Product Line

With its patent pending business model and core technology, BuyHub.com offers free services that allow small to medium sized businesses to manage their entire purchase workflow process over the Internet, while still shopping at the Web sites of their favorite suppliers. Instead of spending $1.4 million on average (estimated by Aberdeen Group) to set up an enterprise-wide internal purchase management system as the big companies do, using BuyHub.com can level the playing field for small enterprises to achieve the same goal at near zero cost. In short, BuyHub.com facilitates business-to-business transactions over the Internet, adding values for both customers and suppliers.

BuyHub.com generates its primary revenue through transaction fees charged to the suppliers. Other sources of income will be Web advertisement, the market intelligence data, and other services.

Technology Proprietary Rights

Using BuyHub.com, a buyer shops at a supplier Web site through a link at BuyHub.com. At the checkout time, BuyHub.com captures the buyer’s shopping cart contents and creates a purchase order. After approvers approve the order, BuyHub.com submits the approved order with the payment information to the supplier. The supplier then charges the buyer account and ships the goods to the buyer directly. BuyHub.com has applied for patents to protect the business method and technology implementation.

Market Opportunities

Aberdeen Group estimates that enterprise purchase process costs $107 per transaction regardless of goods/services purchased. Many large organizations have created internal procurement systems to handle the purchase process automatically to improve the purchase operation efficiency. But the cost for setting-up such in-house system is estimated at 1.4 Million dollars without counting the maintenance cost down the road. In addition, it will take months to evaluate and set up such systems and to train the users. Clearly, many small to medium businesses can not afford the cost to have such an in-house system, yet at the same time it is too costly to continue the present manual purchase management process in today’s fast paced business environment. That is where BuyHub.com comes to help – for free. BuyHub.com expects to reduce per transaction cost from $107 to $3, ten times less than competing models.

BuyHub.com’s revenue is primarily from transaction fee charged to suppliers. Precursor Group estimates that the revenue from B2B transaction fees will be between $50 billion and $130 billion by 2002. This is an emerging market.

Marketing Sales Distribution

On the customer side, since BuyHub.com is providing free services, there is no explicit contract to be signed with a customer nor there is any payment for service transaction. The sales activity will be very closely connected with marketing activities. In practice, BuyHub.com will launch marketing/sales campaigns through targeted email list, advertisement, search engines, affiliations, referral, partnership, etc. Partnership with various organizations is a primary means to reach massive small businesses quickly. To retain customer, BuyHub.com will allow customers to customize the Web pages to create the “at home” feeling and provide value added services such as purchase guide and price comparison.

On the supplier side, acquisition of suppliers is swift. This is because (1) BuyHub.com introduces customers to suppliers; (2) BuyHub.com lets customers shop directly at supplier web sites; (3) BuyHub.com does not require any technical assistance from suppliers.

Competition

Industry heavyweights like Ariba and CommerceOne focus on Fortune 1000 clients using the centralized master catalog approach and installing multimillion dollar purchase management systems on customer’s premises. BuyHub.com will focus on the vast number of small businesses by allowing them to shop directly at their favorite supplier Web sites with unified purchase management. Any business with Internet access can take advantage of the procurement management services offered by BuyHub.com without any new investment.

BuyHub.com’s competitive advantages include:

• Unique patent pending business methods,
• Early start to be a key player in the under-served small business online purchase management market.
• Efficient supplier integration algorithm and process to grow the supplier base quickly.