For better or worse, the cyberspace revolution has arrived and is beckoning the meat, poultry, and prepared foods industry to get onboard for a test ride, if nothing else.

When the term "Internet" joined the global lexicon a decade or so ago, PC pundits and consumer futurists predicted that using it would significantly transform the way we work and live. Some scoffed, viewing the 'Net' as merely a complicated computer tool for academics.

The naysayer guessed wrong, and so far it appears the futurists have hit the proverbial nail on the head. But even the futurists may not have envisioned the evolutionary pace of today's point-and-click marketplace. In the past six months, for example, several online meat and food exchanges and auctions have launched, and food processing businesses of varying sizes and staffs are exploring or using new business-to-business (B2B) services on Web sites. Moreover, industry groups are hastily assembling educational programs to determine the efficacy of e-commerce. Meanwhile, U.S. corporations are expected to spend up to $10 billion this year on Internet consultants.

A significant benefit of what was quaintly (and not so long ago) coined the "information highway" is that it is definitely a two- or even three-way communications channel. Companies, including those in every segment of the meat industry, can potentially use the Web to strengthen relationships with their target business groups, from suppliers and distributors to consumers and government agencies.

Now, boot up your computer and click to enter the browser program. You are ready to launch into cyberspace with its unlimited capacity to accommodate user traffic.

However, before taking the plunge, the following questions need to be answered: Is e-commerce a valid business tool for my operation, even at the current level of success? Will I be able to conduct business via a computer screen and mouse, without seeing people, equipment, or products? Is now the best time to start using the Internet in new ways, given the number of startup dot.com companies and, in some cases, their inexperience in an industry as distinctive as ours? Will using or offering such services favorably impact profitability?

Just like this ever-evolving technology, the answers aren't always simple or clear-cut. What is clear, however, is that this seems to be a watershed moment for the global business community. The technology is now poised to expand or at best explode. Based on projections from Forrester Research, a market research firm, emerging online venues will capture more than half of online business trade in the United States in the next five years, essentially redefining the nature of B2B.

This special report is designed to demystify e-commerce while examining its potential as a business tool for meat, poultry, and prepared foods processing firms. The most rapidly developing area of B2B e-commerce seems to be the emergence of online food and meat exchange and auction Web sites. Some of the largest players in this category have gone online since last fall, boasting multi-million-dollar capital investments and the capacity to dramatically improve company efficiency and, hence, bottom lines. With names like eFoodtrade.com, MeatXchange.com, and eHarvest.com, these sites are looking to capture the interest of our dynamic industry.

Type in food exchange, meat exchange, or meat auction on an Internet search engine and your screen will likely display several possible sites. Just like the "regular" business world, online meat and food exchanges and auctions vary in size, scope, and experience. Choosing a partner in the technical arena is similar to choosing one in traditional channels: the best bet is to conduct research to determine suitable services.

Some sites are devoted specifically to meat and poultry, while others include the category in their general food exchanges. Sellmeat.com, set to launch in early April, is an online service devoted to selling and buying mat, Sellmeat.com was the brainchild of Wayne Rice; chairman of the Web site's advisory board, and former president of Kansas City-based Farmland Foods, and American Meat Institute (AMI) executive committee member.

After he retired from corporate life, Rice enjoyed a brief stint as a consultant, during which time he often discussed the Internet with various Web experts, including the St. Louis-based Influence Group LLC. Soon, casual discussions led to brainstorming and eventually to the launch of the online sales service.

"The concept was to be able to, through the use of technology, make the selling function more expedient," Rice explains. "If your sales calls are to the same number of people, you're contained by that. If you double the opportunities, you double the calls. By taking your product to our bulletin board, you have thousands more sets of eyes looking at it."

