Authorised to sell

Increasingly many companies are realising that trading on the Internet does equate to real business. But these companies have also realised that their static Web pages where customers can browse -- but not buy -- fall short of the aim of full automation of trade, and the resulting cost and time benefits that are possible.

As more customers choose to transact using the Internet, supplying companies win on the side of efficiencies with a reduction in account queries and speedier payment mechanisms. But not all Web sites are up to scratch or authorised to sell. Lizette McIntosh looks at the option of a sellside solution - essentially a virtual shop front for suppliers.

With a sellside solution, a supplier may elect to develop their company Web site into a self-contained "marketplace", offering an online ordering mechanism which the buyer is able to use and purchase items directly from the online transactive product catalogue and price list.

These product catalogues may be in the form of either customised product catalogues and price lists per buyer, or simply a generic product/price list ready for all customers to buy items and add these to their shopping trolleys.

The supplier may also opt to develop his/her system to the extent where they are able to integrate the orders with the buying company's stock and ledger systems, creating a fully integrated end-to-end e-business solution.

The cost of such a solution is generally quite high, as the supplier will not only have to invest in equipment, but also needs to pay for development of this solution over and above the cost of the software being used.

While a system can be developed in-house this is fraught with danger. If the software platform is not widely used, the supplier may create a situation where nobody else but the original developer is able to do any future work on the sellside solution.

Furthermore, if the development house does not survive in the long term, all the skill and knowledge will disappear and you're more likely than not going to have to purchase a new solution and start from scratch.

This is why open platforms like Microsoft are so popular because it uses ODBC "Open Database Connectivity" -- a widely accepted application interface for database access. Most developers are able to interpret and work with it and it means that you can take your development requirements from one development house to another without massive interruption.

There are greater advantages to using an externally hosted sellside solution. A company hosts a simple Web page on behalf of the supplier, in addition to offering all the services that are required for efficient e-commerce trading. The supplier may or may not have a Web page of their own already.

Neither the buyer nor the supplier requires any special software installed on their own computers. The only requirement is access to normal browser software, generally part of the computer's operating system.

The hosted sellside solution offers services to both buyer and supplier.

* Buyers can access a comprehensive supplier directory to find the supplier and products that he/she wishes to purchase.

* The supplier, through his membership of the marketplace, will have produced a product catalogue and a list price from which the buyer can select his products. If the buyer is not satisfied with the list price, he can request a quotation that may result in a trading relationship with the supplier.

* The supplier produces a price list that is uniquely linked to the buyer, and the buyer is able to place his order with the supplier by means of a simple on-line order form.

* The supplier is able to access his requests for quote or orders from the marketplace, and manage the statuses of both quotes and orders.

In essence, the supplier is renting a self-contained and comprehensive trading solution from the marketplace.

In addition, the format in which the product catalogue is hosted on the marketplace, allows the supplier to request a copy for any other trading hub. It brings life to the vision of create-once-publish-many scenario.

In this particular case the benefits are obvious. The investment usually takes the form of a monthly subscription fee based on what services the buyer selects. The monthly charge is an expense on the income statement, meaning that it is deductible from income for tax purposes.

Since no outlay is made in terms of hardware or software, the solution is not reflected as an asset on the company's books. This in itself offers an additional tax benefit to the company.

Realistically, suppliers need to reflect on the long-term electronic strategy for their company. It is fact that many corporate organisations are using e-procurement packages that require suppliers to produce an electronic product and price catalogue specific to that buyer.

When a supplier engages with one e-procurement driven buyer, it forces the supplier to employ different internal business processes. Instead of e-commerce creating efficiency and streamlined processes, having only one customer trading in this manner, is burdening the supplier's resources.

By employing a sellside strategy, the supplier is able to convert and align his entire business process to that of internet trading. It may mean a revision of some processes and a change of others, but in the long-term, e-trading brings about efficiency and savings.