The service, part of a business-to-business portal Merrill plans to launch later this summer, marks the first time that a large nontechnology company will act as an aggregator for online procurement. Merrill will use the online purchasing service of Works.com to offer office supplies at discounts of 15% or more to some 400,000 small businesses that use Merrill's Business Financial Services. Merrill will also acquire a 10% stake in Works.com for an undisclosed sum.

If it catches on, Merrill's purchasing service could be another step in redefining the relationship between buyers and sellers in online procurement and in the nascent business portal market. "Businesses are trying to figure out what business portals should do," says Works.com president and CEO Bo Holland. "They don't need to offer news, stock quotes, or search engines. But purchasing management and leveraging buying power are core capabilities with solid business benefits."

Works.com is talking to other large companies about similar portal arrangements, Holland says. All of the company's customers, including those buying through the Merrill service, purchase office supplies from S.P. Richards Co., a unit of Genuine Parts Co. and one of the largest U.S. office products wholesalers. Merrill also plans to add other suppliers to offer online buying of PCs, travel, and possibly insurance.

Merrill Lynch is considered a laggard behind market leaders Charles Schwab & Co. and E-Trade Group Inc. in offering online stock trading-but on this front, it's ahead of the pack. Holland says the company signed its deal with Works.com earlier this year-just 12 hours after seeing his presentation. Adds Holland, "It's not the kind of thing you expect from a $35 billion company."