eMarketplaces: be ready for boom

Online business-to-business procurement is a hot spot among IT professionals, a Computerworld spot survey has found. And while one analyst has warned users may be turned off by "cartel-like behaviour" of eMarketplaces many are confident buyer power will prevail.

In fact, only one third of users who spoke to Computerworld were concerned about the possibility of vendors setting prices and service levelsHowever, Ken Clare, IT support for Unilever, believes there is potential for vendors to form cartels online to set prices and service levels.

"There is already evidence of this in the US with satellite cities and I believe we will simply follow this lead," he said.

And Barbara Teasdale, group technology manager at legal firm Corrs Chambers Westgarth, said the nature of such trading groups demands uniformity of prices and services.

"Vendors will have to [set prices and service levels], and the industry will expect it."

But Rodney Walden, IT manager at food group Pauls Limited, echoed the comments of most users who said price- and service-fixing was unlikely.

Walden said consumer strength will ensure vendors will not have an opportunity to dictate market prices and services, saying "everyone wants to do business and the customer still has negotiating power".

And contrary to the popular perception that Australia loiters behind US and Europe with business-to-business activity, more than 80 per cent of companies approached had online procurement systems in place or on the cards for the near future.

However, a few survey participants pointed to some issues needing to be bedded down before fully participating in online trading exchanges.

Leo Bogard, national systems manager at Assab Steels, is concerned about large organisations with interests across industry groups monopolising several B2B exchanges. He added that controls placed on B2B exchanges could come about from this cross-investment, in a way similar to how ISPs can control content within their domains. If this occurred, he said "content control to the end user would be a real problem".

And Walden said: "Presently vendors are not providing enough coverage and there are other issues we want to address before we implement our business to business plans."

The question of whether online trading exchanges will completely replace conventional models was a divided issue.

Jeff Phipps, IT business manager at Simplot Australia, said: "In the long term there is no question that online business will replace the old methods of trading; it is the inevitable progression of business. We will eventually drop the ‘e' from e-commerce because it will be standard business procedure to trade online."

Teasdale concurred, saying, "In time B2B will overtake conventional procurement as more business will be done electronically."

A business and IS manager at a manufacturing plant said vendors will drive B2B uptake. "It will be cheaper for vendors to run as opposed to paper-based systems," he said.

However, more typical responses showed users believe online trading will become the reserve of commodities while high-value purchases will continue as before.

"For commodity-type items [online exchanges] are efficient, but other items will require conventional forms of purchasing," said an e-business manager at a petrochemicals company who requested anonymity.

- Lauren Thomsen-Moore and Sandra Van Dijk contributed to this articleFood and beverage firms sink teeth into B2BSix Australian food and beverage companies are to meet in June to discuss the formation of potentially the largest Australian business to business (B2B) e-commerce venture. A spokesperson for the Australian Food and Grocery Council (AFGC) confirmed the companies include brewers Fosters and Lion Nathan, food companies Goodman Fielder, Unilever and Heinz-Wattie, as well as Coca-Cola Amatil. However, Glenda Orland, public affairs manager at Heinz-Wattie, said at this stage, the venture is "embryonic", with details to be fleshed out when the company executives meet. While recent reports suggested the B2B exchange was a joint effort, a spokesperson for Coca-Cola Amatil told Computerworld "this is a Lion Nathan initiative".The spokesperson added: "The companies named have been asked to come along to a meeting in June, which we intend to do. "However, at this point we don't understand what the initiative will entail." The remaining five companies did not return calls by press time. However, Brooke Galloway, Internet analyst at IDC Australia, said the possibility for a B2B exchange such as this is "not surprising". B2B groupings were gaining popularity due to "real value to be gained from efficiencies", she added. This follows on the heels of the announcement of a group of high technology companies including Hewlett-Packard and Compaq Computer to form a B2B alliance with 12 companies for the computing and electronics industries. Meanwhile, Computerworld has learnt the Sun-Netscape Alliance iPlanet is embarking on a similar B2B exchange initiative. Details were unavailable at press time. -- Natasha David

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