By ERIC HELQU

It used to look like a caricature of Soviet industry - only with more state-of-the-art technology. Tons of oil, steel and wheat meant to be traded between companies over the Internet in a modern and efficient way.

But then, other people started to think that companies - manufacturers, wholesalers and retailers - could be interested in trading more consumer-oriented goods over the Internet. Indeed, several projects of this kind have been announced recently or are under development.

And, most observers say, this new orientation may be a particularly promising one, maybe even more so than B2B sites dealing with heavy industry and raw material. Those industries, some say, still haven't proved they have a viable business model.

"It is still too early to say which of those heavy industry and raw material Websites are working," said Alexander Andreyev, Internet analyst with investment bank Brunswick Warburg. "However, it is doubtful that the Internet can bring a lot to the trading process of products such as oil and steel, because there is only a limited amount of players, who already all know each other, and they usually make deals over the counter."

Vyacheslav Nikolayev, telecom analyst with investment bank Renaissance Capital, also had his doubts: "In an industry like oil, players probably don't really need the Internet. Moreover, electronic trading of oil started way before the Internet became widespread."

However, observers agreed that the advantages of the Internet were clearer for more fragmented markets, like consumer goods. "When there is a fragmented market, B2B platforms add more value, because it is normally more difficult to bring players together, and that is what the Internet is good at doing," Nikolayev said.

But, while opportunities on other markets than raw materials and heavy industry are real, sever-al conditions are to be met to achieve success, observers say.

"In such a project, you have to get industry key players on board as soon as possible so as to attract the others as well," said Aaron Smith, account manager with Sun Microsystems, an international IT company that is working with several clients to create B2B market-places. "This is also very important to guarantee a reasonably important volume of transactions and liquidity. And, since there are more players there than on the raw materials markets, getting the key one is going to be a little more difficult."

Another major issue is independence from the industry, Brunswick Warburg's Andreyev said. "To be credible, an exchange portal cannot be affiliated with anybody in the industry it is dealing with. That is one issue with some existing B2B portal, since at least one, Europe Steel.com, was launched by steel-producing companies."

Several new projects will be launched shortly or are in their preparatory stage. On the Fast Moving Consumer Goods (FMCG) market, an exchange platform between brands and wholesalers, CISLink.com, is in its launching stage (reported in the Nov. 25 Russia Journal). Observers say several other FMCG projects are being set up right now.

Another project focusing on consumer goods is the GUM-Internet portal, operated by a subsidiary of the prestigious Moscow GUM department store, in association with Russian financial news agency RosBusinessConsulting's Internet solutions department. True GUM-Internet so far has only launched the B2C part of its project, with its www.GUM.ru Website, which started Nov. 24 and will allow Internet users to buy GUM products online.

But GUM-Internet also has a B2B part. "Last September, GUM signed an agreement Mth 15 department stores - or "univermags" - in the regions, creating the Association of Russian Univermags, a.ru," said Timur Aitov, general director of GUM-Internet.

"Together with them, GUM-Internet will launch a B2B portal which will act as an intermediary between the univermags and the brands, many of them foreign. The definitive agreement for this portal should be signed Dec. 15 and its first stage should be launched sometime next year, with seven or eight department store. We have already been contacted by three major foreign brands that are very interested in our project and con-template taking a stake in it."

Consumer goods are not the only area where new B2B projects are under way. Victor Huaco, who is head of Internet holding Rambler, said his group is working on several Websites, including one devoted to office space.

Although the situation seems to be ripe for B2B Websites, how users will pay once they have reached a deal online remains a question, analysts said. According to Peter Lavelle, head of research at investment bank Metropol Capital, the lack of an efficient banking system is still an important obstacle to the expansion of B2B Internet.

While he does think B2B has a bright future in Russia, Truls Enghoff, head of Internet consulting company Markada, also said banking conditions pose certain limitations. "B2B Websites are great for bringing players together, but I think it is still too early to think they will be a means to actually pay online."

Some Websites share this point of view. Franck Benhamou, one of the founders of CISLink.com, said that while his site will put players in contact, it will not be a place where they can actually make a transaction and pay. "Once they have come together thanks to us, they will have to settle this on their own," he said.