Partners are few for Dell B2B exchange

Although Dell Computer Corp. stands out as a major e-commerce player, generating about $16 billion in online sales annually, that success apparently hasnt spurred suppliers to join the companys new business-to-business exchange, the Dell Marketplace.

First announced by company Chairman and CEO Michael Dell in September, the B2B exchange, www.dellmarketplace.com, was quietly launched the first week of last month after a two-week delay. Despite being promoted as a “comprehensive e-procurement solution,” the exchange so far features only two vendors—3M Corp. and Pitney Bowes Inc.

A third vendor, Motorola Inc., which Dell touted as a partner in the new venture in September, does not yet have a presence on the site. While Motorola still plans to join the exchange, it hasnt set a specific time frame for doing so, Dell officials said.

“Were right on schedule with where we expect to be at this point in time,” said Dell spokesman Ken Bissell. “We did not expect to have a plethora of suppliers on board less than a month after this thing went live.”

The B2B sites lack of partners comes as no surprise to Kevin Knox, an analyst with Gartner Group Inc., in Stamford, Conn., who said the computer makers high-profile name wont be enough to assure the sites success.

“I question the whole notion of what [puts] Dell in any better position than some other exchanges in the marketplace,” Knox said. “The way I view it is that I go to Dell to buy Dell hardware, but I dont know if Im ever going to go to Dell just to buy 3M stuff. Im not going to go to Dell to buy paper clips or something like that.”

While the computer maker has offered “no compelling reason for people to go to Dell to buy this stuff,” it is clear what Dell is trying to do, Knox said—that is, boost profits. “Its more of a shot in the arm for Dell if this thing takes off,” he said. “But what I see right now is that its not.”

Knox said Dell could risk damaging its image if, for example, its customers dont receive the same quality of service from third-party partners that they receive from Dell, of Round Rock, Texas. That potential problem highlights one of the reasons the company hasnt rushed to sign up vendors, Dells Bissell said.

“Our objective with regard to suppliers is quality, not necessarily quantity,” he said.

Another obstacle the marketplace must overcome is the reluctance of suppliers to join the new venture, said Leo Lipis, an analyst with International Data Corp., in Framingham, Mass. “This is set up for Dell to be sort of a middleman, but suppliers in general have been reluctant to participate in these types of private marketplaces,” Lipis said.

Dell faces the same problem most B2B exchanges face: Suppliers just arent convinced it makes sense to offer goods on sites where theyll have to share part of their profits or somehow compensate the site operator.