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Global Trading Web Association: Global e-trading "alive and kicking"
13 March 2002

WhIt's been a long time since the words "B2B e-commerce" caused a stir in business and technology circles. But if the latest statistics released by the Global Trading Web Association (GTWA) are an indication, B2B e-commerce is alive and well.

The GTWA, the world's largest independent membership organisation of electronic marketplaces, recently announced a 733 per cent increase in GTWA member e-marketplace transactions between the first half of 2000 and the first half of 2001. This translates as a 3,110pc increase in sales volume from $115m to $3.7bn for the period.

The apparent "network effect" resulting from convincing many buyers and sellers to trade together in a single space, is key to understanding the GTWA's growth. "As more transaction growth occurs between existing member marketplaces, so they become more successful and so more members are inspired to join," said Alexander Kemper, chairman of the GTWA and founder and CEO of e-business services provider eScout. "Success begets success."

Founded in August 2000, the GTWA looks after the interests of a consortium of 35 member marketplaces across numerous industries, from telecommunications and finance to construction and manufacturing. The organisation provides electronic trading services to more than 250,000 companies across 100 countries. Membership is open to any legitimate marketplace provider and costs $35,000 per year. Members of the GTWA include Citibank, Deutsche Telekom and Mitsubishi.

The GTWA grew out of the Global Trading Network (GTW), a concept first floated by Commerce One, a Pleasanton, California-based e-commerce solutions company. "The idea was to create a marketplace for the entire planet, using local expertise and local market knowledge," said John Matthessen, Vice President of GTW for Commerce One.

Using technical infrastructure provided by Commerce One, SAP and other technology platforms, individual marketplaces within the GTW congregate online via a single, communal hub. This enables buyers and sellers across a variety of industries to trade with each other, irrespective of geography. For e-commerce evangelists, the benefits are clear. "Corporations can save a tremendous amount of money through e-commerce," said Mr Kemper. "It's a way to eliminate processing costs and source more effectively."

FoodConnex, a Web-based marketplace serving the food industry, has been part of the GTW network since mid-2000. Already well-established among US-based food companies, FoodConnex is working on spreading its reach across the world. "Our long-term strategy is to connect our customers globally on a single hub," said Kent Rhodes, CEO of FoodConnex.

Last October, FoodConnex announced a relationship with the Japanese e-marketplace, eCommerce Japan KK, its first major connection to the Japanese market. Mr Rhodes sees FoodConnex's deployment of Commerce One's GTW infrastructure as integral to forging such international partnerships. "Being able to use a single platform has been extremely successful for us in hosting a marketplace in Japan," he said.

Despite the promise of FoodConnex's first entrance into the Japanese market, widespread global e-commerce continues to be a long way off for many B2B marketplaces. In the short term, GTW activities seem to be focused on local procurement. "For now, global companies are sourcing locally," said Mr. Kemper.

At FoodConnex, globalisation is not going to happen large scale any time soon. "We've been able to connect global market sites, but it's been a slow process," said Mr. Rhodes. "It's a case of getting the baseline infrastructure in place and then it's a matter of adoption."

The interoperability between international market sites is crucial to the development of a global e-marketplace. From a technological point of view, this does not seem to pose problems for the infrastructure gurus at Commerce Once. "Our technology is geared towards open standards such as XML," said Mr Matthessen. "Globalisation is not a technological problem."

While systems providers such as Commerce One can configure e-marketplace technologies within a matter of days, it is the development of business relationships and international commercial processes that takes time. "A host of challenges has hampered the development of trading networks," said David Schatsky, research director and senior analyst at the internet research firm, Jupiter Media Metrix. "These include the costs of enabling all participants, reconciling incompatible data formats and business processes and addressing concerns about security, authentication of users and trust."

Facilitating global payments and improving the supply chain mechanism are two of the challenges the GTWA is planning to address in the near future. But for Mr Kemper, the most basic challenge facing the health of a global e-marketplace is trust. The GTWA's independence from any corporate entity is integral to building trust between member marketplaces, as well as its open source philosophy. "We can only build technical interoperability on a foundation of trust," said Mr Kemper.

Nevertheless, Mr Kemper believes that the number of transactions conducted by GTWA member marketplaces will have doubled or tripled since November last year. But connecting thousands of e-marketplaces together across the globe may not necessarily add value. "Trading networks can provide value most quickly when they improve the operations of existing ecosystems of companies," said Mr. Schatsky. "Simply interconnecting numerous trading networks doesn't imply that new business opportunities or efficiencies will arise among companies that don't already have sound reasons for trading with each other."