Those who build computers, appliances and other components have enough trouble staying current without becoming mired in a long purchasing and parts acquisition process. Now, an electronic commerce facilitator has found a way to clear this bottleneck and decrease the time from when an idea leaves the drawing board and when it comes to rest in the customer’s hot little hands.
TRADEC.com provides a liaison between a manufacturer of a component and the multitude of suppliers that make them tick. Consider that a typical manufacturer may need to move procurement information out to several hundred of these suppliers, with bids for each individual component. In the past, procurement was accomplished through the fax and phone; creating a logistical nightmare.
“Any widget that you build will be held back by the slowest member of the supply chain,” said John Abe, founder and chief executive officer. With the automated browser-based distribution of each bid request, response can be instantaneous and, as a result, production time is decreased.
This isn’t an open process. The request only goes to the vendors that the buyer has designated part of the supply chain and increases the efficiency of the process that is already in place-rather than opening it up to anyone who might bid.
TRADEC.com generates its revenues through subscriptions. Buyers pay $1,299 a month for a three-seat license, while sellers can sit at the table for a one time $99 fee. Should the seller want to utilize the full power of the system, a $999 monthly service is available.
“This is a very fast moving industry,” said Abe. “Companies form very tight relationships with a defined set of suppliers; they only deal with a handful of people rather than the world at large.” He goes on to say that TRADEC.com’s target market represents a $15 billion to $20 billion slice of the $600 billion electronic parts supply pie.
The company received its first and only round of venture capital in March 1998; $3.7 million from Novus Ventures, Graystone Venture Partners and Mitsui.
Abe called the funding process “brutal” and in the beginning the company had so little money it was located in a converted hotel down the way from drive-up divorce attorneys and custom bikini manufacturers.
“We were pitching this idea to VCs when they were funding a lot of online catalogs,” says Abe. “Our target customers don’t pay catalog prices. This is a dynamic market that deals in large quantities that change every day. Then we got lucky — Novus Ventures had a managing partner who understood what we were doing right away.”
“They have broken the code when it comes to business to business functionality,” said Dan Tompkins, that Novus Ventures partner. “They are already generating massive revenue. This is a great market opportunity that is getting stronger every month, and they are using the same equation that has succeeded in other market segments.”
Company Name: TRADEC.com
Address: 84 W. Santa Clara St, Suite 500, San Jose CA 95113
Phone: 408-291-2565
Fax: 408-291-2560
Contact e-mail address: kamal@tradec.com
Web address: www.tradec.com
Investor: Novus Ventures, Graystone Venture Partners and Mitsui
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