Electronic Market Places
Imagine world in which people you have never met – in huge companies like Coke or Nabisco or Kraft – can find and purchase your company’s goods and services online.
This is world where goods are shipped straight from factory to retailer without ever visiting warehouse. Invoices are produced, matched and paid without re-keying by typists.
Your decisions on who to buy from are informed by objective, real-time data about who provides good service. Decisions on who to sell to are backed with independent, online information about who pays their bills on time. This is the world that electronic market places are creating.
The barriers fall
For the last 10 years the promise of e-commerce has been held back by the need for individual firms to connect to their customers and suppliers one by one. Painstaking arrangements had to be made (see illustration) with each party, matching everyone’s different software and information needs piece by piece. This was only possible at all because open, global standards (maintained internationally by EAN and its sister organisation in North America, UCC) enabled different information systems to speak the same language.
Yet I know of one international firm that spent seven years trying to integrate its systems with its suppliers and customers, with only 20 percent success.
The “you’re-on-your-own” approach is rapidly evolving into “e-market places” that provide an Internet “hub” that anyone can join, and through which any business can use an ordinary web browser do business with any other.
For New Zealand businesses, this can create unprecedented visibility – because potential business partners who have never heard of you can find you on an electronic market place. Already there are about 1600 such market places, predicted to expand to as many as 10,000.
A consensus forecast compiled by PricewaterhouseCoopers suggests that 75 percent of business-to-business transactions will be carried out through e-commerce by 2010 – up from two percent today.
We are on the verge of company needing only to hook up once to single electronic market place in order to connect instantly with all other members of that market place. The next step – connections among the market places, and thus instant access to all the businesses in every electronic market place – is barely over the horizon.
Not just for the big kids
The scale of some of these market places is breathtaking. Transora’s founding investors, for example, have total buying power several times larger than New Zealand’s gross domestic product. But New Zealand businesses should not be intimidated: these exchanges are being set up specifically to enable Coke, Kraft and the like tap into small and medium-sized businesses efficiently, for the benefit of both.
Transora alone estimates that it will have tens or even hundreds of thousands of smaller companies online, transacting with each other and with the world’s biggest consumer products manufacturers. And typically, an electronic market place will provide standards and expertise to help new members get online. That is because the market places crave diversity of members and volumes of transactions. Meanwhile, the existence of EAN and UCC organisations around the world gives New Zealand businesses confidence that their investment in e-commerce will be flexible and adaptable.
Behind the electronic market places are EAN.UCC numbering and messaging systems that tie everything together in what amounts to universal language. Your barcode, invoice and shipping label will make sense in Alabama and Zimbabwe.
The existence of these open, global standards means your e-commerce strategy will enable your business to talk to the world.
EAN New Zealand is non-profit incorporated society, which recently hosted Wellington conference of e-commerce leaders from around the Asia-Pacific region. The EAN organisation s around the world develop and manage the technology behind barcodes and the EANCOM messaging system. Internationally, EAN is an advocate for open, global standards for e-commerce. What’s in it for New Zealand companies?
“Small to medium enterprises probably have more to gain than large, scaled-up enterprises if they jump on board,” says David Hutchings, when asked about the potential of electronic market places for New Zealand businesses. He speaks as e-commerce director for Kraft Foods North America, foundation investor in Transora (www.transora.com), which is going online before Christmas as the biggest electronic market place yet created.
“When Kraft Foods was evaluating its potential investment in the creation of Transora, we were fully aware that we were leveling the playing field for small to medium businesses,” Hutchings says. “We took conscious decision to encourage that, because in the long run e-enabled partners of all sizes help us achieve our objectives.”
How does Hutchings explain the collaboration that brought together competitors – Coke and Pepsi; Kraft and Nestle; Budweiser and Heineken – to create Transora? “It’s ?collaborative commerce’. The threat of our competitors becoming more efficient through e-commerce is easily outweighed by the benefits we get from connecting better with all the enterprises we do business with.”
by Margaret Fitzgerald, Chief executive, EAN, NZ.
