RealTime IT News

Have Confidence in B2B Market Model, VerticalNet Chairman says

Glengarry Glen Ross it isn't, but VerticalNet Chairman Mark Walsh stressed the important role good leads play in his host of vertical communities in a marketplace symposium Tuesday at Fall InternetWorld 2000.

In expounding on the success of such markets, the gregarious founder rolled through a detailed PowerPoint presentation noting that 20 percent of his company's vertical leads result in sales. Moreover, he said, the average sales of those purchases is about $25,000 -- a far cry from sales of books or CDs from some of today's highly esteemed e-tailers.

Rather, VerticalNet plays host to much more technical markets -- electronics, construction, engineering. All told, there is 57 as of this press run, but more and more are being implemented.

One of Walsh's key points was that marketplaces should not try to be standalones, or "disintermediators," but should accept other participants as part of the successful community -- at least for a while. Walsh said these companies try to specialize and cut less technically and Web savvy marketplaces out of the loop.

In actuality, he said, declaring war on marketplace consortia's and participants will eventually hurt standalones.

"Don't get out of the Trojan horse until you get inside the castle," Walsh urged. "Reach out to the community."

In a lighter hearted, yet overtly earnest moment, Walsh said the largest online book seller was the lone example of a successful disintermediator.

"Amazon.com is a disintermediator, but it is an anomaly," Walsh said, emphatically.

"It has no choice but to work because everybody hates everybody in the book business. Writers hate editors, editors hate writers, editors hate publishers, and so forth. But everybody is going to buy books."

Walsh also attacked the what he said are the countless CEOs who are unsure of the their business models, claiming they are drowning in the "ocean of fear" as opposed to basking in an "island of logic."

He said too many companies rely on the consumer market for profits as opposed to the sell-side, saying "healthy vendors will equal healthy markets."

Walsh said some businesses use the Net wrong, looking to save 5 percent from tier-one markets.

"The Net is not one big GNP reduction service," Walsh claimed.

"Help your customers sell stuff. At the end of the day there is more to save on the sell-side, but most companies won't bet the ranch on that."

Walsh wound down his commentary by saying that there exists a real schism in corporate behavior between the real world and the Internet world.

He said timid corporations want to test B2B once just to see if it will work, just as many consumers buy one single item during their first purchasing transaction on the Net.

The discrepancy is that anxious vendors want to get everything up and running at once, without checking to see if it will work. Consumers, however, show little or no loyalty to e-tailers and are upset if they are spammed about buying something else form a company.

Walsh called this the "screw vendors" ideology.

Lastly, Walsh ensured the audience that there was no such thing as a successful pure Internet play. He said a blending of the two, as in the case of AOL-Time Warner, will lead to a successful business today.

VerticalNet will release third quarter financial results after the market closes at 5:30 p.m. EDT.