as irrelevant. “There are no blazing success stories yet but that doesn’t matter. Just by issuing a press release (about creating a coalition site), the bricks-and-mortar companies robbed the pure Net plays of their momentum and of easy access to capital.

“Some don’t care if it becomes real any time soon. They have blocked a threat and given themselves time to work out the Net.”

He pointed out that U.S. companies such as DuPont and commodities giant Cargill have taken equity in half a dozen different Net market initiatives. That insulates them from failure in any single site but positions them as a partner in those, which evolve into the best players.

“Meanwhile, the parent companies are learning all the time about how to use the Net.”