by Elana Varon

B2B E-Commerce: Are Public Exchanges a Safe Bet or Risky Business?

Sep 01, 20012 mins
BPM Systems

When Dave Evans was working on the launch of World Wide Retail Exchange (WWRE) a couple of years ago, he and colleagues from other consumer goods retailers believed a public exchange would let them pool their product demands to improve discounts and transaction efficiencies. Evans was the CIO of J.C. Penney at the time.

A year and a half after it debuted, WWRE now supports auctions, catalog orders and bid solicitations from suppliers. It’s also testing systems for sharing sales forecasts. However, the promise of a one-stop marketplace where retailers would collaborate to buy T-shirts and shampoo is losing its luster. “There’s a lot of software needing to be built that doesn’t exist,” says Evans, who retired in February.

In the meantime, retailers and manufacturers such as Target and Coca-Cola are hedging their bets by building private exchanges to connect with suppliers and customers, says Julian Chu, director of retailing and consumer goods with consultancy Mainspring, an IBM company in Cambridge, Mass. Coca-Cola also helped found Transora, a public exchange for consumer packaged goods manufacturers, and wants to get bottlers and customers to share real-time sales and promotion data, although strategic functions like these are better suited to a private forum, says Chu. “A public forum doesn’t provide any competitive advantage.”

Evans says both public and private exchanges are in many companies’ futures. J.C. Penney’s suppliers use a private hub to trade sales information, track inventory and exchange orders and invoices. “We all accept that the more visibility there is throughout the supply chain [about data like] how merchandise is performing, the better off we are,” Evans says. He thinks having a way to reach numerous suppliers or customers through a public exchange can help the buyer get better prices and help the supplier lower sales costs. “Maybe we’re still a little bit foggy about what the final form will take,” but the concept, he insists, is still valid.