Chevron, Wal-Mart Join for Web Convenience Store

FRAMINGHAM (03/08/2000) - For the second time in less than two months, Chevron Corp. today announced plans to set up an online marketplace. But this time, the San Francisco-based petroleum giant is teaming up with Oracle Corp. instead of Ariba Inc., its software supplier for the first venture.

Chevron, Oracle and McLane Co., a subsidiary of Bentonville, Ark.-based Wal-Mart Stores Inc. and the nation's biggest convenience store distributor, said they're launching an Internet-based trading exchange aimed at convenience stores and other small retailers.

The new marketplace, called RetailersMarketXchange.com, will be run by a separate company and is due to open for business this summer. The three partners will each own minority shares in the venture, but they said other retailers and suppliers that sign up to use the exchange will also be able to take equity positions.

"It's very important that this appears to be even-handed" from an ownership perspective, said Chevron CEO Dave O'Reilly during a teleconference. He added that getting broader participation is vital because the convenience-store industry is so fragmented.

For example, Chevron owns about 700 stores in the U.S. and franchises another 6,500 to independent operators. But that only amounts to a market share of about 5%, O'Reilly said.

Chevron uses McLane to distribute products to its stores. Chevron and McLane's supply-chain transactions will start to be processed through the new exchange after it opens.

Grady Rosier, CEO of Temple, Texas-based McLane, said the companies haven't tried to recruit other store operators and their suppliers to take part in the exchange. But that will be one of the next steps, he added.

In January, Chevron and Mountain View, Calif.-based Ariba announced that they were developing a similar exchange for the oil and gas industry. That venture, called the Petrocosm Marketplace, is scheduled to go live in the second quarter.

O'Reilly said Oracle's software was a better fit than Ariba's in the convenience-store business. He also noted that Chevron already uses Oracle's database technology in a year-old system that gives its retailers access to financial data and other information via the Web.

The goals of the new exchange are common to the emerging world of business-to-business marketplaces on the Internet: reduced purchasing costs and increased capabilities for collaborative planning and supply-chain management between retailers and suppliers.

For example, O'Reilly said, Chevron already is saving $35 million a year through its internal Web-based system. And that's only being used on a limited scale by about one-third of its stores, he added.

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