Chinese energy giant Sinopec Group has been buying the bulk of its supplies via its own procurement portal for years, and now is opening Epec.com up to allow other companies to purchase on the B2B e-commerce site.
“We found a lot of small companies face difficulties in purchasing, including lacking purchasing experts, high costs and poor cooperation with suppliers,” Wang Zhigang, Epec.com’s e-commerce director, tells B2BecNews. “Based on Internet technology, Epec allows other companies, especially small companies, to share the purchasing resources of Sinopec.”
Sinopec ranked second in the 2015 Fortune Global 500, behind Wal-Mart Stores Inc., with $446.81 billion in revenue in 2014. Revenue fell to $303 billion in 2015 as global oil prices fell and China’s economic growth slowed. The state-run company manages about 120 divisions, with major businesses in oil production and refining and chemical manufacturing. Sinopec also operates 30,000 gas stations and 25,000 convenience stores in China.
Sinopec executives described the procurement portal at a news conference this week in Beijing where they announced that they would welcome other companies to buy on Epec.com. They explained that Sinopec began building its internal procurement website in 2000 to allow its subsidiaries to purchase jointly from manufacturers, the company says. Since then, Sinopec had made 2 trillion yuan ($308 billion) in purchases through its online procurement site, including 150 billion yuan ($23 billion) in online purchases in 2015, according to the company. Sinopec makes most of its purchases online as its total annual purchases amount to about 200 billion yuan ($31 billion), the company says.
15,000 employees in Sinopec works in purchasing. Sinopec also operates 17 technology research centers and manages 25 trading companies, including 14 trading branches located outside of China that do business in 100 countries.
Only suppliers certified by Sinopec can sell on Epec.com. For example, Sinopec says it examines 10 qualities of printer paper, including testing print quality and the likelihood of paper jamming a printer, and only makes the best products available on Epec.com.
For standard products like office supplies, purchasers can order directly from suppliers on Epec.com, just as they would on an online marketplaces like eBay. Sinopec says prices on the procurement portal are typically lower than at other outlets. “We can get the lowest price from suppliers since we buy a lot,” Wang says. “Normally our price is about 20% lower than the market price, even for products like printer papers and ink.”
Epec.com also offers order management functions to buyers. For example, the CEO and the purchasing manager can have different levels of permissions when placing and approving orders on Epec.com. Sinopec says it also allows companies to connect their enterprise resource planning or supply chain management systems with Epec.com.
For large-value and customized products like oilfield equipment that can cost millions of dollars, Epec says it will provide a variety of services to buyers, including quality monitoring, ensuring timely delivery, product inspection and after-sale service.
Sinopec says it opened Epec.com last April in a test mode. Now 25,647 suppliers are selling 153,000 products and 1,615 companies have spent 14 billion yuan on Epec.com. Sinopec says suppliers are adding 13,000 product listings a month on average and monthly sales are growing at 10%.
Companies outside of Sinopec now account for about 10% of purchases on Epec.com, the company says.
Li Juncheng, vice general manager of China National Erzhong Group, a large equipment company, said at the Beijing news conference this week that Epec.com offers some of the same features available to Chinese consumers when they shop from the 8 million merchants on Taobao.com, the leading retail site in China, operated by Alibaba Group Holding Ltd.
“We can order online, talk to suppliers directly on the site and review their services after purchasing,” Li says. “Our order-error rate fell 15% after using Epec.com. Also, the purchasing experts at Sinopec help us find the best suppliers. We have increased purchasing efficiency by 20% after working with Epec.com.”
Epec says it welcomes suppliers and purchasers from all over the world. Canada oil company Syncrude Canada Ltd. recently purchased 11,000 tons of steel pipe via Epec. “Highly professional procurement process,” Syncrude said in a statement released at the news conference. The overall result exceeded expectations, achieving a saving of $600,000 over previous purchase.”
U.S. based General Electric Co. is among the suppliers selling on Epec.com. “We will first sell our gas compressor via Epec.com as a test, hoping it can generate more sales for us,” Stephen Hinson, GE Oil & Gas China’s operations leader, told the news conference.
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