FRAMINGHAM (02/04/2000) - VerticalNet Inc. and The EC Co. are clearing the way for thousands of small-fry suppliers to play with the big boys in the booming business-to-business e-commerce arena.
Under a deal announced today, Palo Alto, California-based EC will provide small and midmarket suppliers with free software to connect to Horsham, Pennsylvania.-based VerticalNet's collection of 57 Internet-based industry exchanges.
Once connected, the smaller suppliers - many of which now do business by telephone and fax - can conduct all business electronically, exchanging purchase orders, advanced ship notices and other trading documents with big buyers over the Internet.
The EC Exchange service functions much like a value-added network, handling all the transaction processing behind the scenes. Suppliers pay a monthly service fee based on transaction volume. Pricing begins at about $45 per month for 25 transactions.
"This levels the playing field," said Carl Lehman, an analyst at Meta Group Inc. in Stamford, Connecticut. "The issue for a long time has been that electronic commerce stopped short of those companies that couldn't afford it.
This makes it easy for companies to get on digital exchanges without having to cough up a lot of up-front money."
Large companies typically bypass small and midmarket suppliers that can't process their orders electronically. Paper-based transactions are too expensive and prone to inaccuracies, according to procurement officials. As big companies move more of their procurement online, a presence on the exchanges is critical for smaller suppliers.
Forrester Research Inc. in Cambridge, Massachusetts, forecasts that by 2001, the average corporation will conduct $49 million in business over four separate digital exchanges, up from $19 million on one or two exchanges today.
Pittsburgh-based Fisher Scientific Co., a $2.5 billion distributor of laboratory equipment and supplies, doesn't conduct business on a digital exchange, but it does use EC's service to send orders directly to smaller suppliers' in-house enterprise systems. Before it started using the service, Fisher didn't even consider a company without electronic capabilities as a potential supplier. "Larger companies with the financial capability to install electronic-commerce systems had the advantage," said Carl Mathews, director of procurement. "We considered only them for private-label business and big volumes."