Convinced that visitor volume was the key to attracting investors and advertisers, most business-to-consumer (B2C) Internet start-ups spent heavily on branding, on high-impact public relations, and on innovative techniques such as viral and affiliate marketing. These efforts did boost the growth of start-up e-businesses in the short term, but few of them have been able to convert a solid proportion of surfers into buyers and first-time buyers into repeat ones. And without stickiness, as we all now realize, B2C companies have little chance of surviving.

As long as investor confidence remained high, these difficulties didn’t seem to matter. But now that confidence has plummeted, we have an especial need for a metric that can provide early-stage e-businesses—and investors—with the kind of information that companies in more mature industries get from earnings per share and discounted cash flow and all the other techniques developed over the last century to assess the health of companies. To answer this need, the current issue of The McKinsey Quarterly is publishing, in one of its two cover articles, the fruits of the research that the Firm has conducted, over several years, into predictors of commercial success for the different varieties of e-consumer business.

As a kind of state-of-the-e-nation report, "E-performance: The path to rational exuberance" makes for a sobering read—rarely has so much been spent by so many for so little. But the article is more than a collection of data. Vikas Agrawal, Luis Arjona, and Ron Lemmens show that blindness to danger has been replaced by blindness to opportunity. Just as investors (and, more embarrassingly, analysts) refused, amid the original hysteria, to recognize the importance of data that were plain for all to see, they now seem to have abandoned hope just as B2C profitability is at last coming into view. A small but solid group of leaders has been profitably converting visitors into customers and getting them to return by following some tried-and-true business practices.

When the air escaped from the B2C bubble, business-to-business (B2B) commerce conducted on-line was hailed as the next new thing, the place for real profitability on the World Wide Web. And in more than one way, the B2B model was far more robust. Indeed, through B2B’s clear precursor—proprietary electronic-data-interchange (EDI) facilities—companies have for years been sourcing goods from a finite number of suppliers at the best attainable price. For consumers, however, price is only one of a host of factors driving decisions about whether to make purchases on-line or through conventional outlets. And the huge number of consumers means that B2C marketing costs are, more often than not, prohibitive.

Nevertheless, the B2B sector, like its B2C progenitor, soon crashed, largely as a result of emerging uncertainties about whether the operators of electronic marketplaces will be able to claim for themselves any of the value they help create. In "B2Basics," Ryan Kerrigan, Eric Roegner, Dennis Swinford, and Craig Zawada offer advice—charge more and charge smarter—that is even more basic than the counsel we offer to ailing B2C businesses seeking to heal themselves. B2B marketplaces add a great deal of value, but, like B2C companies, they have been ceding it to buyers, and sometimes to suppliers, in their desire to build traffic, or "liquidity." Some B2B markets charge nothing at all for their services. Most B2Bs, marginally bolder, charge transaction fees, but the authors expect them to go the way of on-line trading commissions. For those seeking to keep a B2B marketplace in business for the long term, the authors lay out a taxonomy of alternatives to giving away the virtual store.