Exchange future mixed

By Eugene Grygo, InfoWorld |  Business

Certain "high-touch services" -- such as 800 numbers and access to experts on product, deal-making, and auctions -- plus a direct field sales force could yield higher transaction volumes and values for exchanges, according to Williams.

"Companies aren't necessarily ready to do production buying on the Internet without some safety net," Williams says.

The resulting hybrid of a pure play crossed with established services is what many involved in exchanges are calling "collaborative brick-and-mortars," or co-BAMs, -- another echo of the Old Economy.

Beyond providing front-end Web access and transaction platforms, exchange founders will have to provide assurances that buyers and sellers will not be out on their own. Safety nets are likely to include chhannel customer support and back-end integration, all of which means new alliances with established brick-and-mortar companies.

The direct involvement of such companies is intended to ease the fears of buyers and sellers and to make exchange transactions a part of their daily experience.

Marketplaces can be seen as part of a pyramid with the lower level consisting of Web sites with catalogs, Williams explained. The intermediary level consists of the high-touch, public marketplaces. At the very top are the power-player, channel-master marketplaces, which are unlikely to be hit hard by consolidation, she says. "Consolidation will happen from the bottom up of that pyramid," Williams says.

With many buyers and sellers hedging their bets by joining more than one exchange, there is a very high likelihood that some of those investments are not going to pan out, say analysts. Once the smoke clears, the only consolation is that there likely will be at least two competing exchanges per industry, according to analysts.

In spite of the varying levels of risk, all of the exchanges will have to provide avenues for auctioning, RFIs (requests for information) and RFPs (request for proposals), customer and channel management, and ways to analyze and assess participants' performance, say those in the industry.

The underlying technology has to be sound in its support for collaboration and must provide global visibility into offers and offerings as well as real-time and back-end integration.

One of the strongest predictors of success is likely to be the prior business relationships of participants.

"They [exchange participants] understand they have an asset, which is their relationship, and which they can now put into a marketplace," says Peter Graf, vice president of marketing at SAP Markets, a subsidiary of SAP, in Palo Alto, Calif.

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