Dot-com fever

Feeling bombarded by e-marketplaces? You're not alone.

By -- Industrial Distribution, 4/1/2000

Pretty soon they will run out of names.

Domain names, that is. URLs. I mean, how many startups can they think of?

How many upstarts can there be fresh out of business schools, whose parents or uncle worked for safety distributors or abrasives manufacturers?

The founders of many electronic marketplaces often have roots in some gritty industry and apparently saw the virtual light.

In the construction materials sector alone, the number of dot-coms is staggering. There's BuildNet and BuildPoint, BuilderSupplynet and ebricks.com. There's 1stoptools.com and buzzsaw.com. I've probably left out a dozen. And so it goes.

It's hard to get one's arms around the barrage of online marketplaces. Each is so new and the pitches often sound alike: supplier-centric, buyer-supplier neutral, and the like. It's easy to question whether the laws of supply and demand still apply.

But maybe that's just it. Perhaps this is merely the buildup to the great shakeout. Demand obviously has come on strong from CFOs, plant managers and contractors who want to cut their procurement costs. The question is, which dot-coms will survive to continue enabling the supply? I imagine that in a few years, the inevitable implosion won't be pretty.

Meanwhile, we can expect the buildup to continue for some time. Distributors are joining the dot-coms in vast numbers. One authority on e-commerce trends, Forrester Research, expects that in four years more than half of all B2B trade will be conducted through e-marketplaces. In a survey Forrester did of more than 500 corporate leaders, 71 percent plan to extend their business processes to e-markets.

Still, some of these MRO portals remind me of those appliances and gadgets advertised on TV a lot in the 70s and 80s. The kind that promised everything to anyone, the ones later lampooned on Saturday Night Live: "Try the new Bassomatic. It slices, dices and splices ..."

This isn't to suggest that any particular dot-com makes claims it cannot deliver on. But it comes down to buyer-and distributor, and supplier-beware. Do your homework. Talk to another company about their experiences.

Despite this feeling that some dot-coms won't be around for long, there's no doubt we're only seeing the beginning of e-marketplaces.

Some serious players have recently stepped in. Take the Big Three automakers announcement they will form a joint Internet exchange for suppliers, which would be the largest Internet business ever. Currently, GM, Ford and DaimlerChrysler purchase about $250 billion a year from their suppliers. And there's talk of expanding the exchange to include other industries.

Slighter - but no less important-initiatives have come recently from several emerging players in the MRO and construction supplies sectors. A few examples include supplyFORCE.com's acquisition of software developer IDP Solutions, MRO.com's purchase of catalog services and management tools provider INTERMAT, and BuildNet's acquisition of software developer NxTrend Technology.

Any way you look at it, sometime soon there's bound to be a whole lot of shakin' going on.

Ken Brack is Web Manager of ID Online. Your comments are always welcome at kbrack@cahners.com.