Oracle will launch a Web site later this year called Oracle Exchange, an online business-to-business marketplace where companies can buy and sell goods, Oracle executives said on Wednesday.
The site will allow companies to trade products and services using a range of purchase models, including traditional catalogue-based buying as well as auction buying and "spot buying", where a company strikes a quick deal with a firm it has never done business with before, the executives said.
The goal is to help companies cut back on administrative costs associated with real-world, paper transactions, and to allow them to make better informed buying decisions, Ron Wohl, senior vice president of applications development, told members of the media and analysts at a briefing at Oracle's headquarters.
Oracle Exchange could help some companies cut their purchasing costs by up to 20 per cent, he said. "The big saving isn't on a few clerical workers, it's what you save on the material itself, on all the goods and services you buy."
To prime the initiative, Oracle has secured agreements from 260 companies who will sell their products and services online as part of the Oracle Supplier Network. The companies include such diverse names as Adeco Staffing Services, Office Depot, Compaq and barnsandnoble.com.
"Success will be all about getting critical mass. It's crucial that we can bring enough suppliers and enough customers into the network to make this work," said Larry Ellison, Oracle's chairman and chief executive officer.
To help achieve that critical mass use of Oracle Exchange will be free -- at least initially -- aside from a small fee on each transaction, Ellison said. In addition, companies of all sizes can use the Web site, and they don't need to be using any Oracle software, he said.
"It's a Web site; it's a place where you go and hang out to meet customers," Ellison told reporters.
One analyst said Oracle Exchange could prove useful for customers because it will provide them with more complete information on pricing from a variety of companies.
"As the computer starts mediating purchases for more and more things, then eventually price differences will start to disappear," said Bruce Richardson, vice president of research strategy with AMR Research in Boston, Massachusetts.
The site could also be a good source of revenues for Oracle, because the transaction charges could add up quickly if enough companies use the service, Richardson said. Oracle could also generate some hefty advertising revenues on such a sharply focused Web site, "I think it's going to be successful," Richardson predicted, although he also characterised the effort as "schizophrenic" on the part of Oracle.
"Selling to the dot.com companies is the fastest-growing part of their business. On the other hand, here they are kicking the daylights out of them," Richardson said. Oracle Exchange could compete with some of the online commerce sites that Oracle has helped build, he added.
Details remain to be fleshed out about how the site will operate and be run, Richardson added.
Oracle plans to host and manage Oracle Exchange itself, using the same facilities that it uses for its Oracle Business Online applications hosting business. That will allow Oracle Exchange to expand geographically with Oracle business online, Oracle's Wohl said.
The company doesn't plan to offer a way to process payment transactions via the site; its main objective is to provide a place for companies to sell goods, find low prices and place orders. Over time Oracle may partner with banks around the world that will bring payment capabilities to Oracle Exchange, officials said.
The Web site is due to go live in the US by the end of the year, at [ital]http://www.oracleexchange.com/[ital]. While overseas companies will be able to access and use the site, Oracle hopes to launch foreign-language sites in Western Europe and other parts of the world in the first half of next year, Kevin Miller, vice president of strategic procurement, said in an interview.
"It will be easier to roll out in English-speaking countries. Getting the content and handling the transactions overseas will take more work but we have the experience and the intention to do that," Miller said.