Merrill Lynch recently warned of a pull-back in the business-to-consumer sector. The firm cited slowing growth in the seasonal growth drivers
(percentage growth of new Internet users, total e-commerce dollars spent,
and total advertising dollars spent).
It makes sense. The growth curves
will flatten as we enter the summer months. During this time, less people
go online, less people spend money online, and advertisers curb their
spending. Senior analyst, Henry Blodget does, however, see promise in two
Internet sectors…business-to-business e-commerce and Infrastructure.
Reporter@Large-Luke Fronefield, takes the same stance. Reasoning?
INFRASTRUCTURE PREMIUM
These stocks are often referred to as the “plumbers” of the Internet because
they provide the equipment and services which support the life-line and
continuous flow of the Internet. The companies within this sector benefit
from the rapid growth of the Internet without having to sell their
products/services directly over the new medium. While there are now roughly
135 million worldwide Internet users, Forrester expects the number to
balloon to 500 million users by the year 2004.
B2B PREMIUM
B2B e-commerce is expected to grow to a $1.3 trillion market in the U.S.
alone by 2003. Within the same time period, B2C e-commerce will be worth
roughly 108 billion, or 10 times less. A premium is placed on B2B because
of its market size, high barriers-to-entry, the eyeball factor and its
inherent network effect.
The following analyses should be helpful for investors, looking to tap
into these lucrative sectors:
Net Value,
A Wake Up Call for Investors,
Future Synergistic Benefits: Where Clicks and Mortar Meet,
B2B: The Bigger Wave and The B2B Ladder Approach.
