Platforms are the place 2B

Economic necessity encourages more firms to go online Konrad Makomaski refuses to conduct any business off-line if he can do it faster electronically. An e-commerce fan, he uses online banking for all his personal financial transactions and buys his Hawaiian vacation packages over the Internet. Makomaski's personal preference for Web buying spills over into his professional life. He is the president of Marketplanet.pl, a company launched last July as a business-to-business (B2B) electronic platform for buying and selling office machines and services. The operation was set up by Telekomunikacja Polska (TPSA) as an internal purchasing system to save money on costly procurement paperwork and to obtain the best prices for cleaning and security services, company car purchases, electronic goods, furniture, paper, pens and even mineral water. Marketplanet is now one of the largest of the 20 or so electronic B2B platforms in Poland among horizontal - or general - trading platforms, industry-specific vertical platforms and corporate platforms. Marketplanet and the other e-commerce ventures that went online in the past year have just begun implementing their e-trade platforms that aim to simplify business processes and cut expenses. Poland is still an open playing field for B2B e-commerce. And its e-marketplaces are expected to grow within the next few years. According to a report issued last September by the Kraków-based market research firm Polish Market Review and MEMRB Custom Research Worldwide, only 12% of the firms surveyed made purchases over the Internet while 13% sold products. Yet with the expected growth of online exchanges, the report forecast that revenue from B2B e-commerce in Europe would reach $132.7 billion in 2002 and $797.3 billion in 2004. Expansion a must Although the first corporate B2B projects in Poland have reduced costs for large corporations, like TPSA, that created them, industry professionals say they must go beyond their existing customers within the next few years to become competitive in Poland's e-marketplace as well as in the global arena. TPSA, for instance, opened Marketplanet to other large corporations in January in an effort to generate more sales for the parent company's products and revenue for the online venture through transactions fees or commissions. The hook for going online is the potential cost savings. According to the Polish Market Review's report, small- and medium-sized companies in Poland can save 5-10% by transferring their commercial activities to an electronic platform, while large firms can save 20%. Makomaski said that the "multi-million dollar" Marketplanet platform has saved TPSA more than 50% in procurement costs and 30% on purchases through reverse auctions, or the placing of bids to buy products on the Internet. Marketplanet has so far hooked three outside corporations into its platform for both purchase transactions and auctions. By year-end, Makomaski wants 30 companies. He also has plans to eventually expand the platform's services to the public administration sector and specialized markets, such as metals and chemicals. "More and more companies understand the Internet opens a new commercial channel that compliments existing sales or purchasing channels," Makomaski said. "It doesn't replace them, but can significantly increase the volume of sales and also offers the possibility to reach different geographical areas. When you look at others that have started a market like (ours), they're moving in the same direction because that's where the money is." X marks the site Xtrade, Marketplanet's main competitor, has also opened its private marketplace to outside companies. The firm was launched last March by the Polish IT giant Optimus, its main banking client BRE Bank and the U.S. company Commerce One, a producer of software for e-procurement systems. Xtrade originally implemented its electronic exchange for Optimus and BRE Bank but recently opened it to outside companies - selling them licenses for Commerce One software. Once these firms become Xtrade customers, they will pay either a fixed monthly transaction fee or one based on the number of online transactions. Xtrade wants to increase its current seven corporate buyers to 20 and expects turnover of zł. 10 million-zł. 20 million ($2.4 million-$4.8 million) by the end of the year, according to Jan Karasek, the firm's business development director. Xtrade plans to first establish a general e-marketplace for different goods for several sectors, then create a vertical market to focus on niche areas. "Other sectors have strong ties with companies outside Poland and in this respect global trading will be very important for us," Karasek said. Raw recruits A few major companies in specialized sectors in Poland have already started their own e-exchange platforms for raw materials, specifically in the steel and energy industries, and might compete on global e-marketplaces in the near future, according to industry professionals. Global IT research firm IDC released a brief last July forecasting that online raw materials and components orders by manufacturers would become significant from 2003, contributing a quarter of Central Europe's total e-commerce by 2005. In December 2000, for example, ce-market.com, the country's first specialized platform for metals trading was created as a joint project of metal concern Impexmetal and IT group Prokom. Last August, IT integrator ComputerLand and five steel industry companies created the StalPortal B2B platform for firms trading metal products. Some of Poland's large manufacturers of raw goods are natural candidates for global B2B marketplaces, according to industry professionals. "(The metals companies) have a commercial understanding of the sector in Poland and worldwide," said Jerzy Kalinowski, the vice president of the Polish Chamber of IT and Telecommunications. But before Poland's B2B e-commerce firms can join the global marketplace, they need to build their client bases at home. It won't be an easy task as most companies don't understand B2B, don't view it as a strategic part of their operations or aren't ready to take risks, according to Jerzy Szymczak, an Internet project leader at the Warsaw office of international consultancy Boston Consulting Group. In addition, Poland's dismal economy has also prevented companies from plunging into B2B. Nevertheless, most of Poland's largest B2B exchanges are confident they will slowly convince firms of the benefits of going online. "It took more than a year to let the market know what B2B marketplaces are all about," Makomaski said. "We are now reaching a certain information level where managers are starting to understand the advantages of using these types of services."