Dell Computer Corp. today announced it will launch an electronic business-to-business marketplace where its largest corporate customers can sell a variety of branded products and services alongside of Dell's computer products.
On the buy side, the new Internet exchange is tailored to small and medium-size companies. These companies are typically reached by big companies through more expensive means, such as direct salespeople, or not at all.
"The Dell Marketplace is an online tool for our customers to conduct business with one another. Dell is the mall owner, and we're allowing our stores to open up stores behind us," said John Hampton, director of new ventures at the Round Rock, Texas-based computer company.
For now, three suppliers, 3M Co., Pitney Bowes Inc. and Motorola Inc. are involved in a pilot test of the marketplace, which is scheduled to go live at the end of next month.
The Dell exchange differs from countless other announced business-to-business exchanges for office supplies and nonproduction goods in that suppliers and buyers can execute online transactions according to predefined trading rules.
"Some customers have special arrangements with different customers," such as customized product pricing or shipping fees," said John Hampton, Dell's director of new ventures.
"We've built in technology at the marketplace to identify the customer and pass that on to the supplier, which can then give that customer a personalized buying experience. It's a personalization model not just in terms of content but [also]for the entire commerce process," he said.
For example, an electronics supplier selling projectors on the exchange might feature product benefits such as light weight and high-image quality for a less sophisticated buyer but display all of the technical specifications for a buyer who identifies himself as an engineer.
This "virtual showroom" capability is provided via Austin, Texas,-based Exterprise Inc.'s ActiveMarket software, which is embedded in the Dell exchange. 3M's Office Ergonomics products will be the first to use this capability.
One of the key advantages of the collaborative-selling feature will be the ability to take a more proactive role in marketing products online, said Paul Mullaney, e-business manager at 3M. Other marketplaces, by contrast, allow for only posting static product catalogs, which all customers, regardless of their size or industry, see the same way.
Initially, Hampton said, Dell will charge transaction fees for each order executed on the exchange. But these transaction fees, which will vary depending on the products sold, will be phased out as the exchange offers more value-added services for which it can collect other fees.
Looking forward, Dell plans to incorporate credit scoring and financial services into the marketplace. It will also offer systems integration services, such as helping suppliers create electronic catalogs and, eventually, linking regular trading partners' internal enterprise systems through the Dell Marketplace.
"We believe the next phase will be interconnected business networks connecting internal processes within a business to each other, such as connecting the finance organization of one company to another's to do accounts payable and accounts receivable processing," Hampton said.
David Yockelson, an analyst at Meta Group Inc. in Stamford, Conn., said the Dell Marketplace offers a "complete Net market operating system" for buyers and suppliers to trade complex, branded products and services online. In doing so, he said, "Dell has put a stake in the ground for delivering a value-based marketplace."