Pandesic LLCSunnyvale, Calif.

Dec. 21, 2004
Pandesic e-business solution 1.1
Doug Bartholomew, Samuel Greengard, Glenn Hasek, John Jesitus, Scott Leibs, Kristin Ohlson, Robert Patton, Barb Schmitz, Tim Stevens, and John Teresko contributed to this article. Spend any time at all on the Internet, and you'll discover that for every 10 corporate Web sites that offer information, only one is attempting Internet commerce. And of those, almost all companies treat orders placed over the Web in much the same way as they'd treat an order that was phoned or faxed. That is, while the customer may be enjoying the interactive interface and point-and-click convenience that e-commerce offers on the front end, it's pretty much business as usual on the back end. Pandesic hopes to change that. Formed this year by Intel Corp. and SAP America Inc., the company offers an e-business solution that addresses all aspects of Internet transactions, from marketing to order fulfillment to inventory management, payment processing, taxes, shipping and handling, and more. The company is betting that a bundled solution will appeal to small and mid-sized companies that want to do business on the Internet but don't want a new distribution channel to distract them from their core competencies. Bryan Plug, Pandesic's CEO, puts it this way: "E-commerce was the first generation, acting as essentially a catalog on the 'Net. E-business lets you do all the things on the 'Net that you do in your regular business." For example, it's possible to buy running shoes on the 'Net today from a number of different companies. But none of them is currently able to verify that the model you want is in stock, tell you exactly when it will arrive, give you an exact breakdown of all costs (including applicable taxes), and process your payment in the form of "digital cash," remitting to suppliers, shippers, and government entities their respective cuts. Pandesic says its new system is designed to handle all those functions seamlessly. This bundled approach to e-commerce, Pandesic says, keeps infrastructure costs low -- a human being may not need to get involved until the warehouse stage, picking the product ordered and packing it up for shipment. In fact, Plug says that the consignment model made popular by the online book retailer is viable for other businesses using the Pandesic system. An athletic-shoe retailer, for example, may not need its own warehouse full of different brands of shoes; it could forward orders to the warehouses of each vendor and arrange for direct shipment to the customer. Shoemakers might be glad to eliminate the cost and complexities of supplying retailers, especially with a system that gives them their cut of each sale instantly. "This would also help a retailer," Plug says, "because they wouldn't need credit upfront. It could be good-bye to 60-day net." Although the system may appeal most to companies that have had little experience with the Internet, one early customer is Quokka Sports, a company that specializes in Internet-based sports coverage. Quokka provides continuous Internet access to events such as the current Whitbread yacht race. Visitors to the site can, among other things, buy a variety of official race merchandise. Quokka uses the Pandesic system to satisfy all such commerce. "The typical customer is buying $73 worth of goods," says Steve Nelson, Quokka senior vice president and general manager. "The Pandesic system lets us satisfy those orders and disperse the appropriate amounts of money to each party involved." But why would a company whose very existence is centered on the Internet need a turnkey solution for e-commerce? "We're like a TV network," Nelson says. "We want to concentrate on securing the rights to sporting events and presenting them well. NBC doesn't want to sell the products of the companies that advertise on it, and in a sense neither do we. It's an important aspect of our business, and one that Pandesic addresses well from end-to-end." Pandesic's system includes all necessary hardware and software, installation, plus continuous updates and refinements. There is a $25,000 sign-up fee, plus an additional fee based on how much business a customer does. "The business isn't mature enough to support high fixed costs," Plug says, "so we'll charge 1% to 6% of sales, depending on volume. For that fee customers not only get maintenance, but evergreen service -- a continuous stream of enhancements to the software." Pandesic estimates that a company would need to do about $40,000 a month in e-business to break even.

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