Under terms of the agreement, Giant Eagle will use FreeMarkets' online auction marketplace for purchasing, the company said in a statement.
The announcement comes one day after FreeMarkets introduced a new version of its BidWare technology, which powers online marketplaces. Bidware 3.0 supports real-time auctions and 29 different auction formats; and it allows suppliers to conduct online bidding in multiple currencies, the company said.
Giant Eagle joins a growing number of traditional companies moving online to buy and sell goods in an effort to reduce costs.
Shares in firms providing the "plumbing" to build these new business-to-business markets have soared in recent months. That's due in part to analysts who expect the market for commercial transactions to grow to $5 trillion by 2002.
FreeMarkets' stock closed at $ 228.31 a share yesterday.