Online Trading Exchange Fever Hits Retailers

Many retailers use the Internet as a medium to sell toconsumers, and now they're using the Web to reach suppliers and distributors. Sears, Roebuck and Co. and French retailer Carrefour on Monday agreed to team with Oracle to create an online marketplace for retailers and their trading partners. And i2 Technologies revealed an online exchange for apparel, textile, and home furnishings manufactures, suppliers, and retailers. Its first anchor tenant is VF Corp., maker of the Lee, Wrangler, Healthtex, and Jantzen clothing brands.

Sears and Carrefour say their network, GlobalNetExchange, will make buying apparel, soft goods, hard goods, and groceries faster and more efficient than through electronic data interchange networks. Though they've yet to name any suppliers involved, they plan to hold the first auction online in a few weeks. They also plan to bring more retailers onto the exchange and add inventory management, order promising, and transportation scheduling capabilities. SoftgoodsMatrix.com, i2's site, will provide similar services and plans to start operation in April.

Oracle, which holds a minority interest in GlobalNetExchange, will provide the transaction and database software on which the exchange will run as well as implementation and support services. This is the second business-to-business trading exchange in which Oracle has a stake. The company has a similar role in an automotive industry marketplace on the Web with Ford Motor Co., which merged last week with a competing exchange run by General Motors Corp. and Commerce One Inc. and now also includes DaimlerChrysler AG.

Observers believe the key to the success of exchange in any industry it to attract enough of the right participants. The opportunity for fragmentation is greater in retail, where there are tens of thousands of suppliers, than in automotive, where there are relatively few top manufacturers and tier-one suppliers, says Bob Ferrari, an analyst at AMR Research. "Every day now we're hearing about more industry exchanges," Ferrari says. "There has to be some rationalization to get everyone to play."