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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Joe Smith who wrote (14399)	11/5/1999 10:02:00 AM
From: Kaliico	Read Replies (1) \| Respond to of 57584

Freemarkets IPO coming soon this month, B2B, radar this folks... Company Description FreeMarkets creates customized business-to-business online auctions for the world's largest buyers of industrial parts, raw materials and commodities. We created online auctions covering approximately $1 billion worth of purchase orders in 1998 and $630 million worth of purchase orders in the six months ended June 30, 1999. We estimate that the resulting savings for our clients ranged from approximately 2% to more than 25%. Since 1995, we have created online auctions for more than 30 clients in over 50 product categories, including injection molded plastic parts, commercial machinings, metal fabrications, chemicals, printed circuit boards, corrugated packaging and coal. More than 1,800 suppliers from over 30 countries have participated in our auctions. Our current clients include United Technologies Corporation, General Motors Corporation, Quaker Oats, Emerson Electric, Allied Signal Corporation and the Commonwealth of Pennsylvania. Two of our clients accounted for 65% of our revenues during the first six months of 1999. Based on industry research and government statistics, we estimate that manufacturers worldwide purchase approximately $5 trillion each year of "direct materials" -- the industrial parts and raw materials that they incorporate into finished products. Because these direct materials are often custom-made to buyers' specifications, there are no catalogs or price lists to enable buyers to make price comparisons. The process of purchasing direct materials is further complicated by the fragmentation of supply markets and the importance of product quality in supplier selection. Because this complexity leads to market inefficiencies, we think that buyers of direct materials often pay prices that are too high. The Internet offers an opportunity to create more efficient markets for direct materials. As the number of Internet users has grown, large companies have increasingly adopted electronic commerce as a way to do business. Forrester Research estimates that United States business-to-business electronic commerce will grow from $109 billion in 1999 to $1.3 trillion in 2003, accounting for 90% of the dollar value of all electronic commerce by 2003. However, because of the complexity of direct materials purchasing, we believe that Internet technology alone cannot solve the problems faced by large industrial buyers. To solve these problems, we think that Internet technology must be combined with services that are customized to buyers' needs. We combine our proprietary BidWare Internet technology with our in-depth knowledge of supply markets to help large industrial buyers obtain lower prices and make better purchasing decisions. In a FreeMarkets online auction, suppliers from around the world can submit bids in a real-time, interactive competition. Our auctions are "downward price" auctions in which suppliers continue to lower their prices until the auction is closed. Before each auction, we work with our client to identify and screen suppliers and assemble a request for quotation that provides detailed, clear and consistent information for suppliers to use as a basis for their competitive bids. Our service, which we call "market making", creates a custom market for the direct materials or other goods or services that our client purchases in a particular auction. We seek to be the world's leading provider of business-to-business online auctions. Our strategy is to extend our client base in our target market of large purchasing organizations. We also intend to expand into additional product categories where our online auctions can generate savings for buyers and to add new functions and features to our BidWare technology to further automate portions of our market making process.