EQUIPMENT: February 28, 2000

TestMart Charts B-to-B Success

Test site enjoys profitable launch

by Jeff Chappell

The semiconductor industry hasn't been at the forefront of business-to-business e-commerce, despite the fact the industry makes the technology that enables e-commerce. However, TestMart wants to change all that.

TestMart is an e-commerce company that serves both buyers and sellers of test and measurement equipment. The company last week unveiled a new version of its Web site, www.testmart.com . The site has 11,500 products available online, including telecommunications and networking equipment. The site also features normalized specifications for those products that buyers can use to compare and contrast equipment.

The new features of the site include application notes, extensive directories of laboratories and trade organizations, industry news and analysis from third-party contributors, and the ability to establish the value of used equipment and sell it online to TestMart.

Use of the site has increased dramatically since it began conducting online commerce in fall 1999, said Peter Ostrow, president and chief executive officer of Technical Communities Inc., the San Mateo, Calif.-based company that owns TestMart. The privately owned company, launched in 1998 by several test and measurement industry veterans, is profitable, Ostrow said unlike the company's high visibility cousins in business-to-consumer e-commerce, such as Amazon.com.

"We make a reasonable profit with every transaction," Ostrow said. He said he couldn't release specific figures because the company is still privately held. But he did say TestMart's revenue is growing more than 50 percent per quarter, or more than 100 percent on a month-to-month basis. "It's meaningful revenue. We're not talking about a couple of bucks here and there," he said. He added that the company treats revenue measurements conservatively, however, counting revenue only when ownership titles actually change and equipment is shipped.

TestMart has been successful so far because is has offered quantifiable benefits to buyers and sellers in the test and measurement industry, said Kevin D. Jones, co-founder and CEO of Net Market Makers. Net Market Makers is a business-to-business advisory service for Internet business markets.

"The number one thing that makes a good business-to-business e-commerce site is that it understands the problems of buying and selling in its industry and is trying to solve those problems," Jones said. "These things are built for the real world."

Ostrow said one of the primary reasons for TestMart's success is the wealth of proprietary, unbiased information it offers to its site's users. The company's founders are test and measurement industry veterans who put a lot of the data they have collected over the years on test equipment into databases. When the company first launched its site last summer, it was an information-only site.

"What we did offer was extremely deep, database content just facts," Ostrow said. The site included information on thousands of products, including such data as calibration intervals, Y2K status, and normalized specifications for comparisons.

"I think TestMart does a really good job. Buying test and measurement equipment was really hard," Jones said. By offering a wealth of easily accessible technical data, "with a lot of really nuts and bolts things like that, (TestMart) solved the difficulty in the buying process," he said.

Ostrow calls it a value-added service that his company offers. The traditional way of doing business between companies, with commission-based sales staffs and distributors, is very inefficient. "We are a disruptive technology. All of these sales channels that aren't adding value those are the ones that are going to be challenged by the Internet. Even if we go away tomorrow, someone else will do it," he said.