Gobbling It Up
FoodBuy.com is preparing to take a bigger bite out of the online business-to-business food market.
The company (www.foodbuy .com), founded last July, started off by providing a means for “operators” – like restaurants, hotels, schools, prisons and other non-commercial establishments – to buy food in bulk quantities at discounted prices.
The Atlanta-based firm’s July acquisition of competing food site Foodservice.com has allowed it to expand its online presence.
The 3-year-old Foodservice.com site brings with it a registered user base representing $1.2 billion in purchasing power. The site is said to attract more than 160,000 visits each month.
One of FoodBuy.com’s first efforts will be to increase negotiating power among food manufacturers like Nabisco, General Mills and 68 others registered on the site.
“Our buying power has grown from $1.4 billion to at least $2 billion,” says marketingvice president Ann Nickolas.
The acquisition also enables the company to link operators with distributors and manufacturers as well as create customized online storefronts for manufacturers.
As part of the agreement, Foodservice.com will provide its current users with online services like an electronic marketplace with a database of more than 34,000 products, 23,000 company listings and daily market prices, discussion forums and classified ads. Additional services include industry and technology news and editorials.
FoodBuy.com makes its money primarily by charging operators fees of less than 2% of a transaction, says Nickolas. It also provides manufacturers with food usage data on a fee-for-service basis.
FoodBuy.com compiles data on how much food its operators use and how often they use it. It also collects rebates manufacturers offer operators and remits the cash to them.
“It’s like a computerized couponing and redemption system,” she says.
To promote its new status, FoodBuy.com completed a small direct mail campaign to its own users and some names rented from distributors. At press time, however, it was too early to gauge results, says Nickolas. FoodBuy.com is planning to begin a large e-mail effort, al-though nothing has been finalized.
The company was also mulling further promotion and branding strategies. Nickolas thinks the company would probably keep the Food-service.com domain name alive in some form.
