Publication Date:
Wed, 2001-01-03 18:00
Article Image:
| Aaron Martin |
The Internet is already changing the way the building industry operates, especially in the areas of purchasing, financing and shipping. But it has only just begun for small businesses.
Business-to-business (B2B) marketplaces are particularly useful for small businesses, which represent a large percentage of the residential building industry. Unlike large companies, small businesses simply don't have the buying clout, time or resources to find the best deals out there. But because of its vast networks and information resources, the Internet has a powerful equalizing effect on all businesses, essentially leveling the playing field or putting small businesses on "equal footing" with large companies.
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Currently 62% of contractors
use the Internet for procurement
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According to the Construction Industry Manufacturing Association (CIMA), approximately 62 percent of contractors use the Internet for procurement. That number will keep rising at a dramatic speed because B2B marketplaces offer a compelling value proposition by solving fundamental business problems on both the buyer and supplier sides with no additional cost or long term commitment.
Buyers benefit from improved efficiencies and an automated ability to comparison shop. Suppliers dramatically reduce the cost of customer acquisition, lower transaction costs and access to new markets. B2Bs create efficiencies to save buyers and suppliers both time and money, representing a permanent gain in productivity in today's highly competitive market.
EqualFooting.com, a B2B online marketplace that places small manufacturing and construction businesses on "equal footing" with large companies in purchasing, financing and shipping, is one example of a B2B marketplace that is transforming small businesses' procurement and financing methods.
How B2B Marketplaces Work
There are two main B2B pricing options that builders can chose from: fixed pricing (essentially catalog-type sales) and variable, or dynamic, pricing (which includes both exchanges and auctions). An auction is either one buyer and many sellers, or one seller and many buyers, whereas an exchange indicates many buyers and many sellers.
Fixed pricing models (like EqualFooting.com) essentially offer direct comparisons on similar products and services, much the same way a travel agent operates. When you're planning a flight, you tell a travel agent (through phone or a Web site) what you're looking for, the travel agent gives you a list of all your options, and you pick your best option.
In the same way, you can tell our customer advisors what product or service you're looking for, and immediately get a comparison list of our pre-negotiated prices and rates from our vendors. The service is free to buyers (suppliers are charged a small commission fee).
Purchasing. Such a marketplace puts the purchasing power right into the hands of the buyer. Before the Internet, builders and contractors, like many others in the manufacturing and construction industry, had to spend a lot of time leafing through catalogs and making calls to find the best deals. A process that took between two and three hours before can now take minutes.
(EqualFooting.com started by focusing on industrial supplies - including everything from cutting tools, electrical and lighting, to pumps and motors. We worked with more than 3,000 suppliers to post more than 250,000 items in our catalog. To meet the needs of the manufacturing and construction sector, we have also created a Request-For-Quote system to help locate and purchase hard-to-find or specialized products.)
Financing. All small businesses know how time-consuming it is to get a loan. Online financial marketplaces change all that. Online banks don't suit everyone's needs, but online financial marketplaces give you access to established, offline financial institutions, they just expedite the application and approval process. For example, our service offers access to equipment leasing, SBA loans, lines of credit, and terms loans through a network of national lenders.
Shipping. Our service also offers an inexpensive Shipping Center. Customers can issue a simple "quote request" and have one of 30 national shipping partners such as Emery Worldwide and Roadway Express bid on their business. You don't have to be a big business any more to secure deep discounts for full load, less-than-load (LTL) and express delivery products to move anything anywhere in the United States.
The most important point here is that B2B sites offer builders a whole solution to an inherent business problem. If you find the item you want, how do you get the best price possible and how do you get it from Point A to Point B? Purchasing, financing and shipping services can be procured independently, but combined they can save you even more time and money.
What to Expect from B2Bs in the Future
We expect most builders to integrate the Internet deep into their supply chains and business processes. We have already witnessed an acceleration of companies adopting this model, and believe that this process will transform the way they buy, sell and collaborate with buyers and sellers.
B2Bs will fit very specialized needs of each particular industry. Within the next few years, builders can expect to link directly from a B2B marketplace to their back-end financial, accounting and human resource systems (or ERP). For example, an online purchase will automatically be reflected in your financial system and your purchase orders, and it will also trigger adjustments in your inventory management system. Then your entire team will know exactly what was ordered and when it will arrive.
For more information, contact:
Aaron Martin
Co-founder and Chief Business Development Officer EqualFooting.com
22977 Eaglewood Ct.
Suite 100
Sterling, VA 20166
Phone: 877-55EQUAL
www.equalfooting.com [1]
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