IBM Comes To B2B Marketplace With New Deal

IBM (NYSE:IBM) has entered into a new partnership with VerticalNet, Inc. (Nasdaq:VERT), an online business-to-business marketplace, that is designed to delivere-commerce solutions to IBM customers and enhanced technology to VerticalNet. The agreement calls for VerticalNet to promote IBM’s products and services across the 51 industry-specific Web sites owned and operated by VerticalNet. IBM has also agreed to work with its customers to create e-commerce solutions using IBM’s Net.commerce software and to integrate those solutions into VerticalNet communities, where they will be provided with VerticalNet storefronts.

Initially, IBM will purchase 375 storefronts over the next 12 months.

The Broader Implications

This commitment from IBM evidently signals the industry giant’s recognition of the potential of online marketplaces. Marketplaces are increasingly establishing a presence on the Internet, allowing customers to browse through something akin to a combination of a flea market and shopping mall.

What began as a high-tech grass roots movement has rapidly developed into a formidable competitor in the world of online trade. VerticalNet, for example, started just four years ago, and has built or acquired trading communities that cover advanced technologies, communications and manufacturing, foodservice/hospitality, healthcare, environmental products/services, the sciences, and others.

Each of the sites included in the business-to-business marketplace include editorial content that is updated daily, including information on products, directories, job listings and overall industry news.

Additionally, most marketplaces, including VerticalNet, offer their clients assistance with Web site creation. While marketplaces do not operate as business incubators, they do provide a certain level of professional nurturing for clients new to e-commerce.

Solidifying The Deal

VerticalNet and IBM have committed to integrate IBM’s industrial community, wholesaledistribution.com, into VerticalNet’s portfolio. Additionally, VerticalNet will use IBM servers and hosting services for its Web platform.

If all goes as planned, many small to medium-sized businesses will benefit by the muscle and influence of these two larger entities.

“VerticalNet has demonstrated its ability to create customized communities where both buyers and sellers feel at home,” said James Corgel, general manager of Global Internet Service Provider Industry, IBM. “By working with VerticalNet, IBM can give its customers the opportunity to participate in business-to-business e-commerce in targeted vertical communities and, thus begin to establish new distribution channels for the future.”

The name of the game continues to be speed, and while hundreds of marketplaces have sprung up just this year, VerticalNet is one of the few who will be able to claim IBM as a business partner.

Of those few marketplaces that have become high profile enough to offer stock to the public, VerticalNet likely stands to benefit mightily by the new alliance. Public reaction to this fourth quarter announcement should be easily gauged as early as next year, when the number of new entrants into VerticalNet’s marketplace could grow exponentially.

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