To help potential users accomplish such goals, Rice came up with S.A.F.E as a memorable acronym. An online service would have to be accurate, fast, and efficient, he deduced, thus the origin of the acronym. Moreover, Rice says to be considered successful, an Internet exchange should also help its users improve value, by freeing up time for sales teams to promote more new or value-added products. As a person "with the meat industry in my blood," Rice places a priority on working with the industry to learn and master B2B technology. For one thing, Influence Group is hiring "packer tech reps" to train and assist processor management teams and salespeople.

"I have to say, when I first started this I had to be convinced, too," he admits. "So I went through the same emotional process our buyers will go through."

Madison, WI-based FoodUSA.com, another meat and poultry-specific site, is highly capitalized with $50 million in investments. Currently, the site is conducting a pilot exchange matching high-volume meat buyers and sellers. The feedback is expected to help the site expand into a full-service, valueadded system - similar to bid/ask programs common today; but based on a more efficient trade model. FoodUSA.com founder and CEO Rod Heller, a longtime meat importer and broker, agrees that knowledge is key in this segment of the food industry. "Right now, we have a combined four hundred years of experience in this industry," he points out. "You have to have people who know about meat."

Tom O'Connell agrees. As chief marketing officer, O'Connell is primarily responsible for getting the word out about FoodUSA.com. "How do you dedicate yourself to a product if you have only two people working on it?" he asks, adding that trust is essential. "It's a people industry. Ecommerce is nice, but people need to talk to each other." The goal of FoodUSA:com, he notes, is similar to other online exchanges, which is to increase efficiency by holding down costs and reducing the number of nonvalue-added items carried.

"We've taken the middleman out. When you look at coordinating credit, freight, EDI [electronic data interchange], we take all that out of it for you," he says, adding that there is a tangible benefit to making the site an exchange rather than a direct auction.

"We are a true exchange and that's different from an auction," O'Connell says. "In this industry, we don't think an auction will work. These people have to sell products immediately, that's why they are on the phone or faxing at six in the morning."

Heller, who estimates that buyers and sellers could save up to 15 percent using the site's services by gaining improvements in time and other efficiencies, acknowledges that the exchange will have to be effectively presented to industry decision-makers to win them over.

"The thing about a buyer is that his job is dependent on how well he buys meat," Heller says. "Will he click on a mouse to buy something he hasn't seen? They have to know the people they're working with behind the screen know what they're doing and that their truckload of meat will be there on Monday when they need it."

FoodUSA is enlisting third-party groups to deliver its message to potential buyers and sellers. For instance, the group is partnering with a company called Ag Info Link to help track cattle on an individual farm-to-fork basis to be in position to handle foodsafety problems that might occur. They are also working with Homewood, IL-- Silliker Laboratories on other verification services related to food safety, grade-and-yield information, and nutrition services. E-commerce initiatives have much potential in the meat industry, but would benefit from third-party partnerships, assesses C.J. Valenziano, director of marketing.

"The biggest challenge is building trust between buyers and suppliers who don't know each other," she notes. "Buyers have said they want to see test data, preferably from a thirdparty source, on safety, nutrition, and quality on products they are going to buy." Valenziano says Silliker is capable of adding value to e-commerce initiatives because it has an international network of accredited food-testing labs and offers comprehensive food-safety and quality assurance services. "We can help the buyers and suppliers make informed decisions and build strong relationships," she asserts.

FoodUSA founder Heller's vision spans the global market arena. "Once we get established in the United States, I want to expand into Europe and South America and link everyone together. Then you have a worldwide market, and that's what the Internet is all about."

FoodUSA.com isn't the only site with an eye on the global picture, however. GlobalFoodExchange.com launched in October with 1,200 companies already signed on as members - sells to both domestic and overseas customers. Unlike FoodUSA.com and Sellmeat.com, GlobalFoodExchange offers five different categories of foodstuffs, including a meat and poultry segment. The exchange links users across the food chain, including retailers, foodservice operators, wholesale distributors, brokers and importers/exporters.

"Our goal is to bring liquidity to the marketplace," explains Marketing Director Karen Fox. "It speaks to where this industry will be in five years."

