NEW YORK -- Not so fast.
A just-released study by Internet analysts Jupiter Research here indicates that companies may not be as enthusiastic as some surveys indicate on moving quickly to buying supplies and merchandise on-line.
Supermarket operators like the 119-store Nash Finch, Minneapolis, which does $4 billion a year in sales, and the 98-store Save Mart, Modesto, Calif., with $1.47 billion in annual sales, agree with the report.
Others, like the 2,514-store Albertson's, Boise, Idaho, with $36.4 billion in annual sales, and 149-store Raley's Supermarkets, Sacramento, Calif., with $3 billion in annual sales, said they're embracing the Internet technology regardless.
"We are not involved at this point in B-to-B buying," said Bruce Cross, senior vice president of business transformation at Nash Finch. "We are cautiously looking at it. We are curious to see where it is going before we jump too fast."
Sally Sanborn, spokeswoman for Save Mart, echoed Cross' sentiments.
"We are just not into that [B-to-B buying on the Internet] at this point. We are not set up for that," Sanborn said.
The Jupiter report focused on procurement managers, the people responsible for making decisions at large companies on e-commerce. The report said that procurement managers, right now, see little advantage in moving on-line. Almost half of the procurement managers surveyed expected to do less than 20% of their buying on-line for at least the next two years.
Moreover, the report said the procurement managers said the reason they're hesitating is that their existing suppliers are not yet set up on the Web, so they see little reason to go there themselves.
Jean Gabriel Henry, senior analyst for Jupiter, said the enthusiasm for getting involved with B-to-B is a lot lower than perceptions conveyed at industry trade shows, where getting involved with trading exchanges is urged at numerous presentations.
"The enthusiasm is certainly lower than everybody on stage [at trade show presentations] would want you to think," Henry said.
Henry said that while the report indicates hesitancy, he still thinks that B-to-B buying will take hold, but not until 2,003 or even 2,004.
"That's when you will see it being used a lot more. There are still a lot of barriers to overcome."
Besides the barrier of not having their suppliers on-line, Henry said many procurement managers don't have the necessary training and education to use the on-line systems of their suppliers. "All the supplier's sites are different, so there is a lot to learn," he said.
Trust is an issue, as well. Henry said many procurement managers expressed an unwillingness to transact business over the Web with suppliers they may never have dealt with before.
However, while some retailers seem to be throwing cold water on what was thought of to be a bullish trend, others are holding fast and staying the course.
Pat Steele, executive vice president, Albertson's, for one, remains very bullish on B-to-B on-line procurement for both supplies and merchandise for resale.
Albertson's is a founding member of the WorldWide Retail Exchange, a major non-profit retail on-line trading consortium based in Alexandria, Va.
"When we first got involved, it was kind of a dual process," Steele said. "The first was 'let's get some auctions going and see how much costs we can take out [of the supply chain].' We are still very bullish. The whole auction phase is only going to last about two years.
"In reality, at the end of this year and into next year you are going to see this stuff finally take hold and then you are going to see real business and real process around e-procurement. ... That's where the real money is going to be made," Steele said.
"If we can take costs out for both of us, the consumer is going to win in the end and the company is going to win in the end and that's what this is all about," Steele added.
Carolyn Konrad, spokeswoman for Raley's, agrees with Steele.
"We are already using on-line services for ordering supplies," Konrad said. "It has proven to be very effective. We like the system a lot."
Konrad explained that procuring supplies and merchandise for resale on-line is proving to be a good business practice. "It's quicker, more efficient and nothing gets lost," she said.
Moreover, Joe Laughlin, chief executive officer of the San Francisco-based Globalnetxchange [GNX], said the Jupiter report talks about averages. He remains bullish. GNX boasts major supermarket retailers Kroger, Shaw's, Metro, Loblaw and others among its equity partners and participants.
"The amount of on-line buying that is currently going on is still relatively small, that is true," Laughlin said. "But, it's growing. It's just not going to happen, though. It has to be driven."
Laughlin said the Jupiter report dealt with averages. "It [the report] is probably right on the averages. But, more than that, it [e-procurement] won't happen unless senior management makes it happen, unless there is a competitive advantage to gain."
Cross, meanwhile, said that at the moment he sees nothing wrong with not being involved with B-to-B, just as long as the company is prepared to move should need be.
"I would say that as a company you need to be [Internet] enabled," Cross said. "But, if you are not in it, you are not missing out right now. There is a fairly narrow offering.
"We're getting our system in place to handle it," Cross added. "We just haven't jumped. We're taking a little cautious, a calculating approach to it."
Henry said Cross' approach seems to be the norm rather than the exception.
"Purchasing agents understand why they should be using the Internet for their B-to-B purchases, but they're not quite ready to move on-line," Henry said. "They will get there once suppliers that they currently purchase from move on-line and educate them on how to use their system."
Moreover, the Jupiter report also indicates that eventually, two distinct B-to-B markets will surface: one for buyers seeking existing suppliers and one for buyers seeking new suppliers.
