The Exchange business model invoked via the Internet holds the promise of EDI for everyone. The third and most likely the greatest influence on the rapid formation of exchanges is the Wal-Mart business model. The results have spoken for themselves. Wal-Mart has improved their margins, achieved phenomenal revenue growth while building an exceptionally large and loyal consumer brand franchise. Essentially, the CPG exchanges are setting up shop to emulate this extremely successful business model.
Exchanges have the opportunity to invoke two distinct business models.
The exchange provides the facility to aggregate demand where a group of buyers and sellers meet to effect the most effective and efficient business proposition. This is being applied effectively today and is used for the purchase of commodity products and services. In this model, trading partners choose to do business with each other mainly due to the unique branded products and services and the associated consumer benefits that are offered by a given supplier. We already agree to do business together, so let's collaborate and glean the most efficiency and effectiveness from how we conduct business with each other. Then let's redeploy those savings against brand building or consumer oriented benefits rather than waste it in bloated inventory or ineffective interchange of information between each other to effect an order or a sale.