AcquireX.com acts as a discount retailer for online procurement

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

AcquireX.com (Long Beach,CA, www.acquirex.com), a company founded and funded by Bob and Jan Davidson, will be rolling out their ASP e-procurement system to K-12 schools and higher education in January. The company began beta tests of its system four months ago, and has now refined the technology behind a model distinct from competitors.

AcquireX.com negotiates deals with select vendors to offer institutional buyers low pricing. Purchases are then made directly from AcquireX.com, not the vendor. Acting in what is essentially a retail role, AcquireX.com. assumes title to an ordered product (though not actual possession) as well as all responsibility for responding to customer service needs such as returns, damaged products, incorrect orders or stalled shipping.

A Mix of Revenue Models

AcquireX.com's primary revenue is from a markup on products, a markup which Jack Allewaert, ceo of Davidson Networks, emphasizes will still keep the pricing below that of competitors.

It is also possible for institutional customers to use the system to simply facilitate transactions with local vendors or any other vendors who are not a part of the system. The system can also facilitate auctions and the bidding process. This approach gives the customer advantages such as managing purchasing authority and electronically tracking the order. In this model, as is common among e-procurement systems, AcquireX.com takes a transaction fee and does not assume the customer service responsibilities.

AcquireX.com also charges institutions an annual fee of $10,000 for training and other customer service features. Purchases earn schools rebates that are applied to that fee, and Allewaert says that schools are able to earn back that amount or more. He adds that, though Acquirex.com does not require exclusive use of their system, the company thinks it is important for schools to have a sense of commitment to the system.

Vendor Involvement

Allewaert plans to assemble 50 to 100 large, national vendors for the site. This will create a full-service catalog, from pencils to school busses to computers and even utility services. Allewaert says the company is in negotiations with several companies they have sought out. They have also signed deals with a number of large distributors such as Ingram Micro for technology products and S. P. Richards for furniture. No category is exclusive. Even so, the company negotiates discounts based on the volume-buying they bring to a vendor, and multiple vendors in a category could dilute that advantage.

The site also includes a Yellow Pages to give smaller vendors exposure, but these purchases do not include AcquireX.com customer service for buyers.

Market Plans

Acquirex.com will be pursuing both K-12 and higher ed markets. The system will essentially look the same for both markets, though institutions can customize the look with their logo. Higher education beta testers include American U (Washington, DC), Howard U (Washington, DC) and Xavier U (Cincinnati, OH). The company also has six K-12 beta sites.

The best market within the education segments for AcquireX.com, says Allewaert, are with institutions having between 5,000 and 35,000 students. A sales force of about 25 people is actively at work now, and the company anticipates having 100 letters of intent by the end of this year for installations in 2001.

Allewaert is not encouraging clients to immediately pursue costly integration with financial systems. However, AcquireX.com does have a roadmap for integration, and they are beginning the process with their first beta site, American U.

AcquireX.com is housed in the same building as the three other Davidson Network companies: Brilliant Beginnings (parent information services for young children), Neurosmith (high-tech toys for young children), and Future Kids (a business which has transformed from technology learning centers for children to helping schools integrate technology). Allewaert sits on the board of all four companies. The Davidson's have limited day to day involvement.