Updated from 1:06 p.m. EST
(CA:CAC) of France announced Monday that they were teaming up with
to form a global business-to-business online exchange, in the second such deal in four days.
Together, Sears, the No. 2 retailer in North America behind
, and Carrefour, the No. 1 retailer in Europe and Latin America, hold a majority interest in the exchange, called
. Initially, the procurement network will focus on the $80 billion in supply chain purchases that Sears and Carrefour make from their 50,000 suppliers.
Oracle, a leading maker of e-business software, also holds a minority interest in the venture. The companies did not disclose the size of their stakes.
said they would join forces to create an auto-parts procurement network on the Internet, combining Ford's current exchange, run by Oracle, and GM's exchange, run by
Oracle is currently in the process of working with players in other industries to form more of these exchanges and said that announcements similar to today's are in the offing. "We are working with the lead players in the major industries," said Ray Lane, president and chief operating officer of Oracle, in an interview. "Our fantasy is to be at the intersection as industries come together on a single exchange."
In fact, analyst Bob Austrian of
Banc of America Securities
predicted that in the next year, "every business in every sector of the global economy will form or join Internet-based electronic marketplaces for buying, selling and collaborating with all customers, suppliers and partners." Austrian rates Oracle a buy and his firm has done no underwriting for the company.
Sears, based in Hoffman Estates, Ill., and Paris-based Carrefour will seek other global retailers as equity holders and users of the exchange, which will allow members to buy, sell, trade or auction goods and services over the Internet.
It's important that other high-profile retailers join the network. "No doubt it's a great thing to have, but it's unclear they've locked up the retail space," said analyst Richard Davis of
Tucker Anthony Cleary Gull
. He rates Oracle a strong buy and his firm has not participated in underwriting for the company.
For its part, Oracle, based in Redwood Shores, Calif., will host the network and make available its software for auctioning and reverse auctioning. The exchange will "dramatically lower the costs of all suppliers to Sears and Carrefour," Larry Ellison, Oracle's chief executive, said in a conference call with analysts and journalists.
"It will allow suppliers to better understand retail purchasing trends," he said. "They'll know what's selling and can then decide what to manufacture to manage inventory."
Lane said that Oracle will make money by getting a cut of the four or five fees levied by the network, such as transaction fees, commissions from auctions, sourcing fees and advertising fees.
Sears and Carrefour will begin using the exchange's auction capabilities in the next two weeks.
The auto procurement network was the "first sign of coagulation in the B2B marketplace in which industry verticals will coalesce around a common technology platform," said Davis. Today's retail procurement network is now the second. Davis estimated that B2B e-commerce will capture 10% of business commerce worldwide by 2003, creating a $1.3 trillion-to-$1.4 trillion marketplace.
Oracle is one of the stronger players in the space, along with
and Commerce One. "They
Oracle have brand equity, they have pre-existing relationships with a lot of companies already and most customers have had positive relationships with them," Davis added.
Sears closed up 1 7/16, or 6%, to 27 5/16. Meanwhile, Carrefour closed trading on the Paris bourse down 2.6 euros, or 1.7%, to 150 euros. Oracle shares were down 2, or 3%, to 68 5/8, very close to the its all-time high of 71.