Will b2b retail exchanges ever take off? Analysis/Commentary Like the European Union, global business-to-business (b2b) retail exchanges look good on paper, but may never actually get off the ground. The exchanges work like online auction houses -- eBays for business managers, bringing corporate buyers and sellers together via the Internet. They have already been successful in the energy and chemical markets, but no-one knows whether they will work in the dog-eat-dog world of Kmart, Sears, Target, and other big retailers. Most big retailers are taking a wait-and-see approach toward exchanges -- although dozens of public companies have signed up. Two meaningful specifics: the International Mass Retailer Association recently released a study that says that 25% of all retailers currently belong to a b2b exchange, and Jupiter Communications predicts that of the 500 exchanges in Europe, fewer than 100 will survive. Two huge b2b exchanges seem to be cornering the joint U.S.- European market: The World Wide Retail Exchange (WWRE) The Global Net Xchange (GNX). The WWRE groups 53 members with total sales revenue of $722 billion, and the GNX groups 13 members with $60 billion in sales. Other retail exchanges bring together small to mid-sized retailers, or retailers who engage only in liquidation or perform "sourcing" (manufacturer selection). The infrastructure that powers the exchanges is a key ingredient to their success. The WWRE has chosen a platform powered by i2 supply chain software and the GNX has contracted with Oracle and Sun Microsystems. Nobody knows whether the software programs will deliver their promises. Both major exchanges plan "pilots" (tests) of their Collaborative Planning, Forecasting, and Replenishment (CPFR) tools. CPFR tools refine reporting, resource planning, and distribution. Oddly, the exchanges bring together companies known to loathe each other as competitors. The new cooperation between rivals has even been described by pundits as "coopetition." The Federal Trade Commission worries about the strange partners the exchanges will create. To answer its concerns, the WWRE addressed "comments" to the FTC in June 2000, saying that it will protect sensitive information from rivals, and carefully avoid antitrust activities (such as controlling prices). According to the WWRE, exchanges, by improving speed, communication, and organization, will serve as vehicles for business, not as their motors. And business will continue to follow the rules of the past century. March 7, 2001