Quicker, cheaper and ignored - Southfresh drops e-selling

By ADAM GIFFORD

Electronic commerce pioneer Southfresh will close its doors today with the loss of nine jobs because of what managing director Toby Warren calls the slow acceptance of buying online.

"There is no compelling reason for people to do it," Warren said.

"We find a lot of people are interested, a lot of people understand this is way things will happen, but in the short to medium term we do not think it is prudent to continue.

Southfresh spent $650,000 developing its Varenti e-commerce software to support its fish broking business, allowing customers to buy and sell fish online rather than through the traditional burst of early morning phone calls and faxes.

"The cost of operating the fish business was about 10 per cent of invoice value," Warren said.

"The cost of operating the same business with e-commerce is about 2 to 4 per cent.

Armed with that evidence, Southfresh tried to sell the Varenti platform to other commodity traders.

Technology entrepreneur Neville Jordan's Endeavour Capital took a half stake in the company in June 2000, and more staff were hired to develop the business.

"We had a number of customers signed up who were very close, but there was not enough throughput because they had to make too much change in their own organisations and change outside their organisations," Warren said.

"E-commerce takes two to tango. It is about change management and nobody wants to change."

Southfresh's fish broking business will also close, although Unisys will continue to host the trading application until the end of October.

"The fish business was never worth as much as e-commerce business and in any event has been in decline because retail fish volumes were dropping," he said

"That is because vendors and supermarkets have been wanting to get closer for some time. "We recognise that because we taught them how to do it."

Warren said a joint venture with Waikato University's school of management, in which students can use the software to build business, would continue with as little interruption as possible.

Southfresh is looking for buyers for the software platform.

"All creditors get paid, all staff are looked after, all liabilities are taken care of," he said.

"It is a controlled closure. We are parking the car, not crashing it into the fence."

The closure of Southfresh shows again how hard it is to make an online market succeed.

Last year laboratory supplies company Salmond Smith Biolab closed its Onezone site.

The PSB Supplycorp Group, owner of the former Government Stores Board, has spent more than $7.5 million building its Supplynet business with Commerce One software, and the Government plans to spend a similar amount on consulting and software for its Goprocure electronic buying system.

Auckland company e://volution ebusiness continues to pick up customers, but now sees marketplaces as part of a larger e-commerce picture and gets its revenue from selling services, rather than clipping the ticket on transactions.

Southfresh