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Surge in European B2B Marketplaces Predicted

A new forecast says that by 2005, e-marketplaces will claim 6 percent of all B2B trade in the European Union as up to a thousand online markets emerge to facilitate Internet business transactions.

The report from Forrester Research outlines how these e-marketplaces will start off biased toward buyers and sellers, but will evolve into neutral, Pan-European venues that allow all participants to profit from their market reach and efficiency.

"Vast volumes of trade through e-marketplaces will trigger many buying and selling companies and third parties to seek a piece of the action over the next four years," said Jaap Favier, senior analyst for Forrester Research B.V. "But only one in 20 of these initiatives will survive the battle for power and volume."

Across all industries and countries in Europe, companies are shifting large portions of their trade to the Internet, Forrester said. But strong differences between industries will allow some to commence business five years before others do. Three industries represent the bulk of e-markeplace trade: automotive, transportation and electronics. Construction and industrial equipment firms are lagging behind.

Half of all EU e-marketplace trade will take place in the UK and Germany by 2005, the study forecasts. Regions that have strong ties with these giants, including the Benelux states and Ireland, will be pulled into their slipstream, exhibiting high growth rates. Despite its leading position in business-to-consumer (B2C) trade, Scandinavia's B2B trade is lagging due to its dependency on the German and English economies.

"Of the e-marketplaces launched in Europe by 2002, three types of venues will emerge: buyer sites aimed at e-procurement; seller sites concentrating on channel sales; and neutral fair sites, which will be set up by third parties and will milk fragmented markets," Favier said.

Forrester said it believes that extensive merger-and-acquisition activity will produce consolidation, bringing the total number of European e-marketplaces down to 50 by 2005. At that point, regulators will block further market consolidation to prevent monopolies.