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Fyffes said that the charge included closure and redundancy costs in relation to the e-procurement venture, which it developed with Glanbia. The company said in a statement on Monday that it wouldn't be investing any more money on e-commerce ventures due to the downturn in market sentiment towards Internet businesses.
"No further expenditure is anticipated on these activities," said the statement.
IngredientsNet.com was established in late 1999, but closed in July of this year with the loss of 20 jobs. Each company had invested EUR2.9 million in the project, which was an Internet-based B2B exchange that allowed users to buy and sell dairy ingredients, flour, sugar, edible oils and fats.
The closure of IngredientsNet.com, along with the scaling back of investment in its own B2B venture, worldoffruit.com, have proven costly for Fyffes. Earlier this year, Fyffes said that it was writing off its EUR15.6 million investment in worldoffruit.com after the portal for the fresh produce industry failed to secure additional funds in the wake of the tech slump. At one stage, Fyffes had planned to float the on-line venture on Nasdaq.
"It's a shame that the two ventures didn't work, but despite the fact that a lot of people inside and outside the company expected them to do very well, they weren't able to turn a sufficient profit," Carl McCann, Fyffes' vice-chairman, told ElectricNews.Net. "Users reacted well to the sites, but when it actually came to spending money through them they were slow to do so."
McCann added that the company would be spending "zero" on e-commerce projects for at least the next couple of years. "I don't know if B2B has a future, but it will certainly be a few years before it is anyway commercially successful," he commented.
The failure of Ingredientsnet.com and worldoffruit.com are stark demonstrations that e-procurement (business-to-business purchase and sale of supplies and services over the Internet) has yet to live up to its promise of being the killer application of e-commerce.
According to a recent report on B2B by analysts Gartner, "the bubble of e-marketplace euphoria evident in 2000 has popped sooner than expected, although this should surprise no-one considering the proliferation of e-marketplaces with poorly thought-out business plans and inappropriate revenue models...Most (e-marketplaces)...accounted for a fraction of total Internet commerce in 2000."
However, the same report does predict that worldwide B2B Internet commerce will jump from USD433 billion in 2000 to USD919 billion in 2001, and reach USD1.9 trillion in 2002. In 2003, the report said that the market will increase to USD3.6 trillion, and at the end of 2004, worldwide B2B Internet sales should be worth USD6 trillion.
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