NEW YORK -- Executives of the leading business-to-business e-commerce companies specializing in fresh foods say the recent formation of Internet buying groups among large retailers -- and similar activity on the seller side among processors -- might not impact the categories they handle as much as they might Center Store or general merchandise items.
Unlike those products, where every unit is identical and bar-coded, the myriad variables affecting produce, meat, seafood and floral might prevent the retail consortiums from easily implementing mass buy programs, they said.
"The major exchanges are probably going to go after the 90% of the store that is very, very standardized and easily placed into a database," said Chuck James, co-founder of ProduceOnline.com, Pasadena, Calif. "There may actually be opportunities for us to partner with some of the larger exchanges on the more esoteric categories in the store, like produce."
In effect, the retailer e-buying groups could "outsource" their perishable category-buying infrastructure to an existing B-to-B e-commerce firm, he said.
According to Trey Loughran, vice president of corporate development for Atlanta-based GlobalFoodExchange.com, existing category dot-coms have a tremendous advantage because they already have secured the technology, personnel and experience from managing a live marketplace.
"We think there's a terrific opportunity to work with these companies," he said. "Some of these [retailer] exchanges already understand that there's going to be a lot of value working with established players, rather than having to build the whole thing from scratch."
The reaction comes as retailers Kroger Co., Cincinnati; Albertson's, Boise, Idaho; Royal Ahold, Zaandam, the Netherlands; and Safeway, Pleasanton, Calif.; announced their intent to join other food and non-food giants in forming e-commerce buying groups funded by the companies themselves.
Debra Lambert, Safeway's corporate public affairs director, said there are numerous "nuts and bolts still to put together" in this early stage of the new WorldWide Retail Exchange, of which Safeway is a member, though she added it's possible independent dot-coms could play a key role.
"I don't know that perishables would be ruled out -- it depends on what's available, when it's available, and all of the factors that go into those buying decisions," she said. "The whole idea is cost reduction. It's almost open in that regard."
On the supplier side, six of the largest meat and poultry processors in the country announced they would create their own on-line sourcing marketplace for product, service and information. This plan has caught the attention of those outside the industry as well. A letter obtained by SN from the office of U.S. Senator Paul Wellstone (D-Minn.), a member of the small business committee, asks the Federal Trade Commission to launch a "complete and thorough" investigation of the proposed marketplace, and expresses concern for the impact it might have on family farms and rural communities.
The independent executives told SN they've already met with executives of the nascent organizations to tout the benefits of their particular operations.
"What we're initially hearing is that the perishables side is not going to be handled through these exchanges," said Greg Flood, president and chief executive officer of Buyproduce.com, Irvine, Calif.
"We've spoken with some of the senior executives at the major retail chains, and they said these new global Internet marketplaces don't mean that they won't work with certain vertical markets, as long as they provide value," said James. "We believe produce is one vertical where value can be added."
Despite the optimism, however, the various announcements came as financial analysts tracking technology began floating opinions that at least several high-profile Internet-based operators would soon go bust. Among the independent B-to-B dot-coms connecting supermarkets to their suppliers, there is quiet concern just how they might fit into the emerging retailer and supplier group hierarchies; indeed, no one wants to expand the definition of "perishables" to their own Internet platforms.
"It will make it difficult for those dot-coms that are not leaders in their field to gain traction," said Loughran.
