One would expect e-markets and folks associated with them to be the most attuned to the (stock) market effect. Bellwether Internet Capital Group (Nasdaq: ICGE) looks like it will trade in the single digits (it is down from a high of $200+ to about $11), VerticalNet (Nasdaq: VERT, roughly 30 percent of which is owned by ICGE) is trading close to its 52-week low of $19 ¾, after trading around $150 and FreeMarkets (Nasdaq: FMKT) is trading below its revised IPO price of $48 (after trading at $350+) These are not stock-specific effects. A look at the MediaMetrix numbers for VerticalNet reveals the underlying problem suffered by many e-markets: low traffic and a lack of liquidity. (Liquidity is the sine qua non of e-markets.)

With this in mind, B2B e-markets should learn from Priceline in the b2c space. The dark clouds have been hovering over Priceline for more than a year now and without a significant (reactive) change of strategy, it is now paying the steep price at the grocery line and the gasoline line. There is an important lesson for the B2B world in this fall from grace for one of the most well-known e-brands. It is time for strong medicine.

It is axiomatic that markets are driven by supply and demand. Of course, this includes e-markets. E-markets or other B2B firms that are pro-active or at the very least, react instantaneously to supply and demand signals from the larger public markets will thrive. Others are bound to repeat the follies of their b2c brethren.

The solution is to shore up the fundamentals and agility of the firm; thus, when sentiment turns, the stronger firms will be rewarded. Here are some hints: Recognize that the B2B trader is a consumer, albeit a different kind. Price is not the only dimension a B2B trader cares about; size, quality or delivery considerations, for instance, may dominate. Buyers and sellers will demand value across multiple dimensions. It would be hard for isolated e-businesses to deliver such broad value so seek strong partners for the weak elements. Disconnect old information from the web – over 90 percent of information on the web is outdated and / or of poor quality. Enable tasks: negotiate, buy, sell, ship, monitor, etc. Don't just provide products and services.

There has been a tendency among start-up e-markets to brag about the amount of money raised. More important are measures such as the amount of revenue generated per dollar of venture capital raised, and how soon that revenue is generated. For old economy companies making the B2B foray, similar rules apply in this environment. The bean counter’s ROI analysis of e-business initiatives is gaining renewed respectability. Profit and cash flow are King and Queen: don't expect royal treatment without them.

Anyway you cut it; the market effect has a marked effect. This time around, there is no choice but to be reactive … Next time around, anticipate it and be creative. And, there will be a next time. To paraphrase Mark Twain, “History does not repeat itself, but it sure does rhyme!”

Ganesh Mani serves as the co-CEO of PowerLoom.com and over the last few years has made the transition from Computational Finance to Computational e-Commerce