Leading retailers call for fewer B2B exchanges

The chief executives of some of the world's leading retailers have called for the consolidation of B2B exchanges - the systems...

The chief executives of some of the world's leading retailers have called for the consolidation of B2B exchanges - the systems set up to enable firms to trade in virtual marketplaces.

The aim of B2B exchanges was to harness technology, standards and methodologies to improve business relationships, boost competition and reduce cost and waste.

The first major retail goods exchange was introduced early last year, quickly followed by three more major and a number of smaller, niche exchanges.

At the Efficient Customer Response conference in Glasgow last week, the heads of companies including Marks & Spencer and Johnson & Johnson said the situation had become too confusing and called for a reduction in the number of exchanges.

"The danger with too many exchanges is competition. They are popping up all over the place for the wrong reasons, such as egos or the regional differences between the US and Europe," said Christian Koffman, worldwide chairman of the consumer and personal care group at healthcare product supplier Johnson & Johnson.

"To prepare for the future, we have to standardise as much as we can, with as few exchanges as possible," added Koffman. "In an ideal world, there would be two exchanges - one for the retailers and one for the manufacturers."

Luc Vandervelde, chief executive officer of Marks & Spencer, agreed that B2B exchanges needed simplifying. "Whenever we can collaborate with no possibility of differentiation we should," he said.

John Zealley, a partner at consultancy Accenture, said the problem for any collaborative system of this sort was "the fundamental mistrust" between companies.

He added, however, that it was possible to work with different exchanges because of the Global Commerce Initiative, a body that collects information on user needs and works to convert these to viable standards.

The who, what, where of B2B exchanges

The Institute of Grocery Distribution has identified four distinct functions of B2B exchanges:

  • An online marketplace - matching buyers and sellers

  • Transaction processing site, providing the likes of data catalogues and electronic data interchange

  • Collaborative systems - ways to share information and manage joint processes and promotions better

  • A club, or alliance to swap ideas and information

The first major exchange was the retailer-based GNX. Some retailers did not like the GNX membership model so they formed WRE. But manufacturers responded by forming Transora in the US and CPGMarket in Europe. There is also Wal-Mart's retail link and smaller, niche exchanges.

Exchanges have become split between retailers and manufacturers and Europe and the US.

Daniel Thomas
[email protected]

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