Byline: Peter Braunstein

NEW YORK —, a leading business-to-business exchange for excess consumer goods, announced Tuesday that it has secured $25 million in additional financing.
The triad in this new investment cycle is led by 3i, one of the world’s largest venture capital companies with almost $18 billion in investments, along with Koch Ventures and Exeter Funds. In two previous rounds of financing, RetailExchange, which went live online in February, raised $19 million from investors that include Internet Capital Group, Dorset Capital and Castile Ventures.
“In today’s marketplace, our ability to gain additional financing is a significant statement on the viability of our enterprise,” said Kenneth S. Frieze, president and chief executive officer of RetailExchange.
Currently, RetailExchange has nearly 5,000 trading members and has listed more than $500 million in excess consumer goods inventory on its Web site, according to Frieze, who declined to say how much business has been conducted through the Internet B2B venture since its launch.
At a U.S. Department of Commerce-sponsored B2B conference, held last month at the Fashion Institute of Technology, certain panelists argued that business transacted on global B2B would not take off online for another two years, due to infrastructure problems relating to divergent e-mail protocols.
Frieze had another take on the issue. “The main hurdles in online B2B are not about infrastructure; they’re behavioral. Buyers and sellers have been doing business the same way for 5,000 years,” he said.
Some of the new financing will go to enhancing the Web site’s infrastructure. While the company offers multilingual, off-line customer support, Frieze noted it will eventually offer online “multilingual and multicurrency support” in line with its goals of international expansion.
And in line with these objectives, RetailExchange on Tuesday announced an alliance with B2B software and services provider Essentus Inc. RetailExchange had already struck partnerships with e-business solutions providers Retek and i2. The alliance will result in the creation of the Fashionchain Surplus Exchange, a cobranded Web site slated to launch this month that will offer RetailExchange’s excess consumer goods to members of Essentus’ Fashionchain. Fashionchain, the e-commerce unit of Essentus, delivers Web-based products and services to soft goods makers, importers, and retailers. RetailExchange’s rising fortunes seem to place it at odds with the ongoing market shakeout affecting both B2B and B2C e-commerce sites. For his part, Frieze views the current Nasdaq turbulence as a positive development. “What you’re seeing now is an overreaction to what was a bubble,” he said. “[Some] companies, created in the days of the bubble, were just not meant to last. Now, they’re going away, and that will take the noise out of the market.”

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