Are e-marketplaces dead? Some major European appliance manufacturers and their customers don't think so.
[From iSource Business, August/September 2003] A few years ago, with the Internet boom in full swing, Europe's major appliance manufacturers were happily pursuing their separate initiatives to use e-business technologies to electronically connect with their retailer and distributor customers. Like their counterparts in the United States and elsewhere, these companies were counting on the Internet and other new technologies to help them automate processes within and beyond their four walls as a way of improving customer service while reducing costs.
Five of those manufacturers including Germany's BSH Bosch und Siemens Hausger`te GmbH (BSH), Electrolux Home Product Europe, the European division of Benton Harbor, Mich.-based Whirlpool, Italy's Merloni Elettrodomestici and Holland's Philips Consumer Electronics together represent more than $65 billion in worldwide sales and employ almost 370,000 people around the globe.
But despite their own enormity, in the highly fragmented, $33 billion European market for white goods home appliances of all sorts these five manufacturers had to deal with literally tens of thousands of smaller chains and individual retailers. "In Europe, we have 100,000 retailers, and even the top 20 retailers represent less than 40 percent of the market," explains Gustavo Minacci, director of e-business for Whirlpool Europe.
This fragmentation presented a major challenge for each of the manufacturers as they set about their sell-side e-business initiatives: how to link with their thousands of retail customers in a way that would be affordable not only for themselves but also for the retailers, many of which were mom-and-pop operations with just a few outlets.
Meanwhile, as each of the manufacturers pondered their shared conundrum, and as some of them moved to establish Web portals for doing business with their customers, the retailers had their own challenge to consider, namely the prospect that each manufacturer would pursue its own e-business solution, forcing the stores and chains to use five different systems, adopt five different standards, and spend their days punching in passwords and bouncing between five different Web portals to determine product availability, verify prices, place orders and check delivery statuses.
In short order, the retailers' concerns began to filter back up the supply chain to the manufacturers, according to Frederic Marie, e-business director for Electrolux Home Products Europe. "We listened to our customers and decided that we should sit around the table to see what we could do together to satisfy their needs."
Motivated to Get It Done
Thus was born the idea for Tradeplace, a joint service venture formed in 2001 initially by three of the manufacturers BSH, Electrolux Home Product and Whirlpool Europe and later joined by Merloni (in May 2002) and Philips (last September). The aim of the initiative was to create an umbrella for the companies' existing portals that, at first, would provide retailers with a single point of entry, accessed through a Web browser, to the manufacturers' systems. The retailers could then search for product information and availability and place orders with any of the manufacturers without having to log into different systems.
The vision then called for moving the retailers to system-to-system integration through the Tradeplace Message Hub to communicate electronically with the manufacturers. In this second phase, the hub would receive messages and requests from one partner, reformat and translate the data as necessary, depending on the intended destination, and then send the data to the appropriate addressee. Theoretically, the hub would be able to handle data formats ranging from traditional electronic data interchange (EDI) to the latest XML, or even data from Web forms for retailers with just a PC and Internet access.