InformationWeek: The Business Value of Technology

Works.com is the first online procurement offering that essentially asks buyers to change suppliers in exchange for efficiency and savings. Works.com will offer office products from S.P. Richards Co., a unit of Genuine Parts Co. and one of the largest U.S. office products wholesalers. This fall, Works.com will expand to IT peripherals such as printers, but it hasn't yet finalized a deal with a wholesaler in that industry.

To date, most procurement applications and services connect buyers with retailers or distributors that sell mainly to businesses, such as Boise Cascade Office Products, Corporate Express, and Office Depot. Works.com gives buyers a direct link to a lower-priced wholesaler through an online intermediary.

S.P. Richards "isn't selling direct; they're selling to us," says Bo Holland, Works.com's president and CEO. "It's the Amazon.com model. We take ownership of the transaction, but we never physically touch the products."

Works.com is aiming its service at companies with 250 to 500 employees, whether small to medium-sized businesses or branches of larger companies. The Works.com catalog of 20,000 products includes furniture, janitorial products, and office supplies.

Works.com will charge the buyer $1.50 per order for its service. Its most direct competitor at the low end of the market will probably be fellow Austin, Texas, company Trilogy, which sells Buying Chain procurement software for $1,000 to $10,000. Works.com runs on an all-Microsoft platform including Active Server Pages, Windows NT, and SQL Server.

Works.com is betting that the ease and efficiency of buying online will spur purchasers to forsake their current suppliers. "With office products, we're not finding that those relationships run very deep," says Holland. "It's not like strategic production suppliers. People are eager to switch if they can save money."

Some observers agree. Asking buyers to switch suppliers is "a little bit of a risk now, but less of a risk over time," says Forrester Research analyst Bob Chatham. "As online bidding and auctions become more popular for business-to-business buying, there will be less and less loyalty to specific suppliers."