InformationWeek

October 16, 2000

Redefining Business:
Startup

Govern Locally, Buy Globally
It's hard enough to persuade experienced business buyers to switch to online procurement. A startup called GovStoreUSA is trying to convince an even more entrenched bureaucracy--local governments--to use online procurement to save taxpayers money.

GovStoreUSA signs bulk-rate contracts with vendors, allowing it to negotiate lower prices, then sell the items online to government agencies. "We can get a small city the same price as if it were a big city," GovStoreUSA president Tom Straub says.

But getting civil servants to change their buying habits may not be so easy. "Local governments often like to buy locally," says Thomas Davies, senior VP at research firm Current Analysis. "They have local suppliers that they trust."

GovStoreUSA is prepared for customers who are somewhat technology-resistant, relying on an interactive Internet software program from Cisco Systems to help first-time buyers learn the ropes, and a customer-relationship management system from Siebel Systems.

Straub says the prices his company offers are attractive enough that more than 1,000 local governments have enrolled in the program during the past six months.

Davies says the big test for GovStoreUSA will be whether it can convert those merely interested clients into loyal, frequent-buyer customers.

--Eileen Colkin

From Power To Phones
Add one more entity to the list of those competing with traditional telecommunications providers: a publicly owned electric company.

In this case, it's Taunton Municipal Lighting Plant, a utility in southeastern Massachusetts that has broadened its scope of service beyond electricity to provide telephone service, Internet access, and cable television.

The utility has created a subsidiary, TMLP Online Internet Services, that uses a fiber-optic network--originally built by TMLP to control the flow of power between substations--to offer services at cost. Already, TMLP Online has wired 21 schools with digital subscriber line Internet access, has built virtual private networks for local businesses, and is working with technology vendors to develop fiber-optic boxes to unify cable, Internet, energy, and telephone services and billing for consumers.

The utility also has its eye on other New England communities. Says TMLP Online director of marketing Scott Newall, "People are saying, 'I can't believe I'm getting this from my utility company.'"

--Eileen Colkin

Web-Era Swap Meet
ISolve lives by the adage that one man's junk is another man's treasure--even when you're talking $5 million worth of frozen chicken. But the company is finding that the Web's ability to bring together disparate buyers and sellers of surplus merchandise means it has to offer more than matchmaking. "The efficiency of the Web works against us," chairman and CEO Lance Lundberg says.

That's why iSolve guarantees that all goods listed on its site--surplus inventory of nearly any size, shape, or form--will be sold after 30 days, even if iSolve has to buy them at salvage value, with trade credits or cash. Some of the purchases: 800 pounds of pasta from Bestfoods, a car-painting device from Saab, and of course, the frozen fowl.

Partners such as Liquidation World, Canada's largest consumer-goods liquidator, and Thomas Publishing, which prints buying guides, help attract clients. Finding unique buyers is critical, Lundberg says, because the easiest part of the business is collecting a lot of, well, junk.

--Christopher T. Heun

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