Office Depot Enters Into New B2B E-Commerce Deal

Office Depot, Inc.has entered into a strategic partnership with PurchasePro.com, a provider of business-to-business e-commerce solutions, that is aimed at helping small and medium-sized businesses initiate online commerce.

Under the terms of the agreement, PurchasePro.com will be Office Depot’s recommended Web-based business-to-businesse-commerce solution. Office Depot will be featured as the exclusive preferred provider in the PurchasePro.com business-to-business e-marketplace.

The PurchasePro.com product will be featured in Office Depot’s 800 stores, and offered by the sales force of Office Depot’s Business Service Division. PurchasePro.com will also show up in Office Depot’s advertising and on its Web site. “We intend to be the dominant e-commerce provider for growing businesses,” said Charles E. Johnson, Jr., CEO of PurchasePro.com.

The PurchasePro.com e-Marketplace will enable Office Depot customers to bid, buy, advertise and sell, as well as offering them a suite of reports geared toward small business efficiency.

“Our goal is to create a dynamic marketplace where Office Depot customers can buy and sell goods and services from each other,” David I. Fuente, Chairman and CEO of Office Depot, commented.

Rapid Developments

As industry-specific e-marketplaces emerge, buyers and sellers are finding each other more effectively and at breakneck speed. Essentially, the only thing that distinguishes an e-marketplace from traditional marketplaces is the technology. As more sellers load their product catalogs onto marketplace sites, the competition is heating up to get to the buyers first.

Office Depot and PurchasePro.com may have put themselves in the right place at the right time. In 1998, business-to-business Web sites exchanged $43 billion (US$) in revenue, compared with $8 billion for online retailers, according to Forrester Research.

By 2003, Forrester projects business-to-business Internet sales to exceed $1.3 trillion, or 9.4 percent of all business-to-business trade.

Office Depot’s Commitment

As part of the new partnership, Office Depot will make an equity investment in PurchasePro.com. The two companies will share in the transaction fees, subscriptions and advertising costs.

Additionally, the companies have agreed to conduct a nationale-commerce seminar campaign aimed at small and medium-sized businesses. Details have not been released.

Office Depot owns 500,000 shares of PurchasePro.com’s stock, and has rights to acquire up to 600,000 additional shares in the company.

The decision to target small and medium-sized businesses may be a wise move, since most have Internet access (75 percent), but are not currently doing business online. Forrester expects 67 percent of that $1.3 trillion in inter-company trade by 2003 to come from small and medium-sized businesses.

Additional research from Cahners In-Stat Group shows that the 10 million small businesses in the U.S. represent 98 percent of all the nation’s employers.

About PurchasePro.com

PurchasePro.com provides Internet business-to-businesse-commerce in its public and private e-marketplaces. Some of its members include MGM Grand, Bellagio, Carnival Cruise Lines and Mirage.