Harvesting an E-Commerce Solution

B.E. 100s CEO Chuck James hangs out an e-shingle and brings new technology to the produce business

Call it e-frenzy. More and more consumers, as they make their first or 50th purchase online, are ramping up the impact of Web commerce on the economy-an impact projected to reach $101.1 billion in retail sales by 2002.

But a new lion is roaring: a network of business owners and budding entrepreneurs. A recent study by Forrester Research, Cambridge, Massachusetts, reports that business-to-business Internet sales have overtaken business-to-consumer Web transactions and are expected to increase from $176.8 billion in 1999 to more than $1 trillion by 2003 (compared to estimated consumer sales of $143.8 billion for the same period).

Into this fertile e-climate comes ProduceOnline.com (www.produceonline.com) and its founder, president and CEO, Charles “Chuck” H. James III. James’ goal is to capitalize on the tidal wave of Web b-to-b commerce, which is reshaping the landscapes of new dotcoms and old-line businesses alike.

RIPE FOR BUSINESS
According to the Produce Marketing Association, fresh produce in the U.S. is an $80 billion industry. George Dahlman, a food industry analyst with U.S. Bancorp Piper Jaffray, says that the percentage of b-to-b produce transactions conducted online is currently very small. The Packer, a produce industry trade journal, estimates it at less than 1%. “But in the next five years, that figure could jump 25% to 30%,” says Dahlman.

A primary reason for the potential growth is that produce buyers’ and sellers’ markets are highly fragmented. “There is a high degree of geographic diversity and
seasonality of products,” continues Dahlman. This scenario offers an opportunity for “creating a centralized marketplace, which is probably best accomplished on a virtual basis. Thus, the Internet is the logical place to go.”

ProduceOnline.com is hoping its customers will agree, and is looking to centralize and streamline transactions between the world’s numerous wholesale buyers and sellers of fresh produce. The evolution of ProduceOnline.com into a viable e-business provides an inside look at what it takes to get up and running in cyberspace.

PLANTING THE SEED
James is no novice to the produce industry. In fact, he is a fourth-generation produce industry entrepreneur. “As a child growing up in West Virginia, I always knew I would someday work with my father,” he says. In 1985 James joined the family business, and in 1988 he succeeded his father as CEO of Charleston, West Virginia-based C.H. James & Son (Holdings) Inc. (No. 78 on the be industrial/service 100 list), the original holding company for ProduceOnline.com and other e-commerce ventures.

Founded in 1883 in Charleston, C.H. James & Co. is one of the oldest family-owned enterprises in the country. Started by James’ great grandfather, over its 117-year history the company has evolved from its origins as a produce wholesaler into an international produce distributor, most recently operating as the parent company of North American Produce, which served such major clients as McDonald’s.

In 1999, facing increasing competition as a result of industry mergers, James decided to divest North American Produce rather than invest the capital needed to meet the industry’s changing demands. C.H. James & Co. sold North American Produce, which had revenues of

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