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BW ONLINE DAILY BRIEFING
GLOBAL WATCH
November 11, 1999
Can This Startup Grab the Global E-Trade Market?
Nasdaq-listed ProNetLink is taking on much-bigger rivals in a niche they're not
focusing on -- yet
The rush is on to push business-to-business electronic commerce into every
corner of the world. E-trade networks are starting to link up even the
smallest, most prosaic businesses from Barcelona to Bombay. One of the
leaders in this global market charge is New York-based ProNetLink.com
(PNL), which has signed on some 4,000 members in 53 countries -- mainly
small and medium-size companies -- to its new trading network.
PNL sees the global small-business market as the road to fast-track growth.
French-born Jean Pierre Collardeau, now the company's president, came up
with the network concept in 1997 after 30 years in foreign trade and
investment in Europe, Africa, and the U.S. He rounded up private funding
from European banks and other investors and two years ago merged PNL
into a Nasdaq-listed shell company (ticker: PNLK), whose shares trade
over-the-counter.
PNL is trying to exploit a niche that, for now, is being overlooked by bigger,
better-financed rivals such as Horsham (Pa.)-based VerticalNet and Walnut
Creek (Calif.)-based Commerce One, which measure their market caps in
the billions and are now among the hottest Internet plays on the stock
market. The reason is clear. Forrester Research figures business-to-business
online transactions will hit $1.3 trillion by 2003, a 30-fold increase over last
year's estimated $43 billion.
TIGHT SHIP. In this market, PNL acknowledges that it's a David going up
against Goliaths. It's only just starting to generate revenues and expects to file
its first quarterly financial statement in mid-November. A favorite of day
traders, its shares have spiked up as high as $8 in the last year, and now are
a little more than $2.
But Collardeau runs a tight ship. The company has a market value of over
$100 million. It has a staff of just 56 yet says it has spent only $5 million on
setting up its operations so far. "Being a businessman first and an Internet guy
second, Jean Pierre has been running this like a business, not like an Internet
site," says Chairman Glenn Zagoren, a veteran marketing and strategic
development executive for companies and governments who Collardeau
brought in to help run PNL.
The company also has found a niche with plenty of growth to it. It's adding
100 to 150 new members a day, mostly outside the U.S., and its site is
getting 2.5 million hits per month, Zagoren says. But how much business is
transacted is unmeasurable since dealings between members are encrypted.
The company thinks the potential is huge for small and midsize businesses
abroad because they account for most manufacturing but only a small share
of exports, both in the U.S. and abroad," Zagoren says.
SILKWORM POWDER. Zagoren aims to keep up the company's fast expansion.
The first executive of an Internet company to be invited on a U.S. overseas
trade mission, he recently explored prospects from Egypt to Dubai as a
member of a Middle East foray led by Commerce Secretary William Daley.
PNL also hopes to expand its global clout through a deal with UNCTAD, a
trade and development arm of the U.N. (see BW Online, 11/11/99, "The
U.N. Launches Version 2 of Its E-Trade Network").
With member businesses strung around the globe, peak traffic times on
PNL's site are during overnight hours in the U.S., from 11 p.m. to 5 a.m.
Eastern Time. On a recent day, offers to buy or sell posted by users reflected
the diversity of the network's marketplace. Businesses in countries from
Sweden to India were offering to buy or sell electronic parts, diffusion
pumps, children's socks, dried silkworm powder, and dozens of other
products.
For a base fee of $29 per month, PNL members are entitled to an online
catalog page that they build themselves, using a template for text and photos
of their products. Basic services range from a searchable global database of
3.2 million companies to trade documentation forms for 122 countries that
users download.
"INCREDIBLY LOW." By customizing their pages, members are able to log on
and quickly scan a display of prescreened trade offers related to their
businesses as well as daily news, currency quotations, and other information.
Green or red buttons show whether key trading partners are online. If green,
the partners can converse online in real time. Such time-saving features are
important in many countries where Internet access is still costly. For
additional services, such as 15-minute video presentations about member
companies that are stored online, fees range up to $6,500 a year.
The monthly price is "incredibly low for a company to market itself globally,"
Zagoren contends. PNL set the price expecting that members "will buy up
into the product" as they become more comfortable with the Internet, he
explains. Other revenue sources include advertising and commissions from
strategic partners such as United Parcel Service, whose secure documents
are accessible on-site on a click-and-ship basis. For members who want to
sharpen their business skills, the network's online television station, PNL-TV,
is starting to offer seminars and training events and is working with
universities to provide educational programs.
PNL figures its international push will give it a competitive advantage over
bigger rivals, which it feels are still heavily focussed on the huge U.S. market.
While its big rivals "are duking it out, spending millions to establish their brand
names, we are establishing our international footprint," Zagoren says. A brave
strategy in theory. But the big companies are moving abroad, too, so PNL
had best not tarry.
By John Pearson in New York
EDITED BY THANE PETERSON |
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