Ready to fire

Sydney company Netfira has developed a world’s-first innovation that allows electronic trading between any two business. Simon Sharwood explores the company’s technology and long history.

During the late 1990s, the first wave of Internet entrepreneurs had a vision for electronic-commerce that foresaw “trading hubs” which small businesses would use to shop for all the supplies they required.

These hubs would let a small business log on and place an order for the goods they require. Suppliers would then bid for the order, with even humble stationers participating in instant electronic auctions in the hope of securing an order, even if that order was only for a couple of boxes of biros. Buyers would win by getting cheaper goods.

Suppliers would be spared the tiresome chore of having to operate shops for basic commodities.

The vision failed for a variety of reasons. One was that suppliers had little interest in giving away their already-thin margins in online auctions. Another was that small businesses realised that trading hubs did not always include a comprehensive range of suppliers. And while trading hubs envisioned using the power of e-commerce to drive down prices, they left small business with ongoing administration chores to enter the results of each transaction into their financial management software.

Small business has therefore not been a big users of e-commerce other than Internet banking, an application so compelling that its uptake was swift, spontaneous and near-universal. Few small businesses, however, have the ability to place or receive orders without manual data entry in their financial applications. The few that do have usually been forced to acquire this ability, in order to deal with giant customers like Coles or Woolworths. But for the majority of the small business community, doing business still means manual entry of incoming or outgoing orders and a paper trail to document and chase payments.

A new take on e-commerce

George Ruul watched the first wave of e-commerce break down and knew there was a better way. The result is Netfira, an Australian innovation that enables e-commerce between any two businesses, regardless of the financial management software they use.

The software is very simple to use. Download the Netfira software from www.Netfira.com and install it. The software will automatically integrate with either Quicken or MYOB, the two most common financial management software applications used by small business.

The next step is to register as a seller, an action which lists your business in a directory accessible to all other Netfira users. When buyers use Netfira, they can see the levels of inventory in your financial management software, enabling them to order with confidence.

Most importantly, when a buyer decides to acquire your products using Netfira, all of the data entry takes place automatically. Your inventory systems will be updated and the transaction will be recorded in your financial management software. Invoices will be issued and all the chores that come with making a sale will be taken care of, without you having to lift a finger.

Netfira has tested the system with an electrical appliance vendor, which used Netfira with its retailers and other members of its supply chain. The effect has been startling: the vendor used to operate a call centre to take orders for its products and spare parts, and the ten-plus staff there entered more than 1.2 million line items of data each year. Since adopting Netfira, the vendor has been able to automate all of that data entry and close its contact centre.

Another benefit of Netfira is that as a seller, you don’t need to know or care about the software your customers use: Netfira takes care of it all.

“We want to be the lowest common denominator,” Ruul says. “Pretty much any financial software from the last five years can work with Netfira.” MYOB and Quicken already ready work with the software. Ruul is now working to integrate his software with other vendors’ applications and is siging .

“What we want to do is take away the technical problems of e-commerce,” says Ruul, adding that he hopes Netfira can encourage more small businesses to start selling online.

“We think we can get over small business over the hurdle to sell online,” he says. “There is not much more to do than leave the computer running MYOB on overnight.”

Some business owners may baulk at leaving computers unattended, for fear of computer security problems. Ruul, however, says there is nothing to fear, likening the connections between buyer and seller using Netfira to the closed, private connections that enable Internet telephony tools like Skype.

“You just do not get Skype viruses because it is proprietary and encrypted. We have the same technology.”

Aspiring to a global standard

Like any entrepreneur, Ruul hopes that Netfira can become a sizable business. Unlike many others, he has already had some striking endorsements of the technology, with US venture capitalists offering the company tens of millions of investment dollars early in the company’s life. Previous management decided not to go down that path, but Ruul now has a business model that sees Netfira paid a small fee for each successful sale conducted using its software.

The model also calls for as many businesses financial software vendors as possible to adopt Netfira, followed by mass adoption by small business. The company is therefore pursuing partnerships of all sorts and has an unashamed ambition to become a global standard for e-commerce between small businesses.

And the company has a real shot at doing so: no other company has its any-to-any e-commerce capability.

“We want to get small businesses downloading it,” Ruul says. And after seeing Netfira at work, My Business sees no reason not to do so!

Simon Sharwood

My Business Magazine

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