Online Exchanges to Merge

Discussion
Apr 26, 2005
George Anderson

By George Anderson

When the online exchanges, GlobatNetXchange (GNX) and WorldWide Retail Exchange (WWRE), were first created, it was said that they would completely reinvent the way suppliers and distributors conducted business.

While there’s no question the exchanges have had an effect on how information is shared amongst trading partners and how product is moved through the supply chain, neither has lived up to its early hype.

Earlier today, GNX and WWRE announced the two companies would merge.

“Since GNX and the WWRE were founded more than five years ago, the industry has sought a partnership between the two organizations to create a definitive exchange and voice for the retail industry,” said WWRE chief executive, Christopher Sellers, in a released statement.

Mr. Sellers, who will serve as executive chairman of the new organization, added, “The industry will benefit as we drive de-facto standards that will be adopted. We will utilize secure networks and the latest proven technology in order to reduce costs of goods and cost to serve, and ultimately for consumers to reap the benefits of improved product availability and pricing.”

Joe Laughlin, current CEO of GNX, will continue as the chief executive of the new group.

“One of the characteristics both GNX and the WWRE share is their close, value-adding community — the new company will build on this, as we intend to leverage the strengthened community to create a unique and definitive global retail forum for sharing best practices and addressing industry issues and opportunities,” he said. “Forty-five of the largest global retailers and suppliers are involved in this combined entity, creating an incredibly strong force for pushing forward key retail industry objectives.”

Moderator’s Comment: What will be the result of the merger of GNX and WWRE? Will the merger “accelerate adoption of best practices in trading partner
collaboration and relationship management for the entire retail industry” as promised?

George Anderson – Moderator

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9 Comments on "Online Exchanges to Merge"


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Don Delzell
Guest
Don Delzell
15 years 10 months ago
The most relevant comments made here today centered around the actual use to which the exchanges have been put, and the Wal-Mart effect. Should Wal-Mart establish practices, codes or methods which are in contradiction to those of the new entity, I would expect the exchange to move toward the Wal-Mart standard rapidly. Having spoken to suppliers, Wal-Mart isn’t the 1000 lb gorilla. It’s the ballgame. In effect, the exchange is designed to allow others to compete more effectively against Wal-Mart in the Supply Chain arena. In theory. In fact, as has been pointed out, the sharing of resources, information, and data simply has not occurred. The fundamental assumptions about how the exchanges could have benefited the membership were not flawed. What was strangely missing was a realistic understanding of human nature. The larger retailers have sourcing and supply chain infrastructures. In many cases, the people and methods embedded in those infrastructures are in some way threatened by the efficiencies possible within the exchange. And these very same threatened people are the ones who are charged… Read more »
Warren Thayer
Guest
15 years 10 months ago

To me, this one’s a no-brainer, and overdue. People smarter than I predicted it several years ago as an inevitability. It won’t be a panacea for the industry, but this merger will definitely yield some needed synergies.

Ryan Mathews
Guest
15 years 10 months ago

Ah…a bow toward the inevitable! You need one exchange and one set of standards. Any more just clouds the issues. And, as an aside, nothing and nobody could have lived up to the initial hype surrounding the advent of the exchanges — possibly the classic example of jumping to the answer without first seeing what the real question was.

John Rand
Guest
John Rand
15 years 10 months ago

Of course, noticeably absent from the list is a little company in Arkansas.

I was wondering – speculating for a moment that there might be some divergence in item, practice, or price between them. Which should a supplier consider lowest-cost, maximum return and best practice? The consortium and their auctions? Or the single biggest retailer in history? It would be interesting to know whether anyone can discuss this publicly.

Len Lewis
Guest
Len Lewis
15 years 10 months ago

Clearly, this is long overdue. As noted, in the end all you really need is one. The question now is what happens with Transora. Interestingly, while there is some overlap in business between WWRE and GNX, the exchanges seem to have found individual niches. So, rather than just merging the two operations for the sake of efficiency, their businesses can be complementary. Both bring something a little different to the table.

Now everyone can finish cleaning up their data and perhaps the industry can move a little faster toward global data sync.

David Mallon
Guest
David Mallon
15 years 10 months ago

“There’s no question the exchanges have had an effect on how information is shared amongst trading partners and how product is moved through the supply chain”???????? I’d say there is a lot of question. I’m not aware that any company is sharing POS data, inventory status, shipping confirmation or anything else of major significance through these exchanges. They had success for a little while procuring MRO supplies. Then they simply became data pools using what UCCnet developed.

These exchanges have become irrelevant and the right thing would be for them to fold up their tents. Unfortunately, once an industry sponsored initiative gets started, they seem impossible to kill. We’ll be stuck with the plethora of trade associations, global commerce initiative (GCI), exchanges and other unproductive bureaucracies for decades.

Ron Margulis
Guest
15 years 10 months ago

Another key question is where does this leave Transora, the CPG manufacturer-owned exchange? Transora had partnership relationships with GNX and WWRE for a few years, so the relationship will roll over to the merged company. But you have to wonder if Transora now will lose some leverage.

A second point is that WWRE and GNX are run by very competent managers. In particular, I’m a big Chris Sellers fan (always thought highly of Bob Noe, formerly of viaLink and now at Transora, too). These bright guys know the CPG and retail businesses, which makes me believe that there is greater potential for exchanges now than there ever was before. Ryan is right, though. They still won’t come close to meeting their initial expectations.

Ed Dennis
Guest
Ed Dennis
15 years 10 months ago

So much wind in the night! They haven’t mattered to date and they probably won’t matter much in the future. Real systems breakthroughs have occurred and WWRE members have failed to adopt them, even after selecting, endorsing and encouraging. The fact is that the members of the exchanges are independent and greedy. They, like farmers, meet and are provided information and agree that a particular economic path is wise and will benefit all. They adjourn, go home, and plot a way to use the information they gained to benefit their situation, even if is to the detriment of other members. This is the way of our capitalistic society, and this is one of its only shortcomings. The fact is that, unless the government gets involved (impossible due to the international scope of WWRE/GNX), no real progress will happen quickly. Actually, the competitive pressure exerted by Wal-Mart will do more to consolidate and standardize systems and communication than WWRE/GNX.

Bernice Hurst
Guest
15 years 10 months ago

Len is quite right about the businesses being complementary; that’s the only justification there ever was for both of them existing and developing in tandem. Merger makes a great deal of sense although, inevitably, it could go the wrong way. There should be a lot of finger crossing that the good intentions stimulating the deal are actually implemented as things progress. Collaboration is far more likely to be beneficial than competition but it is never easy to put that one into practice. Not in the real world, anyway.

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