KawamaCommerce attracts strong endorsements of its B2B school procurement service

Internet Strategies for Education Markets: The Heller Report, Sept, 2000

KawamaCommerce (Santa Ana, CA, www.KawamaCommerce.com) quietly went live with a B2B commerce site for schools on March 20 of this year. Paul Drysch, chief sales and marketing officer, says the company operated in a bit of a stealth mode until recently, but that changed with recent announcements of endorsements by The American Association of School Administrators (AASA), the Association of California School Administrators (ACSA) and the Association of Educational Services Agencies (AESA).

The agreements call for the organizations to endorse KawamaCommerce's procurement solution and to solicit its adoption by all members. A working group of members from each association will advise on KawamaCommerce development, and the executive directors of each organization will join KawamaCommerce's advisory board. KawamaCommerce has pledged a high level of technology support to the organizations. AASA represents annual purchasing power of $77 billion, AESA $20 billion and ACSA $27 billion.

KawamaCommerce is a direct competitor with Simplexis, Epylon and eschoolmall.com. The company will soon be eliminating two other components of its business: Learning for Success, which offers online learning materials, and KawamaCommerce.com, an e-commerce site directed at parents, students and teachers. The company plans to focus exclusively on the B2B offering, says Drysch, and strategic investors will take over the other divisions of the business. Announcements for the specifics of those plans are expected soon.

The KawamaCommerce system focuses on providing discounts through collective buying and savings through efficiencies of finding merchandise and tracking purchases. The company is working on enabling cross-state bids. That, says Drysch, is a process that requires a little bit of legislation and a lot of legwork. California and Oregon, for example may be able to combine quotes for pencils, but not busses. Or, perhaps some states can combine bids up to a certain dollar amount. The company is working with AASA, ACSA and AESA to define and address the issue.

Very soon, the service will add the ability to track purchasing authority. They are also launching eMall, a collection of web sites from KawamaCommerce tier-one vendors; this service allows schools with contracts with a vendor such as Office Depot to stay within the KawamaCommerce web site and receive contracted pricing from the vendors.

Drysch says the company has not encountered any resistance from vendors, which are being added as quickly as possible. Customers have the highest demand for basic supplies, like paper and pencils. Asked by ISEM whether he expected the site to facilitate consortium or state buys of licenses for online resources, Drysch said it was certainly possible, but he is not hearing that as a priority item from his customer base.

500 districts are actively using the system. King County Directors Association (KCDA) Purchasing Cooperative, an affiliate of AESA, was the first customer for KawamaCommerce, and success there spurred the endorsement agreements. KCDA reaches more than 290 of the 296 districts in Washington state, and the cooperative extends to districts in Idaho, Alaska and Montana. KCDA district purchasing reaches approximately $63 million annually.

KawamaCommerce, says Drysch, is focused on the $115 billion K-12 market, but many of the cooperatives using the service also include state and local government offices and community colleges. The company has also been approached by a large higher-education cooperative.

Drysch sees three levels of users for the company to respond to. The entry-level user simply registers and uses the system, the most committed user wants full integration with their enterprise system. A mid-level user, says Drysch, doesn't want another company in the ERP system, but they do want daily batch uploads. KawamaCommerce offers either kind of integration for free.

KawamaCommerce had an angel round of financing for $2 million and a level A round for $6 million. Ridgewood Capital Venture Fund II (Ridgewood, NY, www.RidgewoodCapital.com) led that round, and eByz.com (San Diego, CA), which has B2B commerce technology, was also a significant investor. Drysch expects another round of financing to be announced soon.