The GULF Better business

By Shilpa Mathai MUSCAT

The past year has seen a number of online trading hubs go live in the Gulf. MidEastOnLine, Businessdubai.com, OmanTradaNet and Tradeyoursite.com are just a few examples of nascent B2Bs in the region. Most of these exchanges operate on similar premises, but they differ in terms of value additions and targeted markets.
The Businessdubai.com model is based on Dubai's regional re-export strength and caters to global companies that want to develop their exports into the region, as well as local trading and manufacturing companies sourcing products worldwide, and similar companies engaged in regional exports and re-exports. "By local companies, we mean those located in each of the four regions that we are focused on: the Middle East, the CIS, Africa and the Indian subcontinent," says Animesh Basu, the B2B's general manager.

The company claims to focus on e-marketing, rather than e-procurement, and lists an e-rep service, where a local business facilitator is allocated to a member company as one of its USPs. "We are able to offer this service to complement the online service because of our own domain experience and industry knowledge," Basu says. "We are also the first site to provide services like vendor rating and pre-shipment inspection."
MidEastOnLine has built its B2B infrastructure on the Commerce One (C1) platform. "Commerce One provides us the ability to offer more than just private marketplaces and e-procurement," says Owen Taraniuk, the company CEO. "We have the ability to offer live auctions, reverse auctions, workflow and seamless integration with existing and legacy systems. Organizations can utilize the MidEast platform in their own name for a fixed fee. We have a strong reseller channel in place, including Al Alamiah in Saudi Arabia, Imtac in Oman, Horizon in Qatar and Gibtek in the UAE. This allows us to spread our efforts to many different industry segments. The energy sector has been a key focus."
MidEastOnLine has also integrated a number of third-party services to the platform. Among other services, says Taraniuk, "we will be offering CitiConnect, the CitiBank Payments gateway, UPS, FedEx and Aramex Shipment Services and UPS/GAC outsourced logistics very soon."

MEC International, an international business development company, and Tradeyoursite.com also jumped into the fray when they started operations in October 2000. They provide Arab investors with a secure, online trading market for the selling and buying of existing and recently terminated dotcoms, or specific assets from such companies.

The B2B concept has definitely spread in the region, from C1 Middle East's alliance with Microsoft, Compaq and PriceWaterhouseCoopers to set up Egypt's first B2B marketplace, to OmanTradaNet, the sultanate's first digital exchange. "B2B sites in the Middle East are fairly new businesses and are in the development stage," says Abdelhamid Z. Suboh of Accenture Consulting Service, Dubai. "Corporations in the region and, specifically, small and medium enterprises will need some time to become aware of the B2B benefits. It will take some time before B2B e-commerce is widely accepted and adopted here."
But is the regional market big enough to support this B2B boom? "I do not see a large number of serious competitors in the region at this stage," says Taraniuk. "We have a first-mover advantage, but we welcome competition. It will help us prove the value of B2B to regional companies."

"The market is large and growing," insists Businessdubai's Basu. "The geographical region covered by us has an estimated user base of 5.8 million corporate users. Each B2B exchange would have to carve a niche for itself in terms of the part of the value chain it covers and then offer unique services. In the long run, there will be mergers and partnerships to provide seamless services."

Suboh, however, strongly disagrees with this rosy outlook for the Arab world. "The regional market is not big enough to support a large number of B2B exchanges. We should learn from the experience in the West in that regard. However, the numbers are still feasible for now. There are emerging B2B exchanges that may increase the number beyond market needs.

In development. "The main problems facing exchanges in the West are the large number of e-markets, low volumes and lack of liquidity. B2B e-markets in the Middle East are still developing and are battling slow adoption and low volumes," Suboh says. "Unless these markets have the financial backing to take them through the business development stage, they won't survive."
Besides the necessary financial backing, what else does it take for a Gulf B2B to survive? Basu insists that "there is definitely a steep learning curve ahead of us. Businesses have to bring the Internet into their mainstream in order to remain competitive and register growth. Apart from a lower base of connected users . . . the Gulf does not offer any unique regional problems. The general issues relating to the growth of business on the Internet are common to all regions."
MidEastOnLine's Taraniuk maintains that most regional CEOs have accepted B2B as the way forward and that people are willing to pay fees to participate in independent marketplaces. "Transaction levels realized by service providers in the region are in line with predictions of analysts such as the Gartner Group, which foresaw low volumes in 1999-2001 increasing exponentially until 2004.

"Companies have shown tremendous interest in the available solutions for B2B, but this has not yet translated to volumes of transactions," explains Taraniuk. "Organizations based in the region have taken a cautious approach to moving their transactions to an electronic medium. Issues regarding payment, shipment services and emerging standards have contributed to the 'wait-and-see' attitude of many companies."

Industry sponsored initiatives are also springing up, with the regional banking industry exploring at least two B2B initiatives in the region. Many vertical portals are under construction, and it is anticipated that a number of portals in the banking and energy sectors will roll out this year. "We are exploring this avenue with several major players to provide industry specific portals in the region," Taraniuk says.

Businessdubai says it has 7,659 registered members from 130 countries registered on its site, a very good response for the first year of operation and an indicator that B2B is gaining acceptance in the region. "The B2B concept is slowly gaining momentum," Basu says. "But a learning process is required for companies to understand the cost benefits of e-commerce."
"Industry sponsored B2B e-markets with considerable financial muscle will emerge in the region," says Suboh. "But if the number increases beyond what the market requires, some of them will meet an untimely demise."