July 28, 2008

IDEA and Trade Service End 10-Year Data-Sharing Agreement Courtesy of Electrical Marketing

By Jim Lucy, Electrical Marketing

Ending a 10-year relationship to share electronic data for the Industry Data Warehouse (IDW), IDEA, Arlington, Va., and Trade Service Corp., San Diego, mutually agreed to not renew their 10-year datasharing agreement, which came to term on July 20.

Representatives from the two companies said they will now be friendly competitors that will provide different product data options for electrical distributors and electrical manufacturers. ccording to Tony Dubreville, president and CEO of Trade Service, IDEA must purge all of the data in the IDW that it got from Trade Service, and IDEA subscribers must do the same from their systems by Aug. 31, if they are not Trade Service customers.

 IDEA said that all Trade Service-provided data was removed or blocked on July 20. IDEA said its subscribers will have to make their own internal assessment on what to do with data that Trade Service claims is proprietary. IDEA said it has already sourced nearly 50 percent of the stock keeping units (SKUs) previously provided by Trade Service as a part of its ongoing data enhancement program and is adding data from other smaller manufacturers as well. It says it remains committed to enhancing the transactional and catalog data within its data synchronization platform. The IDW has 2 million SKUs of active data.

 IDEA’s President Robert Gaylord said IDEA has always received the vast majority of its data direct from the largest manufacturers in the electrical supply chain. "Our position has always been that manufacturers control their data," he said. "The limited amount of data we accepted from the Trade Service feed represented small manufacturers that rounded out our offering (18 percent of total SKUs)."

 The decision to part ways is the latest chapter in the story of an interesting partnership of two competitors that includes different philosophies on populating and updating massive databases that contain millions of electrical product SKUs and a proposed joint venture of the two businesses. After the joint venture was turned down by the IDEA board of directors last year, IDEA and Trade Service continued negotiations to extend the data-sharing agreement, according to sources close to the negotiations. Trade Service’s Dubreville said that while he and Bob Gaylord, IDEA’s president, have a good working relationship and negotiated for many months trying to strike a deal, they were unable to find a mutually acceptable solution.

 "I have a lot of respect for Bob," said Dubreville. "He and I have been talking for many, many months about how to put a deal back together. We (Trade Service) remained very open-minded, and I believe he was as well. But at the end of the day, we couldn’t come up with a fair and equitable deal that both sides felt good about. It was that simple. The joint venture was not acceptable, and anything short of that didn’t work for us. We just couldn’t afford to give them all of our data again. We agreed not to renew the agreement and let it expire, and to become friendly competitors."

 Dubreville said that over the past 10 years Trade Service and IDEA had many discussions about their relationship and product offerings. He said that in the recent attempt to form a joint venture, IDEA and Trade Service mutually hired independent consultants, "to come in and see if there was a deal, and if there was a deal, help us put it together in a fair and equitable way. We both invested a lot of time and a lot of money in that venture."

 "We came up with a scenario that both sides felt very good about and felt that it was fair and equitable," he said. "It was supported by Trade Service and it was supported by IDEA’s executive committee. To be honest, for reasons we still don’t quite understand today, when it got to the larger IDEA board, it was not supported. As a result, all discussion ended."

 While IDEA and Trade Service will now compete to provide the electrical market with product databases, they have distinctly different operating approaches. Trade Service is a privately owned company that has been providing product data for almost 80 years. IDEA was formed in 1998 by electrical distributors and electrical manufacturers in the National Association of Electrical Distributors (NAED), St. Louis, and the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., who believed manufacturers should have complete control of their own product data in a centralized data repository for the electrical market, and that a third-party like Trade Service should not be responsible for handling their data.

 The IDW contains 700 manufacturers’ brands. It feeds data to nearly 400 of the industry’s largest electrical distributors. These distributors include 67 percent of the companies listed in EW’s Top 200 distributor ranking. Trade Service provides more than 1,000 electrical distributors with access to 2.6 million SKUs of product data from 618 manufacturers. The company has 135 employees working on its electrical database.

 Despite the change with Trade Service, Gaylord is confident that IDEA will continue to drive costs out of the channel. "Our mission, as set by the industry, is to drive costs out of the channel. As the channel’s data synchronization service provider, we intend to keep IDW updated with accurate and comprehensive manufacturer data (transactional through catalog) acquired from across the electrical supply chain – which we believe will increase IDW revenue," he said.

 Gaylord did not rule out the possibility that IDEA and Trade Service could work together again down the road.

 "Both IDEA and Trade Service have decided to not renew the data share agreement, which does not rule out the possibility of working together in the future. It is always unwise to predict the future, but if there is a service or solution that is useful to accomplish what the channel has asked of us – and a relationship with Trade Service fits that – we are willing to look at that."