VORTALS

Vortals, or vertical portals, funciton like portals in that they serve as Internet starting points. Unlike portals, which have a broad, general appeal, vortals serve narrow, well-defined interests. A vortal provides Internet users with a route to content that is relevant to their specific interest. Through a careful selection of content and links to other Web sites, vortals focus in on a particular slice of the Internet.

Vortals may or may not be involved in electronic commerce. Some vortals serve specific communities and social groups. Other vortals are focused on hobbies and special interests. These vortals may range in complexity from a simple list of links to compelling content of its own. Add-on services such as branded e-mail are also available on some non-commercial vortals.

E-COMMERCE VORTALS SERVE SPECIFIC INDUSTRIES

Commercially based vortals typically serve a particular industry. B to B magazine publishes an annual directory of U.S.-based business-to-business vertical portals. Among the industries served by vortals are advertising, agriculture, automotive, business, business services, chemicals, computers, construction, design, electronic components, energy, engineering, entertainment, event planning, finance, food, food service, government, health care, hospitality, HVAC (heating, ventilation, air conditioning, and refrigeration), industrial, instruments, life sciences, livestock, machinery and equipment, metals, office products, paper, printing, purchasing, retail, shipping, surplus equipment, telecommunications, and Web site development.

These industry-specific vortals offer various mixes of content and transaction applications. Vortals may include news, industry information, and links to other content sources. Some include job postings and training resources. In terms of transaction capabilities, they may provide e-commerce transactions and services. Some vortals facilitate e-commerce by providing procurement software for a specific industry.

Commercial vortals also follow different models of functionality, including auctions, marketplaces, information providers, and resources. An auction vortal unites buyers and sellers and provides a site to submit jobs or items to be bid on. A marketplace vortal matches buyers and sellers and allows them to conduct transactions in real time. Information providers and resources may or may not offer the capability to conduct transactions.

Business-to-business vortals have had difficulty in generating a sufficient volume of transactions. One reason given is that b-to-b transactions are typically much more complex than business-to-consumer transactions. While vortals can facilitate the matching of potential buyers and sellers, there are many additional steps that need to be taken before a b-to-b transaction can be successfully completed.

VERTICALNET OFFERS VORTAL SOLUTIONS

At the beginning of 2001 VerticalNet operated 58 vortals and electronic marketplaces for a variety of industries. VerticalNet was originally conceived as an online trade magazine publisher. It evolved into an operator of industry-specific Web sites that combined content with electronic commerce capabilities.

VerticalNet encountered difficulties in 2001 and laid off more than 400 workers in the first half of the year. The company sold its electronics marketplace to a consortium of information technology (IT) vendors that included Hewlett-Packard and IBM. In a move that marked a change in strategy, VerticalNet became the software provider to the electronics marketplace it sold. During 2001 VerticalNet subsequently entered into agreements with Computer Sciences Corp. and Microsoft to bolster its position as a software provider to e-commerce vortals.

VORTALS PROVIDE ADVERTISERS WITH WELL-DEFINED AUDIENCES

Vortals appeal to online advertisers, because they serve well-defined audiences. Vortal users also tend to be more action-or market-oriented than their portal counterparts. As a result, vortal ads typically cost two to three times more than ads placed on portals.

In the competition for online advertising dollars, portals have copied vortals to some extent by organizing their content around specific interests. Portals also offer advertisers a much broader reach than vortals. In 2000 Forrester Research estimated that the top three portals—Yahoo!, America Online (AOL), and the Microsoft Network (MSN)—accounted for 15 percent of all Internet traffic and 45 percent of all online advertising.

As vortals evolve, they will likely not remain committed to an advertising supported business model. They will generate revenue by membership or subscription fees, transaction fees, software licensing, and other sources.

OUTLOOK FOR B2B VORTALS

In 2001 B to B magazine noted several trends that it forecast would develop among business-to-business vortals. Among them, the magazine predicted that the number of portals and e-marketplaces would decline, with some consolidating and others going out of business. This prediction was supported by the low volume of transactions on many public vortals as well as questions about the long-term viability of an advertising-based business model for portals and vortals.

Also, private exchanges were projected to increase. They would be formed by partnerships between content providers, portals, and consortium exchanges. Companies reluctant to join a public marketplace would be more likely to conduct online transactions over a private exchange. Industry-leading vortals were projected to emerge, and regional vortals were expected to replace national vortals. Finally, corporate portals were projected to add industry content to their Web sites and become broader and deeper.