Business-to-business e-commerce was supposed to signal the death knell for distributors, with direct buyers doing an end run around the middlemen.
That was a worry for manufacturers as well as the distributors, who can add value to the supply chain ranging from deep-rooted relationships with buyers and suppliers to the ability to break down and move large amounts of product.
The worst hasn't happened, however, thanks in part to companies such as vertical e-marketplace developer dChain Commerce Inc., of Champaign, Ill., and integration software vendor webMethods Inc., of Fairfax, Va. This week, the two will unveil an alliance that will create an e-commerce product for midmarket distributors.
The hosted application will integrate webMethods' B2Bi platform with dChain's suite of applications in a site that will support open standards such as Extensible Markup Language, RosettaNet and Microsoft Corp.'s BizTalk framework.
Distributors will be able to create hubs on a Web site to connect with buyers and suppliers, who will be able to do such things as review inventory catalogs, buy merchandise and track their orders. They'll also be able to integrate with their customers' existing enterprise resource planning systems. The product is available now; pricing starts at $20,000.
The product already has been used by Southern Marketing Affiliates Inc., an agricultural supplies distributor in Jonesboro, Ark. The company has created the SMALink Web site, which links SMA with its 300 suppliers and 2,100 dealers.
SMALink also is designed to be a source of information for farmers, with everything from an events calendar and agricultural news to weather and commodity prices.
The dChain and webMethods technology will allow midmarket distribu-tors to join in on the e-business wave at an economical price, said Chris Newton, an analyst with AMR Research Inc., of Boston.
"It addresses a point of pain for distributors," Newton said. "They can lose their place [without an entry into online commerce] and therefore lose their business."
In addition, it is in the best interest of distributors and manufacturers to keep everybody in the loop, Newton said.
"Distributors still provide significant value in the aggregation of supply and the aggregation of demand," he said.
Suppliers are not usually prepared to create their own costly distribution system or to establish relationships with end users. In addition, distributors are important in aggregating information from numerous suppliers that buyers can access.
The hosted approach introduced by dChain and webMethods is slightly different from that of other competitors, who license their software to distributors, Newton said.
Software companies such as Profit 21 Inc. and Interactive Business Systems Inc. are also helping distributors participate in the e-commerce arena. Profit 21, of Yardley, Pa., is an e-business software provider that concentrates on wholesale distributors; IBS, of Chicago, is also a software provider whose customers include distributors.
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