Advantage targets government's $3 billion appetite for supplies

By Aimee McClinchy

Friday 12th May 2000

Listed e-commerce company Advantage Group has wound up its first online portal initiative but is using part of it to form a joint venture with the country's largest supplies company targeting government departments.

The new company is estimated to be worth $100 million and will target the $3 billion spent each year by the public sector on maintenance and repairs.

Advantage, with its majority shareholder Qixel Capital Group, has joined with Professional Supply Brokers. PSB is the parent company of GSB SupplyCorp, the former government supply organisation, which was privatised in 1992.

The new marketplace for buyers and sellers is to be called SupplyNet.

PSB has 50% ownership, Qixel 30% and Advantage 20%.

Advantage chief executive Greg Cross said Advantage's input was equipment and services rather than investment. He said Advantage had "morphed" its sixth-month old online procurement portal, Venice, into several new initiatives of which SupplyNet was the first.

He admitted Venice was launched too soon before the business-to-business market took shape.

He said it was a pure play rather than a clicks and mortar model and Advantage was faced with "blindly going on" or pulling it and reforming.

"We had to very much rethink the approach to Venice as a result of the marketplace and changes over the last months. "Venice is not dead but it has morphed into a number of key initiatives," he said.

Mr Cross said other companies might take strategic partnerships or equity positions as SupplyNet grew to service markets other than the public sector, by leveraging Eric Watson's web of investments.

He would not say what these other sectors were but said Supplynet would have some private sector clients by its August launch.

The three companies first discussed the exchange portal earlier this year.

But GSB Supplycorp, formerly the New Zealand Government Supply Stores Board until it was privatised in 1992, has been working with US e-commerce technology company Commerce One for over a year on online initiatives.

PSB, majority owned by chairman Charles St Clair Brown and a small number of private investors, brokers $750 million worth of transactions annually and holds a dominant market share.

Mr St Clair Brown said the company would bring its customer base and catalogues of 2000 buyers, 1000 suppliers and 900 long term contracts to the exchange, but would continue to run its business offline as well.

Its customer base includes government departments, councils, ministries and institutes. Mr St Clair Brown said the portal would accelerate the government's "e-government" plans.

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