Like others involved in ebusiness companies, Fox predicts the meat industry will use the Internet as another tool in its sales and marketing efforts. "Look at how quickly the fax machine was adapted, then e-mail," she offers as supporting evidence, adding that there is a misconception that larger processors are automatically the first to embrace such technology. "Actually, a lot of our early adopters are the smaller players. They have the need to move quickly and efficiently," she points out.

To potential users concerned about losing relationships with current sellers, Fox says, "People say, `Won't the Internet hurt my personal relationships?' We tell them they're still going to make the relationships. You can still talk to their people, but this makes it so much faster and more efficient. You don't have to wait for return phone calls." Moreover, the exchange - which is neutral to buyers and sellers - helps buyers quickly negotiate factors such as price, logistics, and delivery, Fox adds.

California-based Agribuys.com is yet another food exchange making inroads in the e-commerce arena. Like other exchanges, buyers log on and submit their needs, which are then forwarded to the appropriate seller. After the buyer makes the final choice, the rest of the connection proceeds in a traditional manner, with additional options provided for logistics and other services, such as transaction reporting and automatic data:

Agribuys.com President Marina Kotsianas points out that although most of the nearly 500 users work in produce and seafood categories, Agribuys does have an active sales force in meat and poultry.

"Because we're asking people to change their behavior, we want to have people here who can talk about the industry and know it," she said, echoing the sentiments of many Internet entrepreneurs who recognize the distinctive nature of the meat protein market. Kotsianas, however, views the meat industry as having ideal characteristics for exploiting opportunity e-commerce offers, "It's not a very fragmented industry," she says. "It's very concentrated, but they can take advantage of the efficiency of this system. We know that every category has its own way of doing things."

These are samples of online food and meat exchange and auctions. Other sites, including ECFoods.com, Efoodtrade.com and MeatXchange.com among others, also are poised to tap the potentially diverse and lucrative B2B marketplace.

In addition to online meat exchanges and auctions, the Internet can connect a processor or manufacturer to a world of other e-commerce sites. Sites devoted to online equipment auctions, for example, as well as content and transaction services; supply-chain software packages, and e-business solution sites - all aimed at helping companies inter-connect key elements of their manufacturing process.

True to the original purpose of the Net, companies can use it to gain valuable information. For example, association Web sites offer free downloadable industry information as well as reports and publications available for a minimal fee. Associations also increasingly use the Web for their own market research goals. The National Turkey Federation recently conducted an online survey of 500 consumers to gauge their eating preferences. AMI, which also offers downloadable programs and information, is working to improve its offerings on the topic of e-commerce. "We will be putting together educational programs on it fe-commerce]," reports AMI's Janet Riley. "It is obviously becoming a significant part of the marketplace."

Those looking to learn more about the marketplace also can take advantage of various market research Web sites. Recognizing the potential of the Internet to reach new clients, many market research firms now sell various studies and data results directly on their home pages.

Forrester Research, which tracks "eMarketplaces," provides insights for buyers, sellers, and vendors interested in e-commerce. On its company Web site, www.forrester.com, the firm offers full or excerpted reports on various industries, as well as studies available for purchase. One report, for example, discusses the need for partnerships for successful online marketplaces, an information source for those pondering such third-party relationships.

There are food-specific market research firms online, too. Technomic, Inc. is a foodservice-consulting firm based in Northbrook, IL, and offers a wide range of services and programs on its site for both foodservice manufacturers and operators. Visitors to, www.technomic.com can subscribe to the company's monthly newsletter and e-business briefing or purchase specific studies individually.

Processors online

While there is a plethora of online services geared to the interests of the meat and poultry industry, processors are changing their company Web sites to make them more value added.

When companies first went online, most offered a glorified version of their annual reports, featuring company profiles, history, investor information, press materials, and contact information. While such information is still a must-have for most corporate Web sites, more B2B features are being added to make better use of the Internet tool.

