B2B's messy relationships will get more entangled

Business-to-business exchange e-steel boasts producer agnosticism right on its home page, where it ticks off those it does business with: 1,618 companies—including 91 steel mills, 348 service centers and 433 fabricators—operating in 69 countries. The idea is to project no specific brand preference—except your own, of course.

Business-to-business exchange e-steel boasts producer agnosticism right on its home page, where it ticks off those it does business with: 1,618 companies—including 91 steel mills, 348 service centers and 433 fabricators—operating in 69 countries. The idea is to project no specific brand preference—except your own, of course.

At this embryonic stage in B2B's evolution, the impartial exchange appears to be the most effective business model. Take any product or commodity—chemicals, food, steel, electronics—and let producers use your site to find new customers and create more relationships.

Everyone is treated the same. A B2B site is like a local exchange without any size, distance or time constraints. Plus, it contains a host of value-added services that compel buyers and sellers to spend lots of time and money there.

But the B2B arena is an ever-shifting minefield of conflicts. When an established brand creates a "neutral" B2B site, its motives have to be scrutinized. Consider Novopoint.com, the "neutral" food ingredient exchange created by agri-giant Cargill and Ariba, a provider of B2B e-commerce solutions and hosting services.

Will Cargill heavily trade its own products to the exclusion of its rivals' on the neutral Novopoint site? Novopoint claims impartiality and says it will invite other food suppliers—some of them Cargill competitors, presumably—to invest in the exchange.

For dancing elephants such as Cargill, there is no easy answer. It's not about to sit idly by while its products increasingly flow through an exchange owned by a truly neutral third party. After all, who's creating the value in the first place?

If Novopoint can maintain neutrality and attract other food giants on equal footing, Cargill may be on the right track. And there are successful precedents. Mostly venture-backed e-Steel managed to attract two steelmakers—USX's U.S. Steel Group and Canadian steelmaker Dofasco —as investors. MetalSite was started as an "unbiased" steel exchange two years ago by Weirton Steel and has since attracted producers such as Bethlehem Steel, LTV and Ryerson Tull to ante up money and participate.

Therein lies the likely scenario: multiple exchanges backed by alliances of producers in a specific category. Ariba and Cargill joining forces could spur other food giants such as General Foods to create competing exchanges.

This scenario potentially leaves truly independent exchanges such as Inc2inc Technologies out in the cold. That's why I think Ariba, frankly, has a bigger problem than Cargill. Being a solutions supplier to neutral exchanges and being directly in the exchange business stand in direct conflict with each other.

It's understandable why Inc2inc fears the Ariba-Cargill relationship. If there is a lesson for Inc2inc, it's "know thy partner." While no one can see into the future, you should at least ask if your partner has any plans to go into the same business you're already in.

Cargill's traditional distribution channel also has to be threatened by Novopoint, but the Web replacing legacy systems is a dynamic most of us have come to accept.

With all the tectonic trend shifts in business, there inevitably will be victims. Most likely, they will be newer and smaller companies with the most tenuous connections to what they are selling. Inc2inc is not going to win against Cargill, but it is up and running, whereas the Cargill-Ariba exchange is little more than press releases at the moment.

Let's face it, B2B will create a tangle of new and confusing relationships that raises many questions about who should own these exchanges. That British arms makers sold bullets to the Russian army in the Crimean War won't seem ironic anymore.

And maybe something more fundamental is going on, such as control returning to where most of the value is really created.

How's your company handling B2B conflicts? Write me at john_dodge@zd.com.