It is only when a workable website turns a business model on its head that people really begin to understand how the Internet can change traditional business.
The latest example to shake up an industry and have a direct impact on the company share price is Irish fruit company, Fyffes. Last week, it officially launched worldoffruit.com, the first Internet fruit market.
Since the site was announced in December, Fyffes' share price has risen 64 per cent to an alltime high this week of €2.70 (£2.13). Following the official launch at the Fruit Logistica 2000 exhibition - the showcase of the fruit world - in Berlin last week, Fyffes shares soared from €2.25 to €2.58.
The reaction is typical of the Internet mania which has seen stock markets sign up to companies which manage to transform themselves overnight from plodding entities into new-age pioneers. Such a move couldn't come quickly enough for Fyffes whose share price has suffered recently hitting a 12-month low of €1.60.
The fact that worldoffruit.com chose the Berlin exhibition to announce a new strategic partnership with Computer Sciences Corporation (CSC), has done much to concentrate investor minds everywhere. CSC has a strong track record as a developer of Internet marketplaces having created E-Steel.com, Plasticsnet.com and Chematch.com.
Launched with a $10 million (€9.7 million) investment from Fyffes, discussions have already begun for venture-capital funding which is expected to amount to more than $20 million, according to industry sources.
The Internet is a natural fit for a commodity product like fruit. Worldoffruit.com will operate as a virtual trading platform where buyers and sellers of fruit can conduct competitive deals by matching themselves with their ideal trading partners.
A key characteristic of the fruit industry has always been seasonal fluctuations in prices. The worldoffruit.com site will provide online trading and auction facilities, similar in many ways to how fruit trades are normally conducted, except the Internet extends the reach beyond traditional industry contacts to a much wider market.
"Today you have to phone the person, haggle on the phone and then await fax confirmation. The online trade option is more immediate. You get an instant response and there's no time wasted missing phone calls or faxes," says Mr Alan Holmes, managing director of worldoffruit.com.
Worldoffruit.com is a natural extension of a site launched by Fyffes in November, specialising in business-to-business trade. FruitXchange is an online trading system where buyers and sellers choose their traders and enter into one-to-one negotiations. The new site will incorporate fruitAuction where trades can be conducted between multiple buyers and sellers through a bidding process. Mr Holmes says worldoffruit.com will provide the forum for people to trade, it will not guarantee transactions, or look after order processing.
"In the same way it operates now, people know who they are dealing with and who they want to do business with. As the site develops we may add an online trading service for the logistics end, which will operate like an exchange for organising fruit transportation."
The worldoffruit.com service will remain free to registered users for a limited period, after which the site will generate revenues through commissions from sellers. With the global fresh produce industry currently valued at $250 billion, Mr Holmes estimates between 10 per cent and 20 per cent of this business could be online within five years.
"We plan to offer free trading for as long as it takes to develop a significant customer base, and then our commissions will be modest by comparison with traditional charges. Once we get significant volumes coming through, our business model sees us becoming profitable sometime within year three," Mr Holmes says.
Already the site is generating considerable interest among fruit traders. When FruitXchange launched in November it brought 25 traders online, since then worldoffruit.com has taken on a further 35 members, and in its first day at Fruit Logistica last week 12 members signed up.
The worldoffruit.com initiative is a classic example of a perceived industry threat being transformed into an opportunity. The idea originally came about when Fyffe's IT department set about examining the impact of IT systems and the Internet on Fyffe's business.
A prototype of FruitXchange was developed, and as a keen Internet user, Mr Holmes - then working in the corporate finance department - saw the case for funding the new business model.
With 11 people currently working full time on the site, Mr Holmes plans to take on another 20 by summer. A key element, he says, is ensuring a strong global salesforce to introduce traders and educate them about using an auction site.
