Just2clicks launch aims for new paradigm of supplier relations

Virtual trading, using the internet to replace traditional buyer-supplier relationships in business, is the Web's latest new new thing and could become its hottest growth property.

Virtual trading, using the internet to replace traditional buyer-supplier relationships in business, is the Web's latest new new thing and could become its hottest growth property.

Indeed, proponents of the business-to-business, or B2B, internet-based trading model see it replacing the traditional business-to-customer model across virtually the entire spectrum of economic activity.

A growing band of Web entrepreneurs see internet trading hubs, linking sellers and buyers, creating deeper, more liquid markets for countless different products bought everyday by millions of businesses.

Put simply, the market potential is huge. Forrester Research, an internet trends researcher, forecasts the US B2B industry will handle transactions worth $1.4tr in 2003. And most agree that's just the beginning.

"We know that the B2B market is going to be massive," says Nainish Bapna, internet analyst with Nomura Research. "What makes these [virtual markets] so compelling is that they reduce transaction cost for users and they reduce the actual product price to buyers."

Until recently, electronic trading was limited to financial instruments, such as shares in companies or commodities like oil and pork bellies. Markets were run by professional intermediaries, the so-called market makers found in the City.

The first phase of B2B e-commerce has seen companies using online networks to locate and purchase supplies at the best prices without having to pay fees to traditional brokers. Now, however, B2B is on the verge of creating hundreds, and probably thousands, of online markets, connecting buyers and sellers in a way that was mostly impossible before the rise of the internet.

As befits the latest internet fad, B2B deals and share offerings are now a daily event. Yesterday, for example, Just2Clicks, which aims to create B2B trading communities on the internet, issued its prospectus to float on Aim next Wednesday. Just2Clicks' offer of 34.6 million shares at 150p, which will value the company at £130m and raise £50m for business development, is already almost three times over-subscribed.

"We have attracted support from high quality investors who have recognised that our business model is a compelling one," says Karl Watkin, chief executive, a 43-year-old Newcastle businessman. "B2B transactions via the internet are set to revolutionise how businesses do business."

Just2Clicks is seeking to exploit the internet's capacity to allow businesses operating in the same industry sectors around the world to communicate and trade with each other online.

Its initial trading platforms are to target markets for specialised types of equipment and parts used in the transport, pulp and paper and electric power industries.

One thing you couldn't do is argue with Just2Clicks' IPO timing. "We're as cynical about internet valuations as everybody else," says Mr Watkin. "But we're in this to build a long-term business," he says, adding that the firm aims to launch one new B2B trading platform a month.