Tecnon (UK): Chemical e-commerce sites roundly criticised

29 September 2000 19:31  [Source: ICIS news]

MONTE CARLO, Monaco (CNI)--A stinging critique of e-trading in chemicals which challenged the premise and questioned the future of most e-commerce exchanges was made here Friday by Graciela de Marzio of consultants Tecnon (USA).

In a highly provocative and controversial address at the end of the Petchem 2000* conference, de Marzio said e-trading's only current advantage was the spot placement of tonnage sellers could not place within their own regular customers. She challenged many of the claims made by e-trading organisations, including the fundamental assertion that buyers can reduce their costs and transaction times by dealing online.

De Marzio listed among e-trading's current problems non-sustainable business models, lack of services to users and a very low ratio of completed transactions to number of users. She predicted a major shake-out within 18 months in which only one or two exchanges will survive each in the US, Europe and Asia.

She said the survivors would be those who have been able to reduce their own costs, deliver on the promise of reducing transaction costs and increase their customers' supply chain efficiency by providing useful services.

De Marzio concluded, nonetheless, that it will be increasingly necessary for chemical companies to:

• Concentrate on their core activity by acquiring electronic supply chain management to fully integrate with business partners;
• And to trade their spot surpluses or shortages in chemical exchanges or with conventional traders once their own marketing options have been exhausted.

"By doing so the company value should increase, its costs should diminish and its level of efficiency should improve considerably," she said.

The option of not being an e-business in the near future does not exist, she added.

Her swinging criticisms of e-trading were delivered before a panel of leading e-commerce players comprising Andy Nicholson of ChemConnect, Fred Cook of CheMatch, Chuck Gruber of Elemica, Hermann Rijks of ChemUnity, Larry Shiel of Covalex and Mark Wright of OneChem.

Although they conceded that chemicals e-commerce exchanges currently lacked liquidity, they collectively and individually rebutted most of de Marzio's other criticisms.

*Petchem 2000 is organised by Tecnon (UK), part of the Tecnon Consulting World Network.

(CNI's parent, Reed-Elsevier, holds an equity stake in CheMatch.)

By: Neil Sinclair
+44 20 8652 3214

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