December 22, 1999 Web posted at: 2:09 p.m. EST (1909 GMT) by Elizabeth Heichler

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(IDG) -- Jane is a Baton Rouge paralegal. Vince is the computer manager at a Silicon Valley Web startup. They've both found themselves wearing the purchasing hat at a small business, and they've both become part of an e-commerce phenomenon that has all the sex appeal of paper clips and postage meters, but is an alluring proposition nonetheless.

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The Web has become a wealth of sources of everything from copier paper to 401K plans for small businesses.

The practice is an opportunity for Web businesses, clearly. Operations spending is typically 30 percent of a company's spending, says Bo Holland, chief executive officer of works.com, an online office supply shop. Also, 99 percent of the working population is at small to medium-size businesses.

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But buying supplies online opens a new door in bulk purchasing for small business, as well. Small companies don't have the buying clout to get good deals. Often, they don't employ purchasing specialists with expertise across a wide range of products. Frequently, it's the bookkeeper, or maybe even the company president who winds up flipping through the phone book looking for local suppliers of a product or service.

The online procurement sites aim, to varying degrees, to offer goods at lower cost and more quickly.

Offering Guidance

Among the dot-coms angling to become purchasing central for small businesses is Buyerzone.com, which recently beefed up its site with an online quote service, customer-specific purchasing management, and a shopping cart that holds orders for multiple suppliers.

Buyerzone.com is heavy on the decision support. The company launched seven years ago modeled as a "Consumer Reports" for small business purchasing, says Brenda Chin Hsu, chief executive officer.

"This mirrors the way you shop in the real world," Hsu says. "It's not necessarily about changing buyers' behavior." The difference is time: What could take 30 or 40 hours of research, meeting suppliers, evaluating bids, and completing an order can be accomplished online in minutes or hours, depending on the item, she says.

Time was of the essence of Jane Ray's pleasure with buyerzone.com. She estimates she spent about five minutes recently putting out a request for quote to local suppliers of postage meters.

Another key benefit for small buyers joining forces online is volume purchase prices for companies that can't buy in volume.

"We help small companies buy like big companies," says Holland of works.com.

Works.com has fewer products than some of its competitors but focuses on getting standing orders for consumables. It offers customers discounts on office supplies for which it essentially acts as a wholesaler. But the company also saves its customers time and money by automating the ordering and accounting side of routine purchases, Holland says. It charges buyers $1.50 per order, and also makes money by moving the discounted goods.

Newer to the small-business online procurement party is BizBuyer.com.

"We are creating a marketplace," says Bernard Louvat, founder and chief executive officer of BizBuyer.com. "We're creating an environment where small businesses can buy or sell--a lot of our users do both," he says. He estimates 40 percent of the small business population sells to other small businesses.

BizBuyer.com now offers 55 categories of products and services, and expects to grow to 150 or 200 next year, Louvat says. He also points to online resources like buying guides.

Business-to-Business Boom

BizBuyer.com and online procurement have lived up to their billing for Vince Borrego, the time-pressed computer manager of ePocrates. Borrego estimates he saved two or three weeks of work using BizBuyer.com to procure a new phone system for the company.

"I feel like the poster child for this," Borrego says; he's evolving into a loyal repeat customer at BizBuyer.com, where he's already put in additional bids for T-1 lines and pagers.

Repeat transactions with customers like Borrego--and completing more business online--will be as important in this arena as in any other e-commerce zone, according to analysts. Taking the sales beyond just bidding and closing the terms of a deal, and actually finishing transactions online, is the crucial next step for these online suppliers to grow their take of the business-to-business pie.