Low cost and realism keys to Acquire's computing success

By PETER GRIFFIN

E-tailing on the smell of an oily rag is the formula for web start-ups looking to trade their way through the tech doldrums, according to e-procurement company Acquire.

Acquire offers an e-procurement service through its website for businesses looking to buy computer hardware and software.

It also has a growing number of consumers making purchases of everything from printer cartridges through to servers online.

The director of supply chains, Simon Scott, said Acquire was formed in April last year and was turning a profit because it had not succumbed to over-expansion, kept costs low and set realistic goals.

"Turnover in March was more than $300,000.

"Not bad for two guys with computers sitting in a house."

The Acquire business works by combining several suppliers' inventory on the one site.

Inventory information is downloaded from the suppliers every day and goods, once bought, are sent directly from the suppliers - meaning Acquire does not have to hold or handle any stock.

Scott said Acquire's marketing expenses so far had come to $2000, with word-of-mouth being the most effective generator of traffic to the website.

Clive Glover, Acquire's founding investor, continued to provide consultancy services to the company but had ceased investing new money in Acquire some time ago.

Glover said Acquire was finding that large computer and IT vendors were looking for players with strong e-tailing strategies when picking channel partners.

Acquire was now looking to license its proprietary e-procurement system to other companies wanting to manage a large number of product categories online, but not willing to pay for expensive e-procurement systems from major players like Ariba.

Legal action with Acquire's arch-rival Supplyzone was well behind the company, said Glover.

The two companies engaged in a brief legal spat when Scott and Kelly Raines, Acquire's director of e-commerce, became involved in the business. Both former Supplyzone employees, they were accused of copying aspects of the Supplyzone model and going after its customers.

"[Acquire] deliberately stayed away from [Supplyzone] clients," said Glover.

"The judge said the restraint of trade was only good for two months anyway. "The whole thing got chucked out [of court] in its entirety."

Supplyzone stopped trading last month and continued to look for an injection of funds that will allow its revival.

According to managing director Neil Taylor, Supplyzone ran into cashflow difficulties when its bank, which did not have a debenture over the e-tailer, cut off its overdraft without warning.

The company, which set up shop in October 2000, had been aiming for sales of around $4 million in its first year.

Glover said Acquire's next strategic move was looking to partner a similar organisation to establish in Australia, a market he said was wide open in the area in which Acquire operated.

Acquire