From: Business To: Business

The Many Faces of B2B

Just who is making it in b2b e-commerce? The gold rush has just begun, and sure winners have yet to emerge, but there are players illustrating the breadth of this marketplace. That's because b2b e-commerce offers diverse opportunities. Some Netpreneurs seek to establish their businesses as exchanges where buyers and sellers meet to do deals while others position their start-ups to provide services and products to business customers in a new, Web-based way. The bottom line: B2b e-commerce entrepreneurs are limited only by their own imaginations, because there are plentiful possibilities in this exploding space.

Check out this sampling of the strategies that b2b businesses are pursuing online: When now 35-year-old Bernard Louvat was hired to set up Disney's The Disney Store in his native France, it seemed like a relatively simple job. In reality, it took innumerable hours to identify sellers of the products and services he needed, from computers to telecommunications, and then get bids, compare them and make deals. There had to be a better way, thought Louvat, and that's why a few years later he founded Santa Monica, California,, a Web-based marketplace established with a mission to streamline buying--and selling--on the part of small and midsized businesses in particular. "The Web will allow everyone, buyers and sellers alike, to achieve more efficient pricing. We help vendors reach new buyers, and buyers hear from new suppliers, and we estimate that our system will save buyers 25 percent," says Louvat.

The model is simple: A buyer logs on to the site and says he or she wants to make a purchase--say, a wireless telephone plan and a new company car. then submits that request to suppliers, and those who want to bid pay "a nominal amount," says Louvat. The buyer gets the bids, and if one seems good, he makes a deal. " collects a commission from the seller on the transaction," says Louvat, who adds that even after paying that commission, a vendor's costs are lower because the Web creates slick efficiencies.

Sound good? More than 20,000 vendors are already enrolled in, and Louvat anticipates strong growth. "Web-based procurement benefits everybody," he says. "Everybody wins with this system."

ProduceOnline. What do you do with a few tons of butter lettuce and no buyer? That's just the type of dilemma Chuck James, 42, CEO of Pasadena, California-based, ProduceOnline, wants to solve by creating a more narrowly focused online exchange that brings buyers and sellers of produce together. "In this business, you sell it or you smell it," says James, who last year shut down his family's 116-year-old brick-and-mortar produce distribution business in order to build his Web site. According to James, "This is an opportunity to reinvent the produce industry."

That industry today is little changed from how business was conducted when James' ancestors set up shop in the 1800s. It's a business that revolves around scraps of paper and "many small players," says James, who points out that while grains and livestock are increasingly in the hands of large corporations, "produce remains a business of small farmers."

At ProduceOnline, sellers list their available fruits and vegetables, and buyers use search tools to hack through the mountains of broccoli and rutabagas in search of the cherries they desire. Neither pays any subscription fee, with ProduceOnline's profits resulting from an up to 1 percent fee on completed deals. In the process, buyers may get lower prices and sellers still may reap higher margins, because "our system cuts transaction-processing costs by 70 percent," says James.

Will farmers take to this model? You bet, says James: "Farmers are already very entrepreneurial, and they're eager to find ways to increase their returns." Who would be nuts enough to go head-to-head against giants like and CDNow, which are fast on their way to devouring the online market for books and music? Meet Jeff Phillips, 32, CEO of San Diego's But Phillips, who intends to make his profits selling those same books and CDs, just may not be nuts at all. His target audience is composed not of readers and music fans, but of media properties such as radio stations and local newspapers. Huh? Phillips explains: "They want to participate in e-commerce, but most don't have the resources to mount a fully functioning site. We offer them a turnkey site that doesn't cost them a dime. In fact, they'll get revenues from it."

The pitch: Pretty much any business (although the company focuses on media) can take the storefront, slap on its own logo, and, in a matter of minutes, be in the business of selling books, music and videos. On every sale, the radio station or newspaper gets 5 percent of the gross, while the rest goes to for handling the transaction.

Even so, don't e-tailers like offer affiliates--who bring in sales by posting, say, logos on their sites--commissions of up to 5 percent? Yep, acknowledges Phillips, but "our key difference--what we sell our customers--is that the site features their brand, not ours. When a radio station sends a customer to, it gets a commission, but owns the customer. With our service, the station's name is up front and they're earning money."

So far, 100 newspaper, radio and television outlets have signed up to use's service, but Phillips is expecting many more. "With our model, we're not competing against partners are, and in their markets they have well-recognized brands," says Phillips. "When you hear a radio interview with an author, why wouldn't you buy the book from the station's site? That's why we believe this model will work, for our partners and for our company." Each day around the world, hundreds of seminars, conventions and workshops are aimed at businesses. For potential attendees, the problem is finding the right ones. For seminar producers, the problem is getting the word out to target audiences. That's where 39-year-old Kim Folsom enters. "We list more than 25,000 seminars and meetings," says Folsom, CEO of San Diego-based, "and we're getting more than 250,000 page views per month from potential seminar attendees." lets seminar producers list for free and charges attendees nothing. Revenues are based on services offered to meeting planners--from online registration to Webcasting programs--and selling advertising on the site. "We're not profitable yet," admits Folsom, who points out the company has raised more than $3 million to date, from angel and institutional investors. "The size of this market is $35 billion annually, and the Web is the perfect solution, both for meeting organizers and attendees. It's low-cost and efficient. This market will take off. Our only obstacle is getting enough people--attendees in particular--aware of what we're offering. As more people learn the advantages of online booking, more will look to us."

Want yet more for-instances? Surf the Web. Nowadays, new b2b businesses are popping up everywhere. "We hear VCs are investing $100 million each week in new b2b properties," says Smith. "There's a lot of excitement about the potential here."

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This article was originally published in the June 2000 print edition of Entrepreneur with the headline: From: Business To: Business.

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