INSTA-LEADS: Our Full-Service B2B Marketing Program Delivers Sales-Ready Leads Click to Learn More!
Welcome Guest | Sign In
ECommerceTimes.com

Minority B2B Venture Folds

Minority B2B Venture Folds

By Paul A. Greenberg
07/20/00 12:00 AM PT

Just four months after former General Motors executive Roy Roberts unveiled M-Xchange.com, a business-to-business (B2B) trade exchange focusing on minority businesses, the venture has shut down.

The exchange was heralded as the first major electronic commerce initiative of its kind, and publicly supported by the Reverend Jesse Jackson, who said that he hoped the company would function as a bridge to growth for minority businesses. Roberts and his partner, Gary Wasserman, had a stated goal of enabling minority-owned businesses to establish a stronger presence in U.S. commerce. In the end, it was a combination of market circumstances and financial issues that killed the dream.

Roberts said in a statement, "Closing down operations is seen as the most prudent action at this time to conserve investor capital." As group vice president of North American vehicle sales, service and marketing, Roberts was once the highest ranking African-American executive at General Motors. Delphi Automotive, the world's largest automotive supplier, was Roberts' first equity partner in the new venture.

Unexpected Closure

Unlike dot-coms that are vulnerable to the much-discussed shakeout, most B2B marketplaces are either too new or too well-funded to fail -- so far. The closure of M-Xchange.com, while not necessarily an isolated incident, is nonetheless rare in the B2B sector.

The Detroit, Michigan-based company said it decided to cease operations due to difficulties in charging transaction fees and a reluctance of capital markets to fund such ventures. While Roberts did not detail the meaning of "such ventures," it appears he was referring to minority-owned e-commerce companies. Funding for B2B ventures generally has been generous and available, but few have identified themselves as strictly minority initiatives.

Initial Optimism

News of Roberts' undertaking was initially met with great enthusiasm, particularly among major automobile manufacturing companies. At the time of the marketplace's launch in March, officials at powerhouse companies such as DaimlerChrysler and ChemPak expressed strong support and an intention to participate.

Roberts and Wasserman had hoped to be able to have M-Xchange.com fully operational by this month, offering buyers the capability to order goods and services via online catalogs, but the site never materialized. Roberts' plan was for the marketplace to operate as an online link between Fortune 1000 companies and minority-owned suppliers.

Roberts had optimistically predicted that by 2003, mainstream companies would buy about $135 billion (US$), or five percent of total B2B purchases, from minority-owned suppliers. He also anticipated other minority-owned startups would emerge in the B2B sector. So far, that has not happened.

All the Right Moves

Roberts and Wasserman appeared to make all the right moves in developing their project, assembling a strong management team, consulting with a strategic Internet business advisor, and enlisting Internet marketing experts. Financing was an early focus, as was structuring the organization.

Still, it was not enough to sustain what appeared to be a good idea. Upon entering into the venture, Roberts said, "In my 40 years of doing business, I have found that there are a lot of major corporations that want to do business with minority companies, but they can't find them. We want to create new economic value for minority businesses in the information economy."


Facebook Twitter LinkedIn Google+ RSS