Retail B2B Exchange Turns to IBM Alliance

A worldwide coalition of big-name retailers led by Target and Best Buy has tapped the alliance of IBM, i2 and Ariba to run the WorldWide Retail Exchange (WWRE), a business-to-business (B2B) Web site that is slated for launch later this year.

The coalition says it expects the online exchange to facilitate and simplify trading between retailers and over 100,000 suppliers, partners and distributors.

Household Names

Members of the coalition include some of the biggest names in retail, such as U.S.-based Albertson’s, CVS, Gap, Inc., Kmart, Walgreens and Rite Aid Corp., as well as European retailers Royal Ahold of the Netherlands, Frances’s Casino and the UK’s Kingfisher, Tesco, and Marks & Spencer. Hong-Kong-based Dairy Farm International is also a member.

Patrick Steele, head of technology and operations for the WWRE and a vice president at Albertson’s, praised the three companies for working together closely as a team during the selection process.

Big Savings Predicted

Gerald Storch, director of marketing for the exchange and Target’s president of financial services and new business, said the B2B hub will allow retailers to buy supplies independent of one another, resulting in cost reductions that will “ultimately translate into lower prices for consumers.”

Said Storch, “The exchange supports what is happening in our industry today. We’re seeing an increased use of technology across all retail sectors to reduce waste and increase efficiency.”

The White Plains, New York-based IBM announced its partnership with Ariba and i2 in March. The companies say their combined technology is now running more than 100 e-marketplaces, including six of the 10 largest in the world. Analysts credit the alliance with lifting Ariba to a stronger-than-expected third quarter, when sales of $80 million (US$) were nearly double analysts expectations of $49 million.

In fact, Big Blue has put its hand directly into similar B2B ventures. On May 30th, the high-tech giant announced it would form an electronics marketplace called e2open.com. IBM’s other partners in that deal — which involves up to $200 billion in inventory — include Ericsson, Hitachi, Motorola, Nokia, Nortel Networks, Philips, and Toshiba.

IBM Shifting Gears

Some analysts are of the view that IBM is turning to B2B e-commerce alliances just in time, finally shifting its resources away from what many believe to be a waning market for personal computers. The B2B market, on the other hand, is expected to boom.

Research firm GartnerGroup predicted earlier this year that B2B e-commerce would be worth $7.29 trillion by 2004, while Jupiter Communications predicted in June that the B2B market in the United States alone would reach $6 trillion by 2005 and account for nearly half of all business spending on supplies.

Inside the Deal

In the deal with the exchange, IBM will provide system integration and host the exchange, which will be powered by the Ariba’s B2B platform and i2’s software solutions.

Technology and services will also be provided by Syncra Systems, viaLink, QRS and Retek.