The gleaming yellow, green or orange paintwork that is traditionally associated with new excavators, loaders and dumptrucks is nowhere to be seen at Yellowtrack's offices. Nor is there a dealer's yard with prospective customers kicking tyres.

Yellowtrack is not part of the standard offline trading system in the construction equipment industry. Used worldwide for decades, this involves OEMs (original equipment manufacturers) selling machines through tightly-controlled regional dealer networks.

In contrast Yellowtrack, which began operations only last autumn, is an online procurement network with just 10 employees. It is based at the open-plan London offices of GorillaPark, an internet incubator which is one of the company's two main investors.

Simon Thornton, Yellowtrack's Australian founder and managing director, is a former executive at Caterpillar, the world's largest construction equipment company, and is typical of the entrepreneurs trying to create new business models for selling equipment. "In the industry everything is about sell, sell, sell," he says. "I thought there must be a way of using the internet to help customers buy equipment."

The company is one of several online exchanges to have emerged with easy-to-remember, macho-sounding names such as Dirtpile, IronPlanet or Ironmax. Most are based in North America and concentrate on the local markets. Some focus only on selling used equipment.

Other sites offer construction equipment as part of a broader package of services and information for the industry. But perhaps the most interesting sites - and potentially challenging for the traditional industry - are those that offer a novel method of purchasing new as well as used equipment.

Boston-based Dirtpile, for example, sells light and heavy equipment but also garden equipment, work clothes and even construction toys. Connecticut-based EarthKing promotes itself as an independent, unbiased internet marketplace for the construction and mining equipment industry, while North Carolina-based TaskPoint focuses on new and used equipment at the lighter end of the market.

Europeans have been slower to get in on the B2B act but are beginning to make some headway. Mr Thornton at Yellowtrack focuses on new equipment partly because there is, he says, so much subjectivity in selling used machines, but also because he sees a clear opportunity in offering a totally independent service, procuring machines of any brand from wherever they are available across Europe.

The machines are sourced normally from dealers, which typically may have pre-ordered and been left with too much inventory. The customers are either end users or banks and asset management companies that lack detailed knowledge of the equipment market but want to participate in financing equipment purchases.

Mr Thornton will not disclose business levels, but says buying targets are being achieved. The company did not set itself unrealistically high sales targets for its first six months - "we are just going quietly about building the business", he says - and hopes to be trading profitably by September this year.

As in other industries, these are early days for online marketplaces in construction equipment, and it is too soon to say which will have any lasting impact - some have already had to alter their business model to keep going. Nor is it possible to say yet whether online purchases of construction equipment will be anything more than a niche alternative.

And, crucially, if the internet does take off as a sales channel, it is far from clear what the relative online roles of the new, independent or semi-independent exchanges and that of the existing OEMs and dealerships will be. When one of the new sites trumpets the sale of its 100th machine, it is hard to imagine the big, established dealerships quaking in their boots.

Nervousness about the internet

Yet David Phillips, managing director of London-based Off-Highway Research, detects a sense of nervousness in the industry that the internet could erode the dealer network, or reduce the importance of the relationship between the end user and the salesman. "The industry is nervous because we are still really at the start of day one," he says.

The exploitation of web-based selling or marketing by the OEMs and their dealers is patchy at best. A recent study by the consultancy Roland Berger & Partners of 120 US industrial equipment manufacturers found more than half used their websites only to provide information about products and services. On the other hand, both John Deere and Ingersoll-Rand, two important US agricultural or construction OEMs, feature among those companies that are using e-business applications extensively to improve their operations.

Similarly, a study of the UK construction equipment sector by Off-Highway Research, for the UK Department of Trade and Industry, found the level of information in the sites and the efforts to make them into marketing tools achieving very variable results. The degree of development of the websites was "reasonably encouraging", with 22 of 34 sites surveyed being used actively as marketing tools. Only five were still at the stage of being mere business cards.

Clearly, the traditional OEMs need a coherent strategy for the web, such as has been developed by Cat. Rather than set itself up as an online competitor to its own dealers, as some OEMs are attempting via behind-the-scenes participation in the new B2B exchanges, Cat is using the web to strengthen its dealer network for mutual benefit, says Sid Banwart, chief information officer.

It has developed, for example, an electronic Dealer StoreFront, which has a common look and feel worldwide. "Initially some dealers put up their own websites, but we delivered so much capability that two pilot dealers decided to redirect their sites to our Dealer StoreFront instead," says Mr Banwart.

Features that dealers can incorporate into their sites include a PartStore, a machine configurator and online machine monitoring and diagnostic reporting. The PartStore (B2C) allows individual customers to find and purchase parts online from the Cat dealer.

Already, the strategy is bearing fruit in Cat's compact machinery business, where new customers are locating Cat dealers at www.cat.com, configuring their machine and seeking a quotation. "When the customer pushes the button [for a quote], it puts him in contact with the local dealer," says Mr Banwart.

The concept of a web-driven, build-to-order environment is crucial for Cat's strategy in compact machinery and last year the company announced a comprehensive strategic alliance with i2 Technologies, the USsupply chain software group.

"The benefits of a build-to-order model include giving the customer exactly what he wants and eliminating massive amounts of inventory. It all adds up to a very powerful way to reduce costs throughout the supply chain," says Jeff Bodenstab, vice president of worldwide marketing for i2's automotive and industrial business units.

Further web-based developments are in the offing at Cat, including modules for customer financing, rental, used equipment and the (B2B) PartStore, which will enable customers to use their own purchasing systems to place parts orders online with the Cat dealer.