announced a full range of purchasing services for small and mid-sized
companies; these are typically companies with between ten and 500 employees.
OutPurchase.com offers more than a connection to a purchasing marketplace.
They promise the same services that larger companies get from in-house
purchasing departments, including
- Vendor Qualification
- Fulfillment Management
- Decision Support
- Returns and Servicing
company develops technology and employs purchasing professionals to qualify
vendors and track their performance history. The staff also negotiates
aggregated pricing and handles returns and service issues for their customers.
The company monitors the quality and responsiveness of its suppliers and
CEO Jim Stovell proudly relates that they have already removed a Fortune
500 company from their approved vendor list because of a poor performance
company emphasizes access to high quality, competitively priced indirect
materials, reliable and accessible customer service, and on-time delivery
of goods and services. Every customer is assigned an account manager who
helps familiarize the customer with the website, does set up and training
(over the phone), and is available for assistance when needed.
providing a large buying base and handling service calls for its members,
OutPurchase.com has been able to land important partnerships with companies
like Boise Cascade and Ingram Micro. American Express is another partner
(and a strategic investor), attracted to OutPurchase.com by opportunities
to integrate its financial services with a purchasing solution that has
generated significant early adoption. American Express and OutPurchase.com
will be jointly marketing their combined solution to American Express's
substantial base of small and mid-sized business clients.
addition to the benefits provided to its customers OutPurchase.com offers
value to suppliers as well, in the form of consolidated and repeatable
access to an enormous but fragmented marketplace.
forward the company intends to introduce other services that fit into
its goal of providing its customers with the "world's greatest purchasing
department." OutPurchase.com, which was founded in 1999, claims 30% month-to-month
customer growth and over 80 employees. The company's major source of revenue
is transaction fees on purchases. OutPurchase.com makes a profit on individual
transactions and is on track toward corporate profitability.
is creating a new business model. Unlike companies that offer access to
a purchasing marketplace - whether one of their own like Dell or Staples,
or a larger aggregated market such as those offered by Concur or works.com,
OutPurchase.com manages the entire purchasing process for its clients.
As new features roll out it will prove to be a formidable alternative
to the model used by many companies of having an office manager be responsible
for ordering and a programmer responsible for buying computers.
We expect that many small and mid-sized companies that are now looking
at joining digital marketplaces as the next step after bookmarking half
a dozen different supplier sites, will be very attracted to OutPurchase.com.
The keys to success will be, first, persuading smaller companies that
there is real value to outsourcing a function that they had no expectation
of creating in-house and, second, having the flexibility to respond to
the specialized requirements of the larger companies in their target space.
The value propositions here are reducing the amount of time spent managing
the vendors and the purchasing process, lowering costs of goods, improving
access to quality suppliers, and a simplified procedure for handling service
issues, especially with computers. Any company that has been handling
all of this themselves will find it worth their while to investigate OutPurchase.com.
Discuss with this service provider the product and service categories
that are currently under development to see whether they also promise
value to your company.
note that one difference with the digital marketplace model for smaller
companies is that OutPurchase.com will not provide an easy route to entering
e-commerce as a supplier. A company planning to enter into e-commerce
might choose to be a purchaser in whatever marketplace it becomes a supplier
on, if only to understand the experiences of its customers. This might
limit the appeal of OutPurchase.com to these companies, but even they
might still be lured by the added value that OutPurchase.com promises.