Advantage Adds Business Portal to Its Stable

Advantage Group (NZSE: ADV) today unveiled advanced plans for New Zealand’s first Internet procurement service.

Code-named Venice, the portal will target New Zealand’s 246,000 small- and medium-sized businesses, helping them increase efficiency and reduce operational costs by streamlining purchasing over the Internet. As a business supply chain network, Venice will be Australasia’s largest “virtual marketplace” and represents a new venture for Advantage, automating and managing business purchasing.

Advantage’s first partner in the portal is the Blue Star Group. Subsidiary companies will place their entire catalogues on Venice, giving business customers online access to a wide range of goods and services including office products and business consumables. Furthermore, Blue Star Group has agreed to take a significant equity position in the venture.

“In simple terms it’s like combining a business directory with full catalogues, price and stock lists, then adding ordering and payment systems, advice, business news, financial services and news, travel services and other business information,” says Advantage Chairman Evan Christian. “Buying and selling become vastly more efficient. Venice will make it faster, cheaper and easier for businesses to buy pens, paper, printer cartridges, light bulbs, cleaning supplies and coffee and a wide variety of other products, parts and services.”
In addition to providing online access to catalogues, Venice will also offer member benefits and vertical solutions.

Business-to-business e-commerce tipped for exponential growth

“Business-to-business e-commerce is the heartbeat of the new economy and eProcurement is a critical application within that,” says Alastair Grigg, General Manager, eProcurement. “E-commerce experts report business-to-business purchasing on the Internet will reach more than ten times the volume of online consumer purchases. Goldman Sachs, for example, anticipates business-to-business e-commerce and will reach $US 1.5 trillion by 2004. More powerful software applications and the move towards Internet-based procurement systems are spurring this growth.”

Other analysts concur. eStats reported that the global business-to-business e-commerce market is set to boom, and tips Europe and Asia Pacific as the markets next to experience it. Furthermore, according to ACNielsen NetRatings, New Zealand has the highest rates of Internet penetration in Asia Pacific (equal with Singapore) with 54 percent of the population hooked up to the Internet.
SME poised for significant savings

Experts also concur about the potential of electronic purchasing systems. According to Forrester Research, some 28 percent of enterprise businesses already have Internet-based purchasing applications and this is predicted to grow to 42 percent next year. Furthermore, those companies already using procurement portals report cost savings of between 25-35 percent in sourcing and order placement.

“eProcurement will save New Zealand businesses hundreds of millions by replacing an elaborate network of personal contacts and triplicate forms with an electronic exchange where trading can happen almost instantly,” says Grigg. “Dramatically lower administration and operational costs, increased leverage with suppliers and providing employees with the ability to self-service means that the procurement portal will be a compelling choice for businesses and organisations. We consider that there is significant potential for such a site within the small to medium enterprise market in New Zealand.”

“The Internet is a great leveller,” says Tom Sturgess, Blue Star Group CEO. “In New Zealand, small and medium businesses account for 93% of organisations with over ten employees. Venice will provide these organisations with a depth of resources previously only available to larger customers with expensive customised applications.”

“The New Zealand market is already familiar with Internet technology,” says Grigg. “As the statistics show, New Zealand has the highest rate of Internet penetration in the Asia-Pacific region, which is tipped to lead the next stage of global business-to-business e-commerce growth, as well as the highest rates of EFTPOS penetration in the world.”

“Everyday, businesses need to buy goods required for maintenance, repair and operations,” adds Grigg. “They are already likely to have Internet access and EFTPOS terminals, consider both to be essential business tools and are ready to avail themselves of the inherent cost savings of the Internet. Goods that we expect will be sold through Venice include office products, IT and IT consumables, engineering parts, café supplies, cleaning supplies, shipping services and many others.

“eProcurement allows businesses to combine their purchasing power to achieve better pricing. Furthermore it will provide access to online services such as electronic bill payment, online delivery tracking and credit checking. It will also provide a platform to enable application service provision (ASP) in areas such as accounting, HR, expense claim processing and customer relationship management.”

“As one of Australasia’s largest web services companies, e-commerce is a core competency for Advantage,” says Christian. “The Venice project is further proof that we are serious about being an innovator and leader in this rapidly evolving and expanding category of business-to-business e-commerce. Speed to market is absolutely critical in Internet-based businesses and having identified the business need for such a service we’re equipped to respond to market demand very rapidly.”

Advantage plans to unveil more details about its procurement portal early in the new year.

Background

Advantage Group Limited, an NZSE listed company, is a leading supplier of e-commerce and transaction processing solutions in New Zealand, Australia and throughout the Southern Hemisphere. The company has three business units:

business-to-business e-commerce, retail solutions and point-of-sale equipment. It provides web development capabilities, software development, transaction processing and funds transfer capabilities to enable end-to-end e-commerce solutions.

ENDS

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