12/22/2010 12:56 pm ET Updated May 25, 2011

OfficeArrow: Startup Offers Groupon-Like Model For B2B Deals

Online group buying is not only changing the way consumers buy from businesses, one new startup is using it to change the way businesses buy from businesses.

Called "Groupon for the business world" by the Wall Street Journal, enables small companies to save by collectively purchasing discounted supplies and services.

Here's how it works: Merchants that sell office items or business services work with OfficeArrow to customize deals that give small business buyers anywhere from 50 to 90 percent off things like computer keyboards, payroll service subscriptions and Microsoft Excel training software. After 24 hours on the site, the deal expires and the merchants, most of which are small businesses themselves, split the generated revenue 50/50 with OfficeArrow, much like a Groupon does.

OfficeArrow CEO Robert Ball suggests that merchants write off the revenue loss as an advertising cost.

Posting deals via OfficeArrow "is really a customer acquisition play for small business vendors," says Ball, a former sales executive and attorney. "Usually, their initial reaction is: I have a new customer, now I'm in a good position to have their information, form a relationship with them, and cross-sell and up-sell."

These days, roughly half of business to business budgets are spent on repeat purchases, according to Enquiro, a leading search marketing agency. For these types of purchases, ordering online is the most preferred way to buy, favored by nearly 60 percent of businesses.

Launched in 2008 as a networking service for small business owners, OfficeArrow now boasts a community of over 300,000 users, to whom it blasts out the daily deals.

"We can do anywhere from 10 to 20 times the sales most small businesses do on a normal day because we're able to broadcast the deals to our community and the people who sign up to our e-mail list," Ball says.

OfficeArrow's service has spawned a host of business to business group-buying sites like GroupPrice and BIZCounts.

(In the coming weeks, OfficeArrow CEO Robert Ball will be contributing a series of blog posts on group-buying and whether it makes sense for your business.)