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VerticalNet pushes ahead in B2B, forms new units

Aiming to be more robust in the popular online-exchange market, VerticalNet sets up three business units, with one focused on business-to-business software.

Aiming to build a stronger and more competitive company in the popular world of online exchanges, VerticalNet today said it has set up three business units, with one focused solely on selling business-to-business software products.

VerticalNet hopes the new strategic units--one each for markets, exchanges and solutions--will better serve customers' needs, such as building a digital marketplace or integrating with any of the 57 industry-specific Net marketplaces the company already operates.

Marketplace ventures have been steadily emerging because they are thought to help companies cut costs through improved price and inventory management. Horsham, Pa.-based VerticalNet, which operates sites ranging from Food Online to Solid Waste.com, faces marketing-heavy competitors Ariba and Commerce One in the popular business-to-business field.

That field is poised to break the trillion-dollar mark in the next four years, but investors have lost some enthusiasm for formerly high-flying companies such as VerticalNet and its competitors. The lull in the sector stemmed partly from an overall market correction in the spring that brought some of these companies' stock prices back to earth, but also from uncertainty over the future of these marketplaces; some industry exchanges have yet to become operational.

Today's announcement of separate business units comes just two months after a major management shuffle at the company. In July, VerticalNet appointed Joe Galli as its new president and chief executive officer. Galli left his post as chief operating officer and president of online giant Amazon.com after just 13 months on the job.

VerticalNet wants to use its five years of experience in building and operating marketplaces to expand its customer base. "We can leverage that expertise and sell our platform to industry alliances" and other outside customers that want to operate online marketplaces, said Michael Hagan, the company's co-founder and chief operating officer.

For the most part, the Markets division will continue to add buyers and sellers to its 57 marketplaces and give them access to additional content and resources. The Exchanges division will focus on industry alliances that are banding together to build more high-end, high-volume public exchanges.

The Solutions unit is a new business-to-business software division dedicated to selling a combination of the company's existing software suite with products from recent acquisitions to help customers build their digital marketplaces. The unit will be headquartered in San Francisco. The company did not disclose where the other two divisions will be based.

Each unit will be accountable for its own financial performance, the company said.