Digital River Runs into Potomac

e-Commerce services provider targets business-to-government market

Minneapolis  June 13, 2001  Online e-commerce services provider Digital River has announced that it is expanding into the business-to-government (B2G) market, allowing the company's clients to sell their products to government entities and agencies over the Internet.

In an announcement, Digital River, which creates and hosts e-commerce sites for companies ranging from software provider Symantec to bowling ball kingpin Brunswick, said it will make its initial entrance into the B2G market by focusing on its current software and digital commerce clients.

The move comes at a time when federal agencies reportedly are increasing their purchases of off-the-shelf software packages. Research firm Gartner Dataquest, for example, estimates total spending in this category will rise from $6.4 billion in 2000 to $9.65 billion by 2005, an annual growth rate of 8.5 percent.

Digital River wants its share of that growing pie, according to Joel Ronning, Digital River's CEO. "Our e-commerce experience and research supports Gartner's market opportunity estimates," Ronning said.

The first Digital River client to announce its government strategy is Tiny Software, a provider of router and firewall software solutions for small to midsize networks. Tiny's president and CEO, Roman Kasan, said his company would give up its previous system for selling to the government and hand the operation over to Digital River. "By having Digital River concentrate on its core e-commerce competency, we are able to focus on our core competency: developing firewall solutions," Kasan said.

To support its B2G initiative, Digital River plans to make use of the existing features of its e-commerce system, including physical and digital product fulfillment, online purchase orders, electronic license management and volume licensing.

Digital River also said its systems will allow government clients to identify, validate and protect different levels of discounts, as well as perform verification and screening protection to support e-procurement and other B2B complexities.

Companies can use the Digital River system to sell products to the government once they have received appropriate government approval via a blanket purchase agreement, government-wide acquisition contract or General Services Administration compliance.