SAN FRANCISCO (07/13/2000) - The battle of the giant Internet retail exchanges is heating up.
On Thursday the WorldWide Retail Exchange will announce that it has partnered with technology providers Ariba Inc., I2 Technologies Inc. and IBM Corp. Formed last March, the WorldWide Exchange includes major retailers such as CVS Corp., Kmart Corp., Target Corp. and Safeway Inc. The Exchange says its first auctions will take place this summer.
Meanwhile, rival retail marketplace GlobalNetXchange, whose founders include Sears and Carrefour, selected Oracle Corp. as its technology provider several months ago. GlobalNetXchange says it is operational and has recorded US$100 million in purchasing volume - a relatively low amount compared to the founding members' $185 billion in collective purchasing power.
Both marketplaces are designed to allow retailers and their suppliers to conduct transactions via the Web, cutting costs. Founding companies hold equity shares in the exchanges.
The sheer size of the participants in these industry exchanges and their collective purchasing power will provide a major inducement for suppliers to cooperate.
"The WWRE has the potential to quickly become one of the largest b-to-b marketplaces in the world based on transaction volumes represented by its extensive global roster of leaders in the retail industry," says Paul Work, an Ariba VP of industry solutions.
Still, these retail exchanges - like those announced in other industries such as aerospace, computer electronics and auto manufacturing - are scrambling to gain traction. Many of these industry-coalition exchanges have yet to move beyond the press-release stage; others are doing only a few transactions.
Founded on the idea of making supply chains more efficient, industry-sponsored exchanges have yet to show that their members can work together to achieve the kinds of savings promised.