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Walsh: B2B Markets Thrive in Net's Global Environment

I recently had the opportunity to sit down with VerticalNet's President and Chief Executive Officer Mark Walsh. Among other things, we discussed Mark's thoughts on the entire B2B landscape and also what we can expect from VerticalNet going forward. In Part I, Mark Walsh talks about the broad face of B2B commerce. Part II Friday goes into more detail on VerticalNet.

The interview is a continuation of the series I began last week entitled "The B2B Ladder Approach." The article featured three top-tier business-to-business companies; Safeguard Scientifics (SFE), Internet Capital Group (ICGE), and VerticalNet (VERT).

Reporter@Large: As a leading figure and one of the most experienced executives in the B2B space, what is B2B e-commerce truly about in your view?

Mark: Well, the consumer marketplace, the things we buy as consumers and the Internet's ability to deliver them to us, or let us find them, is fascinating.

But the very things the Internet is good at: finding the low cost supplier and driving down prices, actually cripples the retail environment. The low cost supplier is always rewarded because consumers are all cost conscious, if not price driven. There is very little loyalty.

On the other hand, the Internet for business markets mostly enhances what the entire business market wants. So I think B2B e-commerce is really more about product information, product supply, multi-vendor sourcing, comparison and auctions that than it is about price. The B2B buyers are far less price conscious than consumer buyers and often use price as the last metric when deciding on a purchase. The Internet allows businesses to find multiple sellers, compare information about the products, reach out to the buyers, engage the buyers in conversation and then pursue that conversation either online for the transaction or offline, for a lot of transactions.

What is really amazing about the B2B market is that there is so much more robust a texture to it than the B2C market. There are small companies, medium sized companies and large companies. Large companies have the issues of what the Internet can mean to how they sell things. Medium sized companies see the Internet as an incredible opportunity to reach up and get bigger companies as customers. Small companies see the Internet as a way to truly level the playing field, in how they get their products out to market and in some cases how they buy products and source products themselves, at prices that are more appealing.

Sort of the wrapping and the bow on top of everything is the idea that B2B markets are by their very nature global from day one, kind of the secret sauce that accelerates a lot of the value. Just as a quick data point, 40 percent of the traffic on our sites is non-U.S. traffic and we've done nothing to promote that.

Reporter@Large: It's interesting that you mentioned the small, medium and large sized B2B companies. Forrester projects the B2B market to do $1.3 trillion in transactions by 2003. Is there room for a lot of success stories here, or are we talking about a few big winners?

Mark: I think that's a matter of timing. When the car business got big in the U.S., there were 50 car companies. When the telephone business started to gain traction in the U.S., there were 300 telephone companies. Obviously we've seen consolidation in both industries. I think it depends on the calendar of your question. It is my contention that much like the consumer onlin