Por example, Johnsonville Sausage of Sheboygan, WI, has an extensive consumer Web site aimed at increasing brand awareness and use of its products, but the company also is examining how to use Johnsonville.com to improve relationships with vendors and distributors.

"For many food companies, the Internet is often more about business to business. It's been an ongoing part of our company's strategy and will be for the foreseeable future," reports David Finch, Johnsonville's director of marketing. The company is currently working on creating a new section on its Web site targeting business customers. Among the potential features is an electronic "art department" enabling distributors or retailers to save and download product images at their convenience.

Red Oak, IA-- based Red Oak Farms Inc. also is putting stock in its Web site as a way of strengthening business partnerships. The corporate Web site, www.redoakfarms.com, offers information, contact names, and phone numbers for its various business customers and investors. Business clients receive a password to gain access to that section of the Web site, where they can retrieve information specifically tailored to their needs. Pete Hudgins, the company's vice president for special projects, says processors use technology to their advantage.

"From one standpoint, it facilitates more direct contact between producers, manufacturers, and the ultimate consumer, removing some links. From the standpoint of providing service to all of our customers, from retail suppliers to foodservice distributors, it provides a direct way to give them more account information on a more timely basis," he explains.

Like Johnsonville and many others processors, Red Oak Farms does not sell products directly on their Web site due to logistic and cost concerns. When the company looked into direct e-commerce, it interviewed various consulting businesses and discovered the budget could go up to $50,000 to launch such an effort, while their current distributor system worked just fine.

"We decided to let that simmer for a while," says Hudgins, who is the company's point person for e-commerce opportunities. Now, he says, they have noticed the trend toward online grocery services and are exploring the possibility of that path to e-commerce. "We've determined that this way may be more appropriate for us, but it depends on their resources, their MIS systems, their competency in-house, and their product line," he notes.

Large processors have revamped their Web sites to include more B2B features as well. Dakota Dunes, SD-- based IBP devotes a special section for customers and suppliers on its site at www.ibpinc.com, including contacts for selling cattle or buying products, software for category management systems, EDI information, and PBX transportation services. Perdue Farms', Salisbury, MD, B2B page is designed to "keep in touch 24 hours a day," offers the company bulletin, a list of appropriate operations, purchasing and sales contacts, and frequently asked B2B questions.

Some manufacturers are getting in the dot.com business as a partner. Northfield, IL-based Kraft Foods, whose divisions include lunchmeat king Oscar Mayer, recently became an investor in Food.com, an Internet food and dining destination network offering home and business meals. Todd Brown, president of Kraft's foodservice division, says the company decided to become involved in the site "to better leverage" the growing consumer interest in online food solutions.

"Our strategic partnership with Food.com offers us the ability to participate in the online food delivery and takeout category," he says. "We see this as an opportunity to draw on the expertise of our Kraft Food Services Division serving the food-away-from-home category and our consumer insights to bring value to foodservice operators."

In another Internet-related area, Kraft recently selected Ariba Inc., a California-based e-commerce solution company, to provide a B2B ecommerce platform for the company. The new platform was chosen to help Kraft manage its purchases across the supply chain and increase its economies of scale. This new infrastructure is designed to electronically aggregate corporate purchasing from each employee desktop and direct spending through Ariba's network to preferred suppliers and marketplaces.

Indeed, partnerships, whether with other e-commerce Web sites, e-business consultants or with third-party verification services, seem be a trend that is growing almost as fast as the e-commerce market itself. While the Internet is a tool that connects all segments of the supply and demand chain, it also provides ample new opportunities to link manufacturers and services in exciting new ways.

Many in the industry are looking forward to these dynamis new relationships, which even in their infancy already are creating specific new e-business jobs.

"I think this is the way it will be," says Wayne Rice, co-founder of the Sellmeat.com auction site. "I am personally acquainted with several CEOs, and every one of them has created additional functions that do nothing but specialize in e-business to business."