Business-to-business cyberdeals--or B2B transactions, in the parlance of the New Economy--are widely seen as the Next Big Thing. But Arthur Scully and William Woods, securities and investment professionals who have specialized in B2B for the past four years, believe the Net itself encourages an offshoot that will ultimately revolutionize the procurement, pricing, and distribution of goods and services. Today's technology enables complementary commercial enterprises to participate in a kind of online bazaar, they contend, "where multiple buyers and sellers can come together in a virtual trading space." In B2B Exchanges, they describe the makeup of several such existing networks and analyze the phenomena for prospective participants. To do so, they focus on four primary derivations: Trading Hubs ("buyer and seller communities for multiple verticals that have not yet embraced the Internet"), Post and Browse Markets ("a sophisticated Bulletin Board ... where parties negotiate a deal between themselves"), Auction Markets ("in which multiple buyers or sellers bid competitively on a contract") and Fully Automated Exchanges (offering "centralized ... competitive bidding between multiple buyers and sellers, with automatic matching of orders"). Recommended for businesses that appreciate the possibilities and want to take early advantage of them. --Howard Rothman
Review
Read this book cover to cover as it will change your company's whole on-line strategy. -- Dr James Martin, Author of Cybercorp
Read this book cover to cover as it will change your company's whole on-line strategy. --Dr James Martin, Author of Cybercorp
Stock exchanges are often revered as bastions of free markets, but the reality is that virtually all of them have been adept at squashing competition from anyone who would challenge their privileged position. Ever since the first stock exchange was founded in Amsterdam in 1611, these bodies have been owned by brokers who control the trading on the floor and make sure their interests are taken care of first.
For a taste of the clubby collusion that defines this world, consider the agreement that formally created the
Most other stock exchanges around the world have similarly operated as exclusive clubs of and for their members. Not until the mid-1970s did the New York and London stock exchanges relinquish their treasured fixed commissions, and only then because they were prodded to do so by the regulators overseeing them.
The chummy world of brokerage-owned exchanges is now being challenged like never before, as Internet technologies make it easier than ever to bypass the middlemen. The old ownership model for exchanges is no longer tenable in the Internet Economy, a point persuasively made by Arthur Sculley and W. William Woods in their book B2B Exchanges.
That truth has not been lost on the hundreds of entrepreneurs who are forming the new marketplaces on the Web that are at the core of the b-to-b phenomenon. Armed to the teeth with high-powered venture capital, they're creating independently owned online exchanges for every conceivable product, from cashews to industrial chemicals.
While these markets are wildly diverse, they operate on some common principles. For instance, most industries will accommodate no more than one Internet exchange. Whether plastics or medical supplies, this game is winner take most, if not all.
But to do that, an Internet exchange will need to have a neutral ownership structure that resists control by the industry giants. This is an imperative that runs contrary to exchanges in autos, steel and other markets that are currently dominated by large players.
Sculley and Woods' book clearly and comprehensively lays out the models for various types of Web exchanges. It's a confusing landscape, even for people who are immersed in it. B2B Exchanges offers an easy entry point for those in need of a primer, and it's a useful attempt at offering a deeper understanding of the exchanges at the heart of the b-to-b craze.
But the book has a few flaws. It doesn't offer any penetrating new insights into Internet exchanges, and it fails to adequately discuss the obstacles faced by the new generation of exchanges. A section on the impact of b-to-b exchanges, for example, fails to note that they make commodities out of products, a phenomenon that's creating great skepticism among many producers.
That reticence by suppliers, in turn, is one reason that b-to-b exchanges are struggling to achieve liquidity, or a critical mass of deal flow. Obtaining liquidity is probably the single biggest problem facing all Internet exchanges. But while this book recognizes that "liquidity is king," it doesn't address the topic in adequate detail.
Internet exchanges still have to prove they can deliver on their great promise for creating a more efficient interaction of buyers and sellers. It's a pretty good bet that at least some of them will get there.
Greg Dalton -- From The Industry Standard
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