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Reviving the B2B exchange model

June 10, 2003

Reviving the B2B exchange model

Alastair Hunter and Gunther De Neve of IT4profit describe how, with a fresh approach and a refined business model, B2B exchanges can begin to deliver the efficiencies they once promised.

Alastair Hunter and Gunther De Neve of IT4profit describe how, with a fresh approach and a refined business model, B2B exchanges can begin to deliver the efficiencies they once promised.

‘Three years ago there was a lot of hype around B2B exchanges,’ says Alastair Hunter of IT4profit . ‘Most took a top-down approach, and the costs were enormous. Distributors could not afford the prices on exchanges driven by manufacturers.’
Today, the unsustainable nature of the current distribution model has driven the resurrection of the B2B
exchange concept for the IT market.


‘The distribution channel is fluid and anarchic,’ says Hunter. ‘Manufacturers want to get their products to customers as quickly as possible, as the life cycle of their products is growing shorter. [Meanwhile] average gross margins are falling from around 15 per cent or more to only 6 per cent – with a net margin of perhaps 2 per cent. A lack of visibility also means that manufacturers only see the tip of the distribution iceberg and don’t see who really buys from whom and at what prices.’


The B2B exchange model is a powerful way to introduce the necessary visibility into the distribution channel. Nevertheless, it must also be an affordable mechanism that provides its users with the information they really need. This means delivering more than just product information to potential customers and suppliers.


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