The Rise and Fall of Trading Exchanges.doc.docVIP

The Rise and Fall of the Trading Exchange “shhh – don’t tell my competitor!” By Andrew G. White Logility, Inc. Contents: Introduction Definition of a Trading Exchange/Net Market Evolution of the Trading Exchange/Net Market Common Traits of a Trading Exchange/Net Market Many to Many, Public Versus Many to One, Private Price is the Primary Decision Driver Transaction is the Focus, Not the Forecast (which derives the transaction) Products are Not Differentiated Fulfillment is Homogenous Continuous Innovation Versus Discontinuous Innovation Self-service Versus Exception-based B2B versus B2C Internet Commerce Continuum The Future for the Trading Exchanges Business Model Introduction Practically overnight the Internet has created zillions of net worth in start-ups and not so new “portal” companies that provide Internet-based, many-to-many Trading Exchanges where buyers and sellers congregate to transact business. But the hype that these portals have attracted to date far outweighs the real usefulness of such portals. The bottom line: In less than 12 months the Internet and its hyperspeed consumption and adaptation of business processes has claimed yet another victim through the birth, growth, short-spaced maturing and death of the Trading Exchange as we know it! As a result of all the hype surrounding Trading Exchanges over the past 12 months, too many people have been applying portal technology to economic models that do not make sense. Many companies that have actually implemented or thought through the Trading Exchange model have seen or will soon see the light -- and in it the problems inherent in the Trading Exchange business model. Most software providers, consultants and experts, however, are still far from this realization. Today, a new model for business-to-business (B2B) e-commerce exists that has already relegated the Trading Exchange to the sidelines. This new model is known as Collaborative Communities. To understand why Collaborative Communities offer a muc