Forget oil and steel. New Business-to-Business (B2B) online trading platforms are set to focus on other, more consumer-oriented, goods. Or, at least, that's what a new portal set to launch next month is banking on.
Whereas previous Internet trading platforms concentrated on raw materials and heavy industry, CISLink.com says it will be a platform for fast-moving consumer goods (FMCG) the type of products found in supermarkets, such as food, washing powders and deodorants.
Franck Benhamou, one of the two founders of the portal, said the operation will put the makers of branded products and wholesalers in contact throughout the C.I.S. However, he added, while the Internet will be instrumental to the project, CISLink is not really a dot.com company.
"With this project, we are building on our experience with brick-and-mortar companies in the FMCG industry and are merely using the Internet as a medium," he said.
"I have been working for 15 years with SC Johnson, a firm that owns several brands of household products, such as insecticides, air fresheners and cleaners. I have been working with the C.I.S. for most of the past 10 years. My associate, Prem Kumar, has been working with Algro, a FMCG wholesaler, for several years."
It is this experience that gave Benhamou and Kumar the idea for the platform and the impetus to leave their positions with well-established companies Benhamou was SC Johnson's Group general Manager for the C.I.S.
"We estimate there are 2,000 brands and 8,000 wholesalers in Russia," Benhamou said. "The market is large and developing fast. The problem is that it is hard for industry players to get information because there is a lack of transparency and the market is very fragmented."
That's where his portal comes in, he said. "Practically all brand headquarters in Russia are connected to the Internet, and nearly 70 percent of wholesalers [in Russia] can log on, so I think our product is relevant."
Benhamou and Kumar hope to reach 10 percent of the region's brands and wholesalers within six to nine months.
Kumar said that CISLink's portal has already been devised and is being administered by the Indian company, Processware, which is based in Bangalore and also works with IT giant Intel. He added that 15 people work in Bangalore for CISLink, and six are in Moscow.
The portal will have about 270 Web pages and six so-called "modules." The most important one, called "ordering," will allow producers to list their brands and wholesalers to go and pick up what they are interested in. The module will be divided into 40 product categories.
Whereas access will be free for wholesalers, producers will have to pay a monthly fee to put their products on the site. The fee will be $500 for a company that wants to get its first brand listed and $100 for each additional brand.
"Brand-listing fees will be CISLink's main source of revenues," Benhamou said, adding that some 50 brands have already signed on. Another source of revenue will be online advertising. Advertising fees will range from $150 to $1,000 per month. Benhamou and Kumar said they hope they will break even after the first six months of its operations. "This could become one of the most successful B2B Websites in the C.I.S., and its business model is really impressive," said Steve Henderson, tax and legal services partner with Deloitte & Touche in Moscow, a consultant for CISLink. "This portal will be a tremendous help for industry players wanting to compare prices and order products, and it will help producers selling their brands. When you think of the time it takes for producer and wholesaler representatives to meet or even talk over the phone to make deals, you realize how cost-saving this project will be."
Deloitte & Touche has become so interested in CISLink that it makes free contributions to CISLink's "industry news" module, posting daily updated data about Russian tax, customs and excise legislation. "This will be very good advertising for us and will help us reach FMCG industry players, which are a key target for us around the world," Henderson said.
Another contributor to CISLink's "industry news" module will be information-monitoring firm AC Nielsen, which surveys consumers habits and products distribution worldwide. AC Nielsen will post data about products in the C.I.S. on the "industry news" module also free of charge.
CISLink will have four other modules. One of them will be devoted to auctions and, Benhamou expects that it will be particularly interesting for producers that have stocks of products they want to get rid of. Another module will allow several wholesalers to group together and place a global order for a product.
On another module, producers will be able to advertise special offers provided they pay a fee and CISLink will also have a "bulletin board" section, where companies can post classified ads and job offers.
CISLink's initial capital input comes from Benhamou and Kumar's personal savings. "We had enough money to do it ourselves, and we didn't want to rely on venture capitalists," Kumar said. "If you do, you tend to lose control over your project. We prefer to launch it first, and to see what comes up then." However, in time, Benhamou and Kumar do plan to drive financial participation from brand owners.
CISLink's founders are not overly worried about the slowdown dot.com companies have been experiencing worldwide since the spring NASDAQ crash in the United States. "I actually think it is a good thing," Kumar claimed. "It means that the Internet as an industry is maturing and that fundamental business principles are finally being implemented there too."