Online Exchanges Growing

A recent survey shows that buyers, suppliers and distributors of industrial supplies are likely to double their use of the Internet to conduct commerce transactions within the next 12 months. Today, 34% of the trading partners in the $1 trillion industrial supply industry are developing and incorporating e-commerce strategies, and the survey says that number will grow to 67% next year, and to 83% by 2004.

Harris Interactive, a market research firm known for its Harris Poll, conducted the survey in early May, which relied on 981 e-mail responses (62 distributors, 133 suppliers and 786 buyers). Participants were asked a series of questions directed to find their position on using the Internet for conducting and developing business strategies in the next year and in five years.

Today, only 36% of buyers, 23% of sellers and 31% of distributors utilize the Internet to conduct transactions. The dominant method for these transactions is still through telephone or fax machine, but apparently not for long. Distributors stated that they intend to use e-commerce 90% of the time by 2004, while buyers and sellers predicted they would escalate to 80% usage.

"The true value of the Internet in business today is providing a common ground for buyers," says Charles B. Sheridan, president and CEO of IndustrialAmerica of Reston, Va. "These online exchanges are particularly valuable in markets where e-commerce is still in its infancy, such as the industrial supplies industry."

IndustrialAmerica contracted Harris Interactive to conduct the survey prior to opening its own business-to-business industrial supplies trading site, due in the Fall of 2000. Sheridan says the site will streamline global trading relationships and reduce operating and transaction costs between partners.

"The benefits of online exchanges are threefold," says Sheridan. "Buyers will enjoy operational and production savings; sellers will have more control and ability to sell their brand to more customers while lowering operating costs; and distributors can cultivate sales and sell to more customers while reducing overall expenses."