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May 8, 2000

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Worldwide E-Commerce: It's More Than A Web Site

U.S. companies seeking to do business overseas must use different strategies

By Beth Bacheldor

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    U nited Airlines Inc. added E-commerce capabilities to its Web site in the United Kingdom in early March. Just 30 minutes after the enhanced site debuted, a British family of five purchased round-trip tickets to Hawaii.

    GlobalFoodExchange.com, an Atlanta E-marketplace that serves the multibillion-dollar worldwide food industry, began operating earlier this year. One of the first deals made on its Web site was between two countries on different continents: A company in Uganda sold about $60,000 worth of perch to a fish-processing company in Colombia.

    The Internet offers the ability to communicate or do commerce anywhere in the world. And American companies are mobilizing to expand their online successes into the global market.

    "There's a lot going on in E-commerce internationally, particularly if you look at Europe and Japan," says Kevin Boyd, United's director of Web development. "While things overseas have been a little slower than the United States, the excitement that has been generated there has certainly caught our attention. And since we're a global company, it only makes sense we expand our E-commerce globally."

    But companies doing international business over the Internet say succeeding at global E-commerce requires more than putting up a Web site. The Internet's ubiquitous nature has the potential to reach customers in Paris, Texas, and Paris, France. But building a global E-business calls for a host of strategies that include partnering with or acquiring foreign companies, assembling sales and support operations overseas, understanding new laws, languages, and cultures, and implementing technology that can sustain a global endeavor.

    "This isn't just about building a cute little Web site," says Christopher Swann, chief operating officer and co-founder of GlobalFoodExchange.com. Swann and co-founder Mark Moore, president of the exchange, always planned to build an international business. But Swann admits that most transactions involving foreign companies have been opportunistic rather than planned.

    "If we really want to ramp up globally, we're going have to reach out and have people on the ground," he says. "This is a very sophisticated, difficult proposition that's much more capital-intensive with a much longer gestation period."

    GlobalFoodExchange.com has started to ramp up. About a month ago, it opened its first overseas office in Guadalajara, Mexico; it plans to open offices in Brazil, Chile, and Argentina in the next six months.

    The company is also pursuing partners overseas; this month, it expects to unveil a partnership with a group of Asian entrepreneurs who've been interested in setting up a similar exchange. GlobalFoodExchange.com is also negotiating with European partners, Swann says.

    "Initially our intention was to grow organically," he says. But partnering makes more sense "because of the speed with which business-to-business models have taken off and are rapidly being expanded to overseas markets," he says. "We can bring the proven technology to the table and partners can bring business contacts. It is a one-plus-one-equals-three scenario."

    E-Steel Inc., which operates an exchange for the steel industry, is also partnering to penetrate international markets. Last month, it unveiled an alliance with Ispat International N.V., in Rotterdam, The Netherlands, a member of the LNM Group, one of the world's largest and fastest-growing global steel producers. Under the agreement, Ispat International will set annual tonnage targets and use E-steel.com for marketing products. Ispat also has made a minority investment in E-Steel.

    Michael Levin, the chairman, founder, and CEO of E-Steel, says partnering lets the company "think globally and act locally." That's important in the steel industry, because the United States accounts for just 12% of the worldwide market. For an exchange to succeed in such an international market, Levin says "you had best be prepared for a global and international business."

    E-Steel is also building its presence in the Asian market. In February, it disclosed plans to develop a steel marketplace with two top-tier Japanese trading companies, Mitsui & Co. and Mitsubishi Corp. The business-to-business E-commerce Web site, slated to go live July 1, will be designed specifically for Japan's domestic steel industry. The companies say the goal is to handle 5 million metric tons of steel transactions annually through the Web site. The Japanese site will be linked with E-Steel.com, Levin says.

    USBid.com Inc., a Melbourne, Fla., online auction site for excess electronic inventory, earlier this year wanted to expand into European markets and decided its best bet was via merger and acquisitions. In February, USBid.com acquired Worldbase.com in Miami, a global marketplace for electronic components; in March, it merged with Now! Components Ltd., a Kettering, England, provider of new, excess, and surplus passive electronic components.

    continued...page 2

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