Great Sites: EnronOnline

Lots of companies talk about using the Internet to find new revenue sources, but Enron Corp. has done it. The company's success in conducting existing business online spurred officials to treat the Internet as a launching pad for trading new commodities. Enron is the clear leader in a race to develop online trading in commodities such as telecommunications bandwidth, just as it has done with natural gas and electricity. Since launching EnronOnline in 1999, the company has added nearly 1,700 products in more than 20 markets.

EnronOnline took an old process--buyers and sellers phoning Enron traders to negotiate large purchases or sales of commodities--and reshaped it for the Web to make trades faster and better. Better, in offering more insight into real-time prices and current commodities environments. Faster, in letting traders close about five trades a day instead of the three a week typical of the late 1980s and early '90s.

Before launching the online exchange, Enron priced trades about 30 times a day; now it can price them 30 times a minute. Of course, the resulting price advantage for buyers means potentially smaller margins on trades for Enron, but the company embraced the new channel before a competitor could. About 60% of Enron trades are now done online.

One benefit of participating in EnronOnline is ease of use. After establishing a password and ID and a line of credit with Enron, a user can log on to EnronOnline and click a button to make trades. The site provides online answers to commonly asked technical and trading questions. Participants also can E-mail questions to EnronOnline support personnel or call the support center. A participating company also can manage its own account online by appointing a "master user" from among its ranks to whom Enron grants administration privileges. One drawback for some buyers, transporters, and producers is that they all must buy from or sell to EnronOnline. It's a one-to-many site, meaning all trades go through Enron.

The company's online business has far exceeded expectations. "We thought we'd do about $50 billion in transactions for our first full year of operation," says a company spokesman. "Instead, we did about $340 billion." In May, EnronOnline reported that it had completed its 1 millionth transaction.

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