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In preparation for your first e-commerce project, it is worth reviewing the three basic economic relationships your organization can share with a business partner as part of an e-commerce online trading environment. You can be the consumer. As a consumer, you are the buyer, and the relative influence you project into the relationship is in direct proportion to the volume of your purchases. The minimum tasks for you to complete online are searching for the goods you want, obtaining pricing, placing orders and tracking orders.

A second role is that of producer. As a producer, you manufacture a product and offer it for sale. Your relative influence depends on the exclusivity of the product, its availability and its price. Common tasks for the producer are providing price quotations, creating purchase orders, checking inventory levels, accepting payment (or feeding some accounts-receivable system) and shipping a digital product (or triggering an order-fulfillment system).

Finally, you might be an intermediary. An intermediary's gain from retailing and distribution is not obvious in the nonspatial environment of the Internet. Buyers have forecast the demise of distributors and other middlemen for as long as governments have promised to reduce spending and cut red tape. Traditional advantages of distribution, such as buying in bulk and g eographic proximity, disappear on the Internet. In an ideal electronic market, every consumer would seek and find the perfect producer, negotiate the best price and execute the transaction in the most efficient manner. The costs for doing business on the Internet would be hidden in infrastructure and the value of a broker would be zero. All middlemen would be eliminated.

Now come back to reality: None of this is likely to happen. Middlemen are finding more opportunities on the Internet, not fewer. Common tasks for intermediaries are matching buyers with sellers, retailing, adding value and developing support.

Hard and fast distinctions between partner and competitor and vendor and customer are impossible to pinpoint. These relationships are quite dynamic and two companies may have more than one type of interrelationship at the same time.

Buying Organization
www.foodservice.com When we talk about consumption, to paraphrase actor Dan Aykroyd, we are talking mass quantities. The FoodService Purchasing Cooperative buys for the nation's fast-food appetite. The cooperative effectively combines the purchasing power of all its members. Requests for food items and equipment from the 6,000 member stores, including KFC, Taco Bell, Long John Silver and Dairy Queen franchisees, flow through the cooperative's EDI-based e-commerce system to its office in Louisville, Ky.--to the tune of 8,000 orders a day and $600 million a year.

The system's sweet spot is lower processing costs. "Our average order is around $500 and we have a 2 percent to 5 percent markup. It used to cost about $25 to pick up the phone," explains Robert Lewis, vice president of MIS at FoodService. Any efficiency contributes directly to the bottom line.

The cooperative's success with EDI has led it to the Internet to complement, not replace, the EDI network. "We have partnered with 600 of our largest equipment vendors, and in the first quarter of 1998 our entire catalog of 23,000 items will be on the Inter net," says Lewis. "We are going to offer to all our franchisees free access to the Internet and access with passports to order smaller pieces of equipment off the Internet. In addition, through network computers, we will be able to send clients to our customer service agents. They will be able to bring up the page of that particular item, which can either be printed out or faxed to the customer."