How small companies can instantly court GoliathsApril 4, 2012: 11:19 AM ET
The expansion of business-to-business sites has, in recent years, offered an opening for smaller players to land big-company accounts.
FORTUNE -- When Kevin Govin, CEO of rubber stamp maker MarkMaster, looks for business from big companies, he doesn't rely on traditional sales pitches alone.
Often, he uses Ariba, which hosts an online marketplace where entrepreneurs can bid on jobs that business Goliaths want to fill.
Tampa, Fla.-based MarkMaster, which has 100 employees and revenues in the $12-$15 million range, gets 15-20% of its sales through Ariba, Govin estimates. While he can't disclose the names of his clients, he says, "I have nine of the top 10 banks in the U.S."
"We have mad Ariba skills," says Govin, whose company has used the system for 12 years.
For many small companies looking for big-company accounts, the best way in the door has traditionally been through old-fashioned networking at venues like trade shows, even in the digital age. Fortune 500 companies, traditionally careful about doing business with small vendors, often put in place complicated vetting processes to protect their brands.
However, the rapid expansion of online marketplaces has, in recent years, offered an opening for smaller players to come in through the back door. As many small firms are finding, big companies are increasingly comfortable posting jobs and projects in these digital venues. "We have jobs that are sometimes [worth] millions of dollars," says Tim Minahan, chief marketing officer of Ariba.
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While Ariba is known for working with the Fortune 500, small businesses are increasingly finding work on sites like oDesk, which is probably better known for serving small firms looking for help with tasks like web development. Faced with shortages of the tech help they need in certain metro areas, big companies are turning to oDesk to find contractors in cities where talent wars are not as intense. "Contractors find clients of all sizes," says Thomas Layton, executive chairman of oDesk.
While preparing a bid for one of these sites takes time and effort, some entrepreneurs say they have been pleased to discover that it's possible to win jobs with substantial sized companies this way.
Michelle Watson, a former high school English teacher who is self employed as an editor in Santa Maria, Calif., has been hired for content editing projects with a large search engine company and a large online marketplace through oDesk. She was contacted and interviewed by oDesk's enterprise services team to oversee small teams of writers under the supervision of oDesk's project's managers. "That's been a nice experience," she says.
To be sure, it's not always easy for a small player to win high-paying jobs through these sites. Lisa Merriam, owner of a one-person marketing firm in New York City, has worked with many large clients over the years. While she has won the occasional project for a big company through markets like eLance -- such as a project for a large regional fast food chain in 2008 -- most of her big-client relationships have come through other routes.
"Most serious companies that have a budget are going to find those resources through networking and recommendations," she says. "They are not going to put it out in front of the rabble. It doesn't benefit the client to use those. You end up getting buried in hundreds of responses from people from all over the place. You have no way to evaluate them other than price."
Some small business owners say that low-priced, overseas contractors who cater to small business clients on very tight budgets have dominated the popular marketplaces.
"There are certain expectations on the part of the clients [who] use them that they're going to get the lowest price out there," says Thursday Bram, who runs digital content consultancy Hyper Modern in Savage, Md. The pricing structure on some sites, which require contractors to pay a percentage of each job and, sometimes, additional fees, can take a bite out of profits, she notes.
But for some companies, the benefits of access to an online marketplace outweigh the disadvantages. Mediafly, a Chicago firm which helps big companies present their content on mobile devices like the iPad and smartphones, has been able to grow without an infusion of venture capital so far, partly because of one service offered by Ariba: "dynamic discounting." Mediafly submits invoices to one of its biggest customers through Ariba, offering a price break if they are paid quickly.
"It gives us an opportunity to get our cash much faster," says Matt Suggs, vice president of enterprise sales. Sometimes, for a small company, that concern trumps a lot of other things.
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