Several years ago, consumer marketers eagerly joined online malls in the belief that, like their real-world counterparts, the malls would draw additional traffic. Now business marketers have gone one better, with the proliferation of industry-specific portals.
Within the past year or so, such industry portals as Chemdex (laboratory supplies), E-Steel (steel industry), and ChipCenter (electronic components) have opened for business. These online marketplaces aim to meet all the needs of buyers in a particular market segment. Visitors to the portals can read the latest industry-related news, exchange information and services with others in the field – and of course, buy and sell merchandise.
For customers, the benefits of portals are obvious: The sites epitomize one-stop shopping, and with numerous competitors featured on one portal, prices will be highly competitive. “Trading partners and prices are becoming more elastic” since the advent of business-to-business portals, contends John Berry, vice president of marketing for AppNet Systems, a Bethesda, MD-based e-commerce consulting firm. Buyers have been used to working with one or more suppliers for long periods of time, he adds, “but now they will have different kinds of relationships, depending on the items they’re buying.”
But what’s in it for online marketers? Wouldn’t they be better off with their own, solo Websites?
For many manufacturers and business marketers, particularly smaller ones, joining a portal allows them to create a more robust Web presence than they could afford on their own. “We’re an interface between manufacturers and farmers,” says Kip Pendleton, founder/CEO of St. Paul, MN-based DirectAg.com, a portal that went online last summer with an electronic eye toward selling animal feed, crop protection, farm machinery, financial services, and other goods to the $80 billion agricultural market. “We work with manufacturers to take their digital product information and transfer it into our templates. They have print catalogs they’ve converted into a digital format,” says Pendleton, whose background includes 16 years in sales and marketing in the nonvirtual farm industry.
In January, Stine Seed Co. in Adel, IA, began offering its soybean, hybrid corn, and winter wheat seed products through DirectAg. Nearly half of Stine’s annual seed orders had already been placed through its network of 3,000 dealers, yet the timing for going “live” was still critical, explains David Thompson, Stine’s communications coordinator. There were plenty of purchases yet to be made, and Stine wanted to be the first among competing seed companies to make the e-commerce leap. Thompson claims that among the top five sellers of hybrid corn and soybean seed, so far Stine is the only one with an e-commerce presence.
While Stine’s annual print catalog is not used for direct ordering, it has been an important sales component since 1979. “Dealers can go through the catalog with a customer and tell him about available products,” Thompson says. “It’s a useful reference piece. But there’s only a certain amount of information you can fit in a catalog’s finite space. You can highlight products, but not with too much depth.” DirectAg allows Stine to greatly enhance the catalog, with links to data sheets, product evaluations, and information on how a certain seed might respond within the customer’s exact location.
Certainly, Stine could have enhanced its existing, nontransactional Website with such features, but that would have required a considerably larger investment, Thompson says, though he won’t supply specific figures. “One option was to produce our own e-commerce component, but in the end we decided it was not the best use of our time and resources, because other systems were in place that already had it together.” In other words, why reinvent the wheel?
Then too, with their noncommercial content, such as news feeds and advice from experts, portals offer online users plenty of reasons to return regularly – and such stickiness can encourage repeat business. What’s more, the DirectAg portal gives marketers newfound sales tools, such as financing. Rather than lose a sale that hinges on the potential customer’s ability to secure financing, Stine’s dealers (who fulfill any orders placed on the system) can direct the prospect to one of the lenders also on the portal. “We don’t want to just sell seed,” Thompson asserts. “We want to offer a comprehensive package, a bundling of products and services that benefit the customer.”
Another benefit to the customer and the marketer alike is offered by portal developer/operator eB2B, whose forthcoming portal, eB2Bgolf, aims to bring together manufacturers of golf clubs, balls, carts, and related products with specialty golf retailers and pro shops. Austad’s Golf, which operates eight stores in the Midwest, has already signed on as a buyer, because “we’ll be able to connect our computers to the computers [of manufacturers participating in the portal] to order products,” says president Dave Austad. “That link is key.”
In addition to providing direct systems links between buyers and sellers, eB2B will handle ordering, inventory management, shipping, billing, and customer service for participating merchants. While fees vary depending on the services and systems requested, both eB2B president Scott Barnett and Wes Boyd, director of Internet marketing and e-commerce for portal participant Adams Golf, say that the costs are appreciably less than for building an independent transactional Website from scratch.
“If we had done this on our own, there would be significant costs involved in developing a system,” says Boyd, whose Plano, TX-based company manufactures and markets the Tight Lies line of clubs. “The neat benefit to us and our sales reps is that we stop doing all the paperwork and spend more time on strategic selling.”
Business-to-business e-procurement has become big business for a number of companies in a very short period of time. “All of these sites are telling manufacturers, ‘You don’t have to worry about distributors or jobbers anymore: We’ll handle those transactions for a small fee,'” says Don Libey, president of Philadelphia-based catalog investment banking firm Libey Inc.
In addition to online ordering through a vast array of vendor partners, most of these sites offer specific industry community features, such as news, bulletin boards, and information on upcoming trade events.
Below, a few portals with their missions and offerings:
Chemdex integrates the entire procurement process, from requisition through order fulfillment and billing. The portal assumes responsibility for database maintenance and upgrades, which helps enterprises reduce their total cost of ownership and avoid costs associated with custom-designed procurement systems. The site enables b-to-b procurement agents to work seamlessly with some 400 vendors in the life-sciences laboratory-supplies market.
Calling itself “the first comprehensive online service for electronic-component information and sourcing,” ChipCenter is co-owned by Arrow Electronics, Aspect Development, Avnet, CMP Media, and Pioneer-Standard Electronics. The site includes an online magazine entitled Circuit Cellar.
This portal for the international steel industry boasts that participants include more than 1,340 companies – including 149 distributors and 101 original equipment manufacturers (OEMs) – from more than 65 countries.
www.parts.com (formerly Miracom Corp.)
Launched on Jan. 23, Parts.com offers automobile-parts OEMs a real-time exchange between buyers and sellers. The company plans to launch a print catalog in the near future.
As its name indicates, Plumbing.com is designed to be a one-stop shop for plumbers, as well as for plumbing supplies distributors. It offers more than 60,000 products from some 35 vendors.