Cambridge, Ma. — Despite an overall decline in e-business, the number of organizations using the Internet for buying indirect goods and services remained constant, according to an Institute for Supply Management™ and Forrester Research, Inc. Report on e-Business for the first quarter of 2002.

The report revealed a substantial decrease in activity through online auctions and marketplaces. The percent of manufacturers purchasing from online marketplaces dropped from 26.7 to 18.2 percent over the previous quarter.

"Despite a general drop reflected in this quarter's report, the trend overall has been growth in e-business adoption over the past year," said Forrester senior analyst W. Daniel Garretson. "The Internet remains important, especially for large-volume buyers."

He said the importance of the Internet is revealed in the substantial increase in RFP activity by large-volume buying organizations. Organizations utilizing online RFP activity increased from 65 to 72.2 percent.

"Larger companies have been faster at adopting e-business and use the Internet more frequently," said Garretson. "Even though they are adopting at a slower rate, smaller companies are picking up their usage over time."

One distributor that has invested significantly in its IT infrastructure is Interline Brands, Inc., headquartered in Jacksonville, Fla. The distributor of maintenance and plumbing supplies maintains seven catalogs, each covering distinct vertical markets, all on one computer platform.

"As a consolidator, bringing all of our [IT assets] onto one flexible system has been the most meaningful aspect of our initiative," said executive vice president William Sanford. "Our primary focus is on productivity through IT."

The company converted 75 percent of its procurement to e-commerce through a combination of Internet and EDI purchasing. Interline has realized savings through e-commerce by taking the paper out of the transactions, he said.

"We have had fewer of our existing customers adopt e-commerce," Sanford said. "Most of our customers are still in the planning stages of e-procurement."

He says new customers are finding his company though online catalogs and the distributor's extensive list of unique private-label products. Sanford noted substantial research and RFQ activity online with these new customers.