Shadowed by an impending shakeout in the sector, faced with trying to streamline one of the more highly fragmented industries, and dogged by a lack of technology awareness among building-material suppliers, construction marketplaces are tackling one of the most challenging areas of the new economy, analysts say. On one hand, the financial potential of construction e-business is striking. But the numerous challenges facing the nearly 100 construction e-business players will force many to bow out before the true rewards are realized, analysts say. The sheer size of the construction industry and the vast amount of subcontractors, general contractors, suppliers, laborers, developers and architects that make it up make it fragmented.
Fragmentation happens when a particular sector or industry is controlled by numerous players.
In the construction industry, the top eight companies in terms of market share control less than 20 percent of the industry, allowing more companies to have a shot at the market. In the aerospace market, by contrast, the top companies control over three-fourths of all trade within the industry. It's so fragmented that you can sell down to the level of a single individual. Tim Clark, an analyst at Jupiter Communications, said the problem of fragmentation is real. A route to efficiency Analysts and e-business professionals see the Internet as a way to streamline the industry to drive out inefficiency and lower costs.