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Smartbuy to find fulfilment elsewhere

Smartbuy to find fulfilment elsewhere

Startup online IT store Smartbuy.com.au expects to announce a new fulfilment and distribution partner next week following the collapse of Dataflow.

Smartbuy.com was to be Dataflow's first distribution customer in its transition to becoming an e-commerce fulfilment company, Tony Gattari, Smartbuy's managing director, said today.

Dataflow officially went belly-up earlier this week after filing for receivership in late May. The company, which had lost several significant deals in recent months in addition to facing a reportedly unsuccessful ERP implementation, was unable to attract a suitable buyer, consultant Arthur Andersen said.

Gattari, who was formerly a consultant for Dataflow, said Smartbuy.com had been aware of Dataflow's problems for some time and had begun the search for a new fulfilment partner around three weeks ago. "We understood there were going to be some difficulties going forward," he said.

Following the release of a tender document, Gattari said Smartbuy.com had narrowed its potential partner list to four companies from among traditional IT distributors, dedicated e-commerce delivery companies and freight organisations such as Australia Post.

The company intends to make its final decision by early next week, with a commercial agreement in place within around six weeks, Gattari said.

Dataflow had been contracted to store, distribute and ship all of Smartbuy.com's products to allow customers to receive numerous goods in one single delivery.

It seems Smartbuy.com and Dataflow had more than just a distribution deal in common. In addition to several of the same directors, the organisations both received investment funding from at least two of the same equity firms in February this year.

Allco Finance and South Africa's Brait Capital each invested $2 million in Smartbuy.com in February as well as making undisclosed investments in Dataflow in the same month. Smartbuy.com, which raised a total of 6.5 million in funding during February, also received backing from Hambro Grantham, now owned by Colonial First State Investments.

Gattari, who joined Dataflow in September 1999 as a contractor to assist in raising equity funding, said he "got to know" Allco and Brait Capital through his role with Dataflow.

"I suggested that Dataflow would have the opportunity to reinvent itself to become an e-commerce fulfilment company," he said, adding that this would be a way for Dataflow to attract investors.

"In getting to know me (the investors) suggested to me that they would be very keen to support me (in an e-tailing venture) . . . and my company would become Dataflow's first (e-commerce fulfilment) customer.

"I used the (Dataflow) opportunity to feather my own nest," Gattari admitted.

According to Gattari, while the Dataflow investments have now been reduced, all investments in Smartbuy.com have been unaffected.

Meanwhile, the lack of a distribution partner has delayed the commercial launch of Smartbuy.com, although Gattari said the organisation has also been working on other alliances.

"We fundamentally realised the market has changed . . . but because we haven't spent a lot of money yet we are in a fortunate position to have a lot of funds to form alliances," he said.

"Our view of the world is that alliances will make sense for a profitable company."Potential alliance partners were not revealed, but Gattari did say Smartbuy.com was discussing a content relationship with Ziff Davis and already had 30 suppliers on board.

According to Gattari, the alliances are expected to be signed within four weeks and the store will go live sometime in the second half of the year, well before Christmas.

The company is also expected to announced a fourth investor as early as tomorrow.


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