BOSTON (06/15/2000) - Lots of companies now regularly buy commodity products like PCs and printer cartridges on Internet-based exchanges.
Services, on the other hand, have been a tougher sell. At issue is the quality of service providers. Many of the new digital marketplaces list vendors without evaluating them. Instead, the sellers simply pay a listing fee, and they're in.
But now BizBuyer.com Inc. in Santa Monica, California, hopes to instill a bit more credibility into the online buying process.
A year-old exchange that specializes in Web site design, e-commerce projects and other high-tech services, BizBuyer.com doesn't only evaluate suppliers, it also interviews three to five of the suppliers' customers to gather information about whether suppliers completed projects on time and at the contracted price.
BizBuyer.com also interviews the suppliers about the number of employees they have, their qualifications and their professional certifications, among other things.
Beginning this month, Bizbuyer.com, which already provides users with software tools to craft requests for proposals and to compare bids online, is also promising to mediate disputes between buyers and sellers and to reimburse customers up to US$5,000 for unsatisfactory performance by a prequalified vendor.
BizBuyer.com also will give sellers information about why buyers may have rejected their bids. Buyers who delete bids are required to provide information on why they did so. This information is shared with all vendors participating in the bidding process.
"There's a trust element we need to build," said BizBuyer.com CEO Bernard Louvat.
Sometimes referred to as the "eBay for B-to-B," BizBuyer.com handles about 25,000 bids per month for services that range from installing telephone systems and hosting Web sites to designing and developing Web sites. BizBuyer initially targeted businesses with 20 to 500 employees, and its average transaction value is now about $8,000. But Louvat said larger companies are now tapping into the exchange, which is free to buyers. Sellers pay a transaction fee that ranges from 1 percent to 10 percent of the total value of the services purchased.
Vince Borrego, information technology manager at Epocrates.com, a San Carlos, California, company that delivers medical information to physicians over wireless devices, used the exchange to buy a telephone system and installation services.
"It was pretty amazing. I received five bids back within an hour," Borrego said. "It easily saved me a month in finding vendors." He said he chose a provider from the Los Angeles area and subsequently contracted it for additional services.
Borrego said the money-back guarantee will play well with security-conscious IT managers.
"It all comes down to security when you're selling to IT people. But so far, I haven't had any problems," he said.
Steve Simpson, communications director at Adoto Inc., a Seattle-based startup that develops Internet-based software for the fashion industry, said BizBuyer shaved weeks from the process of finding and hiring suppliers of software development, telephone installation and IT recruiting services.
"What they do is save you time in prequalifying vendors and then letting you compare them apples to apples," Simpson said.