InformationWeek
Defining The Business Value Of Technology
August 2, 1999
Food Suppliers Get Web Market
Site caters to specialty distributors
The NEI WorldCommerce service supports multiple pricing structures, letting distributors sell online using different prices for different customers. NEI is betting that such flexibility will appeal to fragmented industries in which much of the commerce is done without highly structured contracts.
"About 80% of the food-service market is small distributors that serve the mom-and-pop establishments as well as large hotels and other operators," says NEI executive VP and chief technology officer John Schachat. "Our pricing algorithm lets us match on the Web what the supplier does currently--different prices for different products." Among NEI's first buying customers are the Monte Carlo Resort in Las Vegas and the Smart Start chain of day-care centers.
NEI's key to success will be landing joint marketing contracts with distributors to get their customers signed up to buy online, analysts say. "Their technology's excellent, but these types of buyers aren't very Web-savvy," says Scott Latham, a senior analyst at AMR Research. "The distributors will have to show them the benefits of E-commerce."
NEI has a marketing and technology partnership with Stratton Warren Software, which sells an IBM AS/400 purchasing app used by 80% of U.S. hotels. Buyers already using Stratton Warren are linked to NEI WorldCommerce and can use the Stratton Warren interface to buy online.
Unlike many Web markets, NEI charges a monthly subscription fee rather than taking a percentage of each transaction. Both sellers and buyers pay fees based on the buyer's size or the number of items in the seller's online catalog. Monthly buyer fees range from $100 to several thousand dollars; seller fees start at $1,000.
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s the number of business-to-business marketplaces on the Web increases, providers are beginning to target not just industries, but specialized niches within them. Last week, Networld Exchange Inc. unveiled NEI WorldCommerce, an online market for specialized food distributors and the restaurants and other food-service businesses that buy from them.
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