WAL-MART PUMPS UP ONLINE B2B EXCHANGE

Byline: Kristin Young

LOS ANGELES — Wal-Mart Stores Inc. is beefing up Retail Link, its nine-year-old online business-to-business supplier exchange network, with software it has purchased from Atlas Commerce, the retailer announced Monday.
Wal-Mart has purchased Atlas Metaprise Software, from the Malvern, Pa.-based provider of Internet business applications, to increase its global sourcing capabilities. Terms of the deal were not disclosed but sources close to the deal put it in the multimillion-dollar range.
Through an exclusivity clause in the purchasing arrangement, Atlas has agreed not to sell this software to Wal-Mart’s retail rivals for a limited amount of time.
Wal-Mart will initially test the pilot program with five suppliers, and has plans to roll out the application to all 10,000 of its suppliers via a worldwide system. The upgrade will be at no cost to suppliers and will not affect contracts that are currently in place, according to a Wal-Mart spokeswoman. In addition, it will not require suppliers to install or purchase any software.
“We think its going to increase opportunities, say in apparel for instance,” said a Wal-Mart Stores spokeswoman. “There are suppliers who have not approached us yet, or maybe they’re looking for ways to introduce new projects. We’re giving them the information they need to reason out what we’re looking for.”
Specifically, the Atlas Software increases the capabilities of three areas: global sourcing, global commerce management and supply and demand management. The software will allow the company’s 3,000 stores to submit spending forecasts and merchandise information to headquarters via the Internet.
“It’s a share environment where Wal-Mart can ask all stores to provide a forecast for certain products or materials, aggregate that into a single request for a quote, deliver that to suppliers, which they then can bid, as well as negotiate back and forth,” said Scott Beaver, director of marketing communications for Atlas.
Previously, Wal-Mart sourced manually, primarily by phone, fax and e-mail. The deal is expected to save the Bentonville, Ark.-based retailer “millions and millions of dollars” in administrative costs over the next several years, according to the Wal-Mart spokeswoman.
Evie Black Dykema, a senior analyst with the online retail group at Forrester Research Inc., in Cambridge, Mass., said the new system would be particularly valuable for Wal-Mart in markets that are more statistic-driven such as apparel vendors.
“It’s been so fragmented and rife with inefficiency on the consumer side,” she said. “Fashions are ephemeral, and vary by geography. It’s a major opportunity for vendors to improve efficiency on the supply chain side and it offers [Wal-Mart] the chance to differentiate more successfully on the front end.”
Wal-Mart and Atlas officials noted the deal will not directly affect Walmart.com, the retailer’s business-to-consumer online vehicle. However, its indirect impact will be considerable, they said.
“The biggest problem with retailers is taking an order but not delivering that order,” said Beaver. “[This deal] will improve supply chain issues.”
Two B2B providers, — World Wide Retail Exchange and Transora — had been wooing Wal-Mart but the retailer has refused and opted for its own technology platform as a foundation for the new software.
When asked why Wal-Mart has kept such B2B systems in-house, the spokeswoman said there are several reasons.
“It’s free, it’s very successful and it currently supports 10,000 companies,” she said. “The public exchanges you are reading about now are just getting started. We already have 70 percent of the supply chain functionality that other trading exchanges hope to have in place by sometime next year.”
And there are competitive considerations as well.
“We do view retailing as a competitive advantage, and we’re not sharing,” said the Wal-Mart spokeswoman, noting some of the other exchanges share secrets between retailers. “We know [Retail Link] gives us a competitive edge in the retail industry and we like it that way. Ultimately, we’re going to be able to give better deals to our customers.”

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