The e-commerce embrace: Vendors pursue online sales, but will carriers bite?

Newbridge Networks announced last week at ComNet that it will auction some of its more mature inventory through a partnership with TekSell.com. The move makes Newbridge the latest supplier of network infrastructure to pursue the e-business strategy for equipment sales.

Newbridge's approach is similar to that of telezoo.com, an online marketplace launched last March that sells equipment to vendors, systems integrators and service providers. Although the maneuver appears to be a step toward revenue gain, that was not the driving factor behind the initiative, said Tim Ragan, vice president of e-business for Newbridge. "This is a way to experiment with this type of channel."

By clearing out older inventory, the company can free space to house the new and more innovative equipment some customers will demand, he said. The e-commerce approach also may help retain current customers.

But predicting the future of e-business, particularly the potential revenue it can add to a company's other sales channels, is hard. For Newbridge, the online initiative is aimed primarily at giving its customers more sales options by leveraging e-commerce capabilities.

"In terms of revenue stream, we are going to explore how this channel might develop into a viable revenue [source] for the long term," Ragan said. "How to make it successful will evolve over time."

The equipment sold online will be at least 9 months old. Newbridge plans to offer key customers competitive pricing, Ragan said. This is because TekSell.com can offer vendors, OEMs and other telecom companies private branded auctions without the cost of hosting and maintaining an internal auction site.

"You cannot be all things to all people, but you can have a targeted auction," said Andy Cummins, co-founder and CEO of TekSell.com.

Because of the complexity of the systems they require, Ragan said he is uncertain as to whether the joint effort will appeal to large service providers. However, he believes Newbridge's e-business strategy gives customers an opportunity to save money on equipment purchases with the assurance that their online transactions are secure. Newbridge and TekSell.com maintain that online security is intact.

"I believe the initial market will be smaller organizations, but over time, [larger ones] will have to become more willing to go to the Internet in order to get information and better prices," Ragan said.

Today, carriers might buy online only when purchasing less complicated network solutions, such as routers or T-1 connector boxes, but there is no telling what the Internet can do within a year, said a Lucent Technologies spokesman. Like Newbridge, Lucent believes e-business is important.

"It is necessary because it will engender loyalty and keep customers coming back," the spokesman said. Lucent currently has an online buying option that allows customers to purchase equipment.

The Web eventually will become a part of every business process in every organization, Ragan said. Although some education will be necessary when organizations decide to fully adopt e-commerce strategies, even the most sophisticated service provider will look to the Web to change its underlying business processes, he said.

E-commerce in multiple forms has attracted ample attention at this point, but some might say the phenomenon is just beginning.

In response to the growth it has experienced since its launch, telezoo.com recently received $3 million in additional backing from Lazard Technology Partners. The company plans to use the money to continue expanding its marketing and sales efforts and improve customer service, which indicates the importance of customer interaction in online buying and selling.

By creating an environment where telecom professionals can compare products to make informed decisions, telezoo.com has attracted more than 400 vendors, service providers and systems integrators that sell their goods and services via its Web site. Ascend Communications, which merged with Lucent last year, Cabletron, Lucent and Newbridge were some of the first to sign onto the site after telezoo.com's launch.