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Research says suppliers who offer more services can increase their business

Boston  May 24, 2001  Jupiter Media Metrix reported today that over 80 percent of B2B buyers will be strongly influenced to trade online with suppliers who offer more comprehensive services, including collaborative product design and supply chain inventory visibility. Jupiter B2B research released today at the Ground Zero 5 Conference in Boston indicates that 54 percent of B2B buyers would treat suppliers as "preferred vendors" if they provided such value-added services. According to Jupiter analysts, suppliers must provide "Buyer Productivity Applications"  services designed to simplify B2B interactions  to jump-start the slow growth of B2B commerce and strengthen relationships with buyers.

"B2B companies are focusing on creating customer loyalty and should not be concerned with reducing costs of transactions. Gradually, suppliers are recognizing this and are using the Internet to strengthen the quality of buyer-seller relationships," said Jon Gibs, Jupiter analyst. "Closer working relationships will bring new efficiencies that will ultimately result in cost savings. New Jupiter research reveals that 'Buyer Productivity Applications' will foster more loyal relationships and create value for B2B commerce."

Key findings and forward-looking analysis from the latest Jupiter B2B research, which was discussed in detail today at the Ground Zero 5 Conference in Boston, include:

  • According to a Jupiter B-to-B Executive Survey, six percent of B2B buyers said that if a vendor provided "Buyer Productivity Applications," they would shift all of their buying to that specific supplier, while 22 percent would increase the amount they buy from that supplier. According to Jupiter analysts, these figures assure suppliers that adding these applications could only strengthen their competitive position, since no buyer indicated they would buy any less from that vendor.

  • Jupiter analysts have identified three separate categories where value-added applications can play a significant role: design collaboration, inventory visibility and interactive planning. Jupiter analysts say these newly available services would fill in the holes left by buyer-focused B2B software producers, including Ariba and Commerce One.

  • According to Jupiter analysts, B2B buyers have been slow to move online and will remain slow for the next 18 months. Suppliers must use this period to reposition themselves as industry leaders and implement "Buyer Productivity Applications" according to their customers' profiles. By doing this, Jupiter analysts believe that suppliers will create a greater level of buyer sophistication on the Internet that will lead to more loyalty and higher revenues.

"At present, supplier strategy means going online only to meet the few buyers already there," Gibs said. "But future supplier plans include bold new collaboration applications that will help buyers get with the program. By investing in programs buyers really value, suppliers may finally experience the market expansion they've been waiting for."

Understanding Buyer Motivations

According to Jupiter analysts, online initiatives are costly and suppliers need to plan before they spend. Jupiter analysts say suppliers' strategies must reflect understanding of buyer motivations and offer the following advice that will help create an advantageous situation for both buyers and sellers:

  • Research and study best buyers. This is the most important step in planning an online initiative and requires substantial survey work and needs-assessment studies.

  • Initiate buyer training. If management for buyers will not take the initiative in training their buyers, suppliers must do it for them.

  • Move existing buyers online. Create a comfort level for customers by having them conduct simpler transactions online, including reordering and scheduling goods based on existing contracts. Once suppliers have made their buyers more comfortable with interacting online, they can then implement more advanced applications.

  • Implement advanced "Buyer Productivity Applications." Once a buyer has become comfortable and trusting of basic applications they can be assisted in moving to more advanced applications. According to Jupiter analysts, here is where they will begin to see the real growth and efficiency.

  • Attract new business online. Suppliers must shore up their existing bases before they can hope to expand market share online. Attracting new business will happen, but not yet.