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VerticalNet : The New Face of B2B. Chris Wood, Ashley Glading, Jessica Gabriel, Megan Longtain, Ashli Edmund, Patrick Robbins. Introduction. Evolution of B2B, History of Vertical Net Why visit a vertical/ Development Revenue/ Expenses and Income Competition SWOT Analysis - PowerPoint PPT Presentation
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VERTICALNET: THE NEW FACE OF B2B
Chris Wood, Ashley Glading, Jessica Gabriel, Megan Longtain, Ashli Edmund, Patrick Robbins
•Evolution of B2B, History of Vertical Net•Why visit a vertical/ Development•Revenue/ Expenses and Income•Competition•SWOT Analysis•Problems and Recommendations
Introduction
Evolution of Business-to-Business E-Commerce
Electronic data interchange (EDI) started to be used in the early 1980’s as a way for businesses to electronically transfer information
Web-based internet applications began to replace EDI’s
A successful B2B exchange included: High availability Transaction support XML Security timeliness
Digital marketplaces business models: E-Communities E-Distributors E-exchanges
History of VerticalNet
Mike McNulty believed the internet could be an efficient and effective way to satisfy his clients complaints
In August 1995, VerticalNet was established in Horsham, Pennsylvania by McNulty and friend Mike Hagan
At first, McNulty and Hagan contributed $75,000 together, and a $1 million equity investment was made from Internet Capital Group (ICG)
Cont. History
August 1997 Mark L. Walsh signed on as CEO
5 verticals with less than 50 staff members when Walsh joined VerticalNet
ICG provided more equity-based funding and took 49% stake in the company
VerticalNet developed new verticals and almost doubled their number of employees by the end of 1997
Cont. History
May 1998 VerticalNet won the Tenagra Award for “Successful Internet Business Model”
WaterOnline had about 80,000 unique visitors a month and had annual revenue of more than $500,000
VerticalNet had 29 verticals by the end of 1998
Due to expansion, a $14 million operating deficient accumulated and their venture capital was about to run out
Cont. History
February 11, 1999 VerticalNet went public to take advantage of the IPO market
650,000 unique visitors a month and 40,000 sales leads generated
During the IPO, 4 million shares were traded and the price rose 184% to $45 a share
Why Visit a Vertical?
ContentCommunityCommerce
Developing a Vertical
VerticalNet had a refined process for developing a new vertical through a series of steps.
1. They used various criteria to identify and industry sector that might benefit from a vertical portal.
2. VerticalNet recruited well-respected industry editorial talent who acted both as a content producer and a credibility builder for the site.
3. The company hired sales professionals to develop an industry buyer guide and a potential list of advertisers.
*The resources required for each vertical included an editor, an industry manager, and a sales manager.
Primary Source of Advertising Storefronts
Banners
Sponsorships
Sources of Advertising
Storefronts Simple Display company information Display product overviews Directed to storefronts from
banners
Banners Ads available in 2 formats
Large banner ads Small banners
Advertisers purchase 2 types General Vertical specific
Sponsorships 2 Types
Sponsorship of specific area, or channel, of a vertical
Sponsorship of a vertical’s newsletter
Primary Expenses
Salaries Staff on salaries
Editors Sales staff Engineers
Marketing Expense 2 Major catergories
Off-line advertising Online advertising
Offline is placed in: Trade magazines Exhibited at trade
shows Online works with 2
portals: Excite Altavista
Competition for Vertical Net
Online B2B IntermediariesIndustry-Specific Online Sites
Traditional Trade Magazines and Publications
Distributors
Competition for Vertical Net
Online B2B Intermediaries Free Markets
Manages and hosts B2B auctions for buyers of industrial parts, raw materials, and commodities
Purchase Pro
Company offers proprietary software that enables businesses to buy and sell products over the Internet.
Distributors W.W. Grainger
E-Distributors that consolidate goods and services offered by multiple vendors stand as competition to the Vertical Net Business Model.
Competition for Vertical Net
Traditional Trade Magazines and
Publications Penton Media
Provides its customers with a portfolio of advertising options including trade magazines, trade shows, and websites.
Cahners
Emerged as a B2B publishing and trade show management company.
Industry -Specific Online Sites
Chemdex
Is a provider of e-commerce solutions for the life sciences industry. Part of a new B2B e-commerce company that unites buyers and sellers in a virtual marketplace.
E-Steel
Online steel industry marketplace. Uses one-to-one profiling software to deliver customized content to steel buyers.
SWOT Analysis
Strengths Already have market
power early into the market growth
Rapid growth of their shares, $16-45 in first day
Weaknesses Had an issue with end of
year revenues with the risk of bankruptcy early.
Since this was a new market to the business world, there was a lack of experienced workers in this field
Opportunities Room for growth as the
internet developed and evolved.
Great room to make revenues and be successful, Analysis of 1-3 trillion by 2002
Threats Many people trying to get
in the market, also many other successful companies in the same position as Vertical Net
Could be quickly taken over if Vertical Net didn’t keep innovating and reinventing
Problems
Online Advertising Expanding Target Market
Recommendations
Advertise more online Concentrate on current customers
Yahoo Google
New Target Market Short and Long Term Goals
Recommended