Business Week Article on PNLK and UPS
Can This French Startup Grab the Global E-Trade Market?
Nasdaq-listed PNLK 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,
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 Colardeau 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 |
