NCPA - National Center for Policy Analysis

How E-Commerce Steadies Prices, Benefits National Productivity

March 8, 2000

Experts report that business-to-business networks are the wave of the future. By slashing the time and cost of transactions between buyers and sellers, the networks are already having a significant impact on prices and productivity rates.

  • According to Goldman Sachs, new B2B networks, as they are called, can cut purchasing costs by up to 39 percent.
  • Executives at General Motors say that a typical purchase order which might cost the company $100 can be completed for as little as $1 using the new technology.
  • B2B networks that link firms globally via auctions or buying co-ops could cut raw material costs by up to 25 percent, according to the Organization for Economic Cooperation and Development.
  • While just over half of U.S. businesses now buy supplies through B2B networks, that figure is expected to rise to 93 percent by 2002, according to Forrester Research -- and hit $2.7 trillion in transactions by 2004.

Source: Joseph Guinto, "Business to Business E-Commerce: Promise and Peril for the Wannabe," Investor's Business Daily, March 8, 2000.


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