Too much attention to the wrong part of the Internet! The 2000 Bicycle Retail Education Conference (BREC) January 13-16, 2000 in San Diego, California featured a Blue Ribbon Millennium Panel of industry experts. In their presentations Bill Fields, Gary Coffrin and Jerry Norquist shared their thoughts about the Top Trends impacting the Specialty Bicycle Retail channel of trade for the coming year. That too much time and attention are focused on the wrong part of the Internet emerged as one of the most important trends.

The same conclusion was drawn by Jim Rennie in the January 3, 2000 issue of his Sports Letter. Jim writes that the "most important trend today, from our perspective, is simply this ˇV too much focus and energy applied to (the wrong part of) the Internet."

What are these experts talking about? The focus in our industry on the quantum leap in e-commerce has been Business-to-Retail, or directly to the consumer. The experts are telling us that Business-to-Business, also called B2B, not only is where we should be focusing, but also the single most important feature of the Internet and e-commerce relative to the future of the Bicycle Industry.

Just look at the numbers. According to The Kiplinger Letter of December 29, 1999, "online sales to consumers will reach $39 billion" in 2000. Impressive - until you consider that faster Internet connections are just around the corner, and they "will more than double total business-to-business online dealings in 2000 to $250 BILLION."

Deflating retail dot.com bubble. This same issue of The Kiplinger Letter also predicts "a deflating dot.com bubble, pierced by fierce competition among redundant consumer sites. E-tailing will see its first failures. Many firms will be forced into fire-sale mergers, others into oblivion." In fact this prediction is coming true with Amazon.com, Toys and Priceline stocks all down 40 percent or more from their peaks.

B2B improves profitability. Business-to-Business e-commerce has the very real potential of greatly improving the profitability of the bicycle industry, as it already has for other industries. Reducing lead times, shortening supply pipe-lines and dramatically improving the efficiency of our channel of trade are all possible with the connectivity and communication that comes with Business-to-Business e-commerce.

The facts indicate that Business-to-Retail is a relatively high-risk proposition that is going to go through a major shake out within the coming year. Some of the experts we have talked to are concerned that companies in our industry that have not done the research and planning will find themselves faced with financial losses, and a few may even be forced out of business because they focused on the wrong part of the Internet.

Why hasn't there been more emphasis on Business-to-Business? The hype and financial promise of being able to make all or a big part of retail prices probably explains some of the reason our industry has virtually ignored the vital importance and potential of Business-to-Business e-commerce. The planning and investment required in time and money is probably another factor.

B2B needs to be embraced now! The experts agree ˇV Business-to-Business e-commerce needs to be embraced and utilized by the bicycle industry on an urgent basis! The advantages to the international bicycle industry are tremendous. Business-to-Business (B2B) isn't as colorful as online auctions and selling merchandise to consumers. However, B2B has what is becoming a proven ability to transform entire industries.

B2B projected to be 9 percent of total U.S. business sales by 2003. In 1997 Forrester Research, one of the leading research firms focusing on the Internet and e-commerce, predicted B2B trade would reach US$327 billion by 2002. By December 1998 the actual and phenomenal growth of Internet-based B2B had blown by the 1997 prediction and Forrester increased its projection to US$1.3 trillion in 2003, or more than 9 percent of total U.S. business sales!

The U.S. is on the verge of five to ten years of B2B hypergrowth. According to Forrester Research, one of the major drivers of their revised B2B projection is solid evidence that the U.S. has actually entered into a "commerce threshold," an 18 to 24 month building period preceding five to ten years of B2B hypergrowth. In fact, Forrester says the computing and electronics industries have already entered hypergrowth, and several others are set to follow. Please note that the bicycle industry isn't one of them! Forrester predicts that by 2003 the leading B2B industries will include aerospace, petrochemicals, utilities and motor vehicles.

The global bicycle industry desperately needs real efficiency in all of its channels of distribution. We need the communications and connectivity provided by the Internet and B2B E-Commerce so as to drive company-to-company selling, ordering, billing and virtually every aspect of commerce ˇV all done computer to computer.

Inventories will be a thing of the past. The August 6, 1999 issue of The Kiplinger Washington Letter predicts that because of the power of B2B e-commerce, "Inventories will be a thing of the past in many industries." Examples include book printing where new print-on-demand technology will allow "books to be digitized and stored on computer, only to be printed at high speed to fill orders." In the Auto industry it won't "be long before vehicles are made to order."

Electronic exchanges connect suppliers and customers. According to Selling on the Internet: Infinite Universe, Individualized Marketing, published by The Global Network: "More and more companies are turning to electronic exchanges that match buyers with sellers. And they're creating their own private networks, or 'extranets,' that connect them with both suppliers and customers and allow them to get a precise picture at any time of their inventories, costs, and customer requirements. A price change that used to take months to filter down through the supply chain now takes minutes, creating vast savings that can be passed on to the consumer. The most dramatic effect of electronic commerce will be felt on the distribution side of supply chains, as companies look for differentiation by offering innovative services."

Business analysts predict that within the next five years B2B online business will penetrate virtually all U.S. supply chains. However, not all business sectors will embrace B2B e-commerce at the same pace. Stuart D. Woodring, vice president of research at Forrester, explains that the B2B e-commerce explosion "will open up a new set of business opportunities in every industry." He goes on to predict that companies "that are unprepared to compete online will be pushed aside by competitors who understand how to use the Internet to generate new value and efficiencies for their customers."

The total cost of doing business could fall by as much as 12.5 percent. According To B2B or not to B2B? an article by Elise Ackerman published in the February 7, 2000 issue of U.S. News & World Report, the "Internet has the potential to save companies boatloads of money." How much is a boatload of money? Goldman Sachs estimates "that the Net could reduce purchasing costs in industries like forest products and electronics by more than 20 percent. As a result, the total cost of doing business could fall by as much as 12.5 percent."

What an opportunity for the global bicycle industry! All the B2B pioneering work has been done in other industries. All the bicycle industry has to do is sit down and make some very simple collective decisions about bar-coding, scanning technology standards and connectivity and communications standards ˇV and we have the very real potential of reducing our cost of doing business substantially. What would it mean to your business if you and your suppliers, customers and your distribution channel could reduce the total cost of doing business by as much as 12.5 percent?

After you get through calculating the answer, send E-mails and make phone calls to all of your business associates around the world and ask them to join you in embracing B2B today! It may be the most important thing you ever do.

Next month we will look at some of the B2B companies that are teaching old-industrial manufacturing companies like Ford to play in the new E-Commerce economy. (back to top)