Online B2B Exchanges Still Have a Long Way to Go

BOSTON (05/03/2000) - A new study shows that business-to-business online marketplaces so far have found the most use in the chemicals, energy, pharmaceuticals and steel industries, but even the top trading exchanges register limited transaction volumes between buyers and sellers.

The report, "Evaluating the Independent Trading Exchanges," from Boston's AMR Research Inc., says most of the top business-to-business marketplaces support only rudimentary online transaction processes, failing to truly automate the supply-chain process.

The top exchanges generally support electronic data interchange and flat-file formats, but the survey says some sites - such as VerticalNet - fall far short of enabling trading partners to exchange data online.

A few have made progress. The National Transportation Exchange, with approximately 500 customers booking carrier and trucking routes, enables trading partners to feed information into SAP, Ariba and Manugistics programs.

Though momentum for online business-to-business exists, the list of top exchanges could look far different next year as consolidation or new competition alters the playing field, AMR Research says. Corporations considering the use of exchanges need to be mindful of change in the rapidly moving area of online purchasing. This is important because they'll have to devote considerable business and IT resources to participate in one exchange or another.

With venture capital pouring into business-to-business exchanges, there are currently about 600 independent trading exchanges, but few exchanges have a strong base of users, says AMR Research. Not one exchange named in the report even begins to approach 1 percent of its respective industry's revenue.

According to the AMR Research report, one of the most successful exchanges to date is Altra, now used by 1,800 buyers and sellers in the natural gas and electric power industry, and operated by Altra Energy Technologies in Houston.

AMR Research also singled out Ventro (formerly Chemdex), with its catalog representing thousands of suppliers and almost one million items bought by biotechnology firms and universities.

AMR: www.amrresearch.com.

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