adoption. I would speculate that this is indicative of Canadian's cautious nature
and can be perceived as an advantage. Canadian companies have been watching
the shifting fortunes in the U.S. while they thoroughly educate themselves on the
reality of e-commerce. This may have been the right approach to date, but we
believe waiting much longer represents a risky strategy.
Forrester Research Inc. forecasts $272 billion in online business trade in Canada
by 2005. They expect that online business trade will largely be from four provinces
where 92 per cent of Canada's B2B trade already occurs: Ontario, Quebec,
Alberta and British Columbia.
The interest in B2B exists and was demonstrated by the attendance levels at a
seven-city tour TD MarketSite recently conducted with Internet research company
Forrester Research. Over the course of two months this spring, more than 900
executives from companies across Canada came out to learn more about the
opportunity of using the Internet to streamline their businesses.
Since the advent of the Internet business opportunity, commentators have identified
the business-to-business sector as having 10 times the market size relative to
B2C in harnessing the potential of online trade.
Why does B2B offer greater potential?
Two reasons. The business-to-business market is lucrative because of its sheer
trade volumes. It also offers businesses the opportunity to improve processes and
bottom lines things that are particularly important in a slowing economy.
By streamlining and automating the buying and selling of goods, the Internet can
transform the way Canadian companies do business. What's key to accelerating
B2B adoption in Canada is being able to understand the challenges individual
companies face in terms of process and adoption and guiding them to the
opportunities.
We have been talking to companies interested in changing their processes. Our
greatest observation from conversations with customers is that many are in the
initial stages of understanding what B2B e-commerce can do for them. A
significant part of our work has involved explaining e-purchasing and how it applies
to their business.
We met with representatives from a variety of sectors including high-tech, industrial
supplies, oil and gas, construction, health care, service industries, consulting and
law firms, professional associations and municipalities. Attendance exceeded
expectations in all locations, with company representatives keen to see how B2B
can make a difference to their organizations.
What I heard back most frequently from companies was that despite all the
headlines about B2B's bright future, nobody had explained how it could apply to
their own business structure and purchasing processes. E-purchasing does
represent a shift in these processes, and people admitted they have been cautious
and focused on learning everything they can before committing to change.
Companies were also concerned about large upfront investments in software
installations and training. Executives were reassured that they could use some
e-purchasing services with no investment in software and hardware, and still
receive ongoing support and a relatively quick return on investment.
The potential for bottom line improvements generated the greatest interest. Based
on our experience to date, electronic purchasing can produce bottom line
improvements of up to 15 per cent, with savings attributed to increased control,
focus and process efficiency.
For B2B to be most attractive, companies want a choice of suppliers including
national and regional suppliers. That shows how the Internet acts as a tool that
maintains supplier relationships in a new environment.
Businesses also have different needs based on their size, number of offices and
purchasing habits. They want a range of services relating to e-purchasing that
includes a choice of pricing and approval processes. They are also looking for
complementary e-purchasing services value-added services like trade financing,
shipping and storage.
Intrigued with the potential B2B offers, companies are taking the time they need to
understand how to make it work for them. What they are learning is that B2B
e-commerce can give them streamlined processes, return on investment and
stronger bottom lines, with no upfront investment. Based on what we are hearing
from businesses across Canada and the customer registrations following the
cross-country tour, I believe we are at the cusp of B2B e-commerce adoption in
Canada.
Tim Bradshaw is a vice-president with TD MarketSite. TD MarketSite became
Canada's first operational e-purchasing site in March 2000.
