Feature: Online b2b marketplace in the Appliancezone

A number of leading players from the online b2b marketplaces and supply chain management sectors have joined forces to launch Appliancezone, a dedicated b2b marketplace targeting Europe's £50bn home appliance and consumer electronics industries.

Appliancezone, which has already secured financial backing from Netherlands-based pan-European venture capital fund NeSBIC Cte Fund, has been set up by b2b e-procurement software provider, Ariba; intelligent e-business and supply chain management solutions provider, i2 Technologies; and Andersen Consulting who will be providing chain management expertise.

The new e-marketplace aims to reduce the inefficiencies in the supply chain which its estimates cost the industry £10bn a year, and claims that it will generate more profits for retailers and manufacturers whose growth is at present restricted by low profit margins, rising overheads, and intense competitive pressure.

Retailers, which on average deal with over 50 suppliers each, will be able to cut their order processing delays and costs through a single link to manufacturers. The portal will also reduce transport and warehousing costs through collaborative planning to cut down on inventory in the supply chain.

Appliancezone will also create an online trading community connecting manufacturers and retailers, and enabling the exchange of goods, services, and industry knowledge.

Craig Ibsen, a former executive from AB Electrolux of Sweden and Maytag of the US, has been appointed CEO of the new venture.

According to Ibsen, “several million dollars” were invested in the company's first round. “There were two institutional investors, NeSBIC, who lead the round, and AC Ventures, the VC arm of Andersen Consulting.”

Ibsen and the company's founding members are the only other shareholders in appliancezone, though the VCs have the majority holding. “We lost it in this round,” said Ibsen commenting on the founders' majority control of the business. “The institutionals do hold the majority of the equity, and now that we've also implemented an employee share scheme, we're being diluted even further.”

Ibsen added that negotiations are currently underway which could result in Ariba and i2 also taking stakes in the company. “They are major software vendors, and we are one of the first implementations that they have achieved in Europe. So, there is an interest for them to further the partnership with our market - though we don't really need any further funds at the moment.”

Though Ibsen was reluctant to reveal how much was invested at this stage, he said another substantial fundraising is expected towards the end of the year. “I'm already talking to a number of VCs that I know. We're looking to raise between EU20m and EU30m. We're launching this summer in the UK, and will be scaling our technologies into Europe in the early part of next year, which is where the additional fundraising will be necessary.”

He added that a third round is envisioned next year, before the company would be ready to float sometime in 2002.

“Our main goal at the moment is to show transactional value very quickly. The problem with some of these marketplaces here and in the States is that they have low transactional volumes. We've immediately focused on signing up with manufacturers and retailers, so that when we launch we are immediately transactional.”

Ibsen said that the portal will be launched with two of the world's largest players in the electrical consumer space, and that they are in talks with a number of retailers, including some in the online b2c space.

Appliancezone will be piloted in Europe throughout the summer, before a formal launch in October.