Washington, D.C.— Merchant wholesalers conducted 7.7 percent of their business electronically in 2000, according to figures recently released by the U.S. Census Bureau.

The majority of sales were done using Electronic Data Interchange rather than pure Internet applications. Of $212 billion in wholesale trade sales, $188 billion was transacted by EDI run over proprietary networks. That's about 88 percent of the e-commerce total.

Manufacturers led all business sectors in e-commerce, electronically transacting 18.4 percent of their orders in 2000. Ninety-four percent of all e-commerce is B2B, the report said, with the largest manufacturers representing, by percentage, the largest share of e-commerce activity.

For example, Daimler-Chrysler claims that savings due to e-procurement procedures through www.covisint.com, an independent e-business exchange for the automotive industry, exceeded its costs of e-procurement in the first 10 months it used the service. Daimler-Chrysler continues to ramp up e-buying in reverse auctions, purchasing 43 percent of the parts it will use for a future model line via the Web site, according to Covisint.

The electronic sales of machinery, equipment and supplies was up a surprising 13.9 percent over 1999, according to census figures. Also, professional and commercial equipment and supplies was up a robust 15.5 percent over the previous year, and lumber and construction materials showed an 11.3 percent gain.

According to the Census Bureau, "merchant wholesalers" take title to the goods they sell. The category excludes manufacturers' branches, e-marketplaces and exchanges, and agents and brokers.

Because manufacturers are surging ahead with plans to integrate Internet programs, distributors must do the same, said Adam Fein, president of Philadelphia-based Pembroke Consulting. Both groups need to streamline their communications and collaborate as completely as possible, he said.

In many circles, experts thought the Internet's speed and flexibility would effectively cut distributors out of the e-business chain.

"Contrary to many predictions, e-commerce technologies are strengthening the wholesaler's position in the supply chain," Fein said.

Still, distributors must keep up with manufacturers in acquiring systems and training users, or risk falling too far behind in the information race.

"To succeed in the future, wholesalers must be equally agile with phone, fax, in-person and e-commerce [sales methods]," Fein said.