Study forecasts huge e-biz growth

By Staff -- Industrial Distribution, 10/1/2000

Reston, Va.-A recent study conducted by two global companies-an Internet research firm and an online business-to-business trading site for industrial supplies-suggests that Internet commerce is still a relatively untapped gold mine for distribution.

Harris Interactive, a research firm headquartered in Rochester, N.Y., and IndustrialAmerica, a Reston, Va.-based B2B trading site for buyers, sellers and distributors, surveyed 981 people responsible for purchasing, selling and distributing products in the $1 trillion industrial supply industry. Surveys were sent via e-mail during a one-week period in May.

The overall sampling error is estimated to be plus or minus 3.2 percent; for distributors involved in the study, the range is plus or minus 12.5 percent.

Survey findings show that up to 80 percent of distributors are likely to engage in online transactions within the next year and up to 90 percent within five years. Currently, 31 percent of distributors engage in online transactions.

The study also estimates that 79 percent of distributors are already using the Internet to research products. Respondents indicated that two major advantages to online distribution are comparing prices and saving time. In a recent news release, IndustrialAmerica's president and CEO Chuck Sheridan said the evidence speaks for itself. "The vast majority of distributors are searching for answers on the Internet," Sheridan stated.

Chuck Moyer, IndustrialAmerica's vice president of product development, acknowledged that conducting an e-mail survey probably skewed the numbers slightly because it pre-selects for individuals who have access to and use e-mail. Yet Moyer said the results are still indicative of market trends.

"E-commerce is here to stay," Moyer said. "People expect over time to be doing more and more of their business that way."

This fall, IndustrialAmerica plans to release two as-yet-unnamed products for the industrial supply market. One is an e-procurement marketplace that Moyer said would be most attractive to the middle market. The other is a data mapping service, which would help buyers analyze their company's purchasing. Moyer offered a fictitious example of a large company trying to analyze purchases of brown general-purpose gloves.

"We can basically tell them ... you buy from four manufacturers, through 10 distributors in this aggregate number," Moyer explained.

Study results also indicate that about 80 percent of buyers and sellers will embrace online transactions within the next five years. It also estimates that 36 percent of buyers and 23 percent of sellers currently use the Internet for commerce transactions.