The figures keep coming. European Internet business will be worth £840bn within the next four years, growing at 87% a year to 15% of western Europe’s gross domestic product. Business-to-business Internet sales will reach £534bn by 2005 and by 2004 Britain’s e-commerce economy will rank ahead of every European competitor.
While these projections grab headlines and push e-commerce further up every boardroom agenda, working quietly away in the background is the development of the business culture and technology that will ultimately make it possible.
And the timber and wood products industry has been at the forefront through a number of dotcom-style combined exchanges and successful individual company websites.
The crux of a successful e-commerce operation and the biggest challenge is integration of technology.
ForestExpress, the joint dotcom venture of Georgia-Pacific, International Paper and Weyerhaeuser took another step forward this month when it joined forces with webMethods, a top US Internet technology company. This will allow ForestExpress to tie in to the operations of the three com-panies and make it available to buyers.
The move follows the latest leap of faith by the timber industry in Europe, which will make buying and selling timber on the Internet a lot easier. It successfully uses an emerging technology – XML – and, together with the culture of co-operation, could prove a model to other industries struggling to provide a standard.
Ten of Europe’s timber websites have agreed one technology for order processing that will be completed by the end of the year (TTJ October 21). The European Wood E-trade Association (EWETA), includes TIMBERWeb in the UK, Woodmarket from Finland, one of the earliest entrants to the Internet arena, and others from Germany, Holland, Belgium, Sweden and Malaysia.
This co-operation will allow customers to place orders and handle the administration, such as putting the transaction through their own accounting systems. without re-inputting the information.
It is a significant step forward from Electronic Data Interchange, the pre-Internet business-to-business link-up that uses expensive digital lines.
The change is made possible by using XML (extensible mark-up language), which has been threatening to revolutionise the Internet for several years, but is only now coming to the fore. In fact, XML is applicable to many digitised operations. It removes the need to take, say, words typed into Microsoft Word, or numbers into Microsoft Excel or words, pictures, graphics and colours into more sophisticated applications, and re-enter them for another computerised use.
XML represents data in a highly structured format, setting down how different information should be coded and conveyed. It recognises content and gives it a value, which can be identified for future uses.
“XML represents data in a highly structured format, setting down how different information should be coded and conveyed. It recognises content and gives it a value which can be identified for future uses. The change is as great as going from a piston engine to a jet turbine. So far it remains a dream, realisable probably later this decade” |
The change is as great as going from a piston engine to a jet turbine. In some industries, XML is considered the way to access all computer information within a company’s operation and reuse it, without hands-on intervention. So far it remains a dream, realisable probably later this decade.
Without XML, customers using the 10 timber websites had to fill in 32 different electronic forms all asking for the same information for a single transaction. The accord will cut this to one. When the deal was signed online, Magnus Hedin, for the Swedish e-market place Materium, said: ‘We are going to achieve something that the industry has tried to do for 20 years and failed, but under the name of EDI.’
The reason this is an important step forward is that TIMBERWeb estimates its target market to be worth £113bn a year. The operation has attracted more than 500 subscribers from more than 50 countries since its launch three years ago. Now it is dropping subscriptions in favour of commissions on transactions. It will charge a maximum of 1.5% on every deal.
The debate between subscription and transactional revenue continues and the move to transactional working is not necessarily the trend in business-to-business e-market places. This is because fears about trust and security still plague the sector and banking your money upfront is considered by many to be better than waiting for your cut from the deal – if there is a deal.
One e-market place for IT services has shunned transactional charges for subscriptions, and puts its buyers and sellers in touch online before they meet offline to close the deal.
A spokesperson for UK-based Ace-quote.com said: ‘I think it’s only a question of time. There is not a great deal of confidence in the security aspects of the Internet in business transactions where we are talking about a great deal of money.’
According to the latest report by market analyst Datamonitor, security breaches are costing business more than £10bn a year and it warns that many e-businesses are ignorant about the risk to which they are exposing themselves. It adds that failure to resolve Internet security issues jeopardises the growth of e-commerce.
To tackle this there are many new software packages on the market as vendors move in to profit on business fears. Leaders in the field include Commerce One and Ariba, which is used by TIMBERWeb. To help business-to-business players tackle the technical issues and make the right partnerships, a new B2B trading community has been formed. NetmarketsEurope.com is based in London and runs regular workshops.
Other B2B pioneers, which have been unable to find the answers, have found there own ways forward. There is an office products e-market place, which insists all users sign contracts covering the quality of goods they are supplying. It also secures the data they submit online so that it is not passed on to competitors – useful when a buyer has given away how much he is prepared to pay, and a seller how far he is prepared to come down (TTJ October 14).
A system of checks, though, is not always easy when the website is dealing with a small company in a far off land, often in central or eastern Europe. And these are the types of business that often use the web the most.
In addition to handling the buying and selling, some e-market places are offering an inspection service whereby they provide inspectors to physically inspect the goods before they are shipped to the buyer. But if that is the case, why not just go there yourself, or have your agent go there, and buy it on the spot? In fact, why use a website at all. The time will have to come when these issues are resolved.