A recent count shows that there are some 22 vertical hubs and 27 horizontal online trading hubs in Australia, according to Interactive Knowledge Online's Directory of E-Business Trading Hubs.
It's tempting to ignore them, or to just sign up as a half-hearted monitoring exercise. After all, the Web technology making these exchanges possible can be deployed in much less ambitious ways to streamline procurement processes. Examples can be found at AMP which has deployed an extranet portal to allow staff to procure wares from a range of prequalified suppliers, shortening delivery times and cutting administrative overhead. The business benefit of such procurement endeavour is obvious, but not without some risk to the bottom line. It's easy to imagine previously frustrated line-of-business managers going all out with their click-through purchasing.
Rod Gallagher, head of Deloitte Consulting's B2B practice, says many Australian organisations are seeking advice about which exchange to join, and notes that many have paid their membership fees just so they can keep an eye on what's happening. Deloittes recently crunched some numbers for a bricks 'n' mortar organisation keen to pilot an exchange in Australia and then roll it out globally, along with participants on the buyers' side - effectively a buying cooperative arrangement.
For this client, the firm was able to state "given the transaction fees you're going to charge, these are the volumes of transactions you need to put through that exchange in order to turn a profit". The expected volumes in the first two years were two-thirds of what's needed to get to break even. Many are underestimating the volume of transactions they'll need to achieve sustainability.
Deloittes is saying that the vertical exchanges are market maker exchanges most likely to be sustainable (see Cover Story, starting on page 18).
For lively discussion on what's happening, and to perhaps help you decide where to stick your toe in the water you could also check out Interactive Knowledge Online's "ebusinesshubsasia" forum. Enquiries to email@example.com David_Beynon@idg.com.auEditor in chief