Mediagrif eyes U.S. market with B2B buyout

Canadian e-business giant, Mediagrif Interactive Technologies Inc., is one step closer to a possible expansion into the American B2B automotive space through the recent purchase of RBC

Financial Group’s 50-per-cent share in B2B Vertical Markets.

The deal makes Montreal-based Mediagrif, best known for operating the Merx public sector tendering service, the sole shareholder of B2B Vertical Markets (B2BVM), a holding company that owns Carrus Technologies Inc.

Based in Longueuil, Quebec, Carrus is a provider of business management software and online parts-ordering solutions for the automotive aftermarket supply chain.

Denis Gadbois, chief executive of Mediagrif, emphasized his company can now make decisions with respect to Carrus that are uninhibited by RBC’s needs. This makes an expansion into the U.S. more of a possibility, he suggested.

“”(Before this transaction), Carrus didn’t have a lot of resources to look at the U.S. market because we wanted it to focus on Canada first and better serve the customer base of the bank. But now if we want to expand and look at the opportunity on the U.S. it will be easier to do.””

Gadbois added that Medigrif has the resources to re-invest in Carrus if needed.

“”If we want to expand the business model or re-invest in specific activities we’ll do that.””

The possibility of a Canadian company operating a North American vertical for automotive parts would be quite an accomplishment, added Charles Davis, an e-business professor at the University of New Brunswick. That Mediagrif made the initial investment in Carrus is significant in and of itself since the Montreal firm was focused on “”tight niches”” only a few years ago, said Davis.

“”It looks as though they’ve decided it’s a good time to invest in larger, broader verticals,”” he said, adding this may prove that customers are willing to spend more on this technology and that an IT resurgence may be in the works. “”Mediagrif has certainly shown it’s a knowledgeable company and they don’t just jump at things.””

Davis suspected there’s a need for a North American “”vertical place”” where customers can get new and used automotive parts.

“”Retailers could go to one place to get all the parts they need. Look at how many automotive parts stores there are,”” he said.

However, the value of a common network for the automotive industry hasn’t been demonstrated yet, said Gadbois.

“”The value is between one jobber (a local distributor of automotive part) and his customer base of 200 or 300. The value is still local. It’s not within a network, under one industry just yet.””

Gadbois pointed to Covisint’s original model as evidence. Formed by DaimlerChrysler, Ford, General Motors, Renault and Nissan in 2000, the online marketplace for the auto industry has faced several challenges in its effort to offer a virtual marketplace and auction house for industry suppliers and manufacturers.

Covisint’s original model failed because there aren’t a lot of companies that can supply $400 million worth of mirrors to GM, for example, said Gadbois.

“”The requirements to sell to these large buyers are more complex. (Covisint) is supporting the process more than creating value through a centralized database like we’re doing. In our case, we need to bring in information from different sources, aggregate that, standardize that, and make it available to the community.””

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