by Sheila Galatowitsch
E-commerce emerges as a new distribution channel for cleanroom products, but some suppliers and distributors remain cautious.
While many companies take a sink-or-swim approach to e-commerce, ever-prudent cleanroom suppliers and distributors are still testing the waters. Early word is that the Web is fine for sales of certain catalog-type consumables, questionable for more complex products and ideal for information dissemination. But it will never replace face-to-face relationships with cleanroom users—at least not until virtual experts can troubleshoot application problems with the same skill as an experienced vendor.
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Today, only a few sites offer online ordering of cleanroom products. An early adopter, VWR Scientific Products (West Chester, PA), has had its 300,000-product portfolio available for online sales since 1996. Users can create custom ordering forms, which list everything from gloves to wipers to tables, and order right from the form without searching the company's inventory. They can also check on product availability and view their previously negotiated pricing in real-time.
The Web revenue is substantial, but it's minor compared to the sales conducted over the company's internal legacy purchasing system, says Arne Brandon, vice president and general manager of VWR's Production Supplies and Services (PSS) division, which distributes cleanroom consumables, furniture and small equipment. Eventually, the company plans to migrate its internal system to the Web. That's where purchasing is headed, Brandon says. Suppliers and distributors “need to be Web-enabled for the transfer of information and so that customers can look into a glass pipeline to see where the products are in the supply chain.”
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Terra Universal Inc.'s (Anaheim, CA) top-selling products have been available for purchase on the Web for nearly a year, generating a steady sales stream. “We were surprised. We didn't think we would sell anything right away,” says Janice Jordan, director of sales and marketing for the manufacturer/distributor. “We thought we would need more time, exposure and advertising, but customers are using their credit cards to buy furniture priced as high as $5,000.” Hot sellers include cleanroom-compatible stainless steel tables, desiccator cabinets, gloveboxes, hoods and computer tables—and so far, most of the customers are from the semiconductor industry.
E-commerce is still a tiny fraction of its business, but the company expects sales to grow after its giant 1,000-page catalog is completely available for purchasing online. The company is also participating in Web-based buyers' guides and business-to-business auction sites, such as ThomasRegister.com and DoveBid.com.
 Prudential Cleanroom Services’ online presence won’t replace its traditional distribution channels any time soon. |
It wants to add specifications to the manuals already posted online and even offer customer service through the Web. “We are big believers that this is the way the industry is going,” says Jordan. “Our goal here is to be the Lands' End of the Web,” she says, referring to the catalog clothing company that is now an e-commerce success story.
Other companies have no plans for selling over the Web, at least not until it evolves into a better selling vehicle for more complex or specialty products. Analyzing an application is critical to purchasing cleanroom products, says Bill Paley, president of The Texwipe Company (Upper Saddle River, NJ), a cleanroom consumables manufacturer. “The Web is great for getting information from each manufacturer about products, but then there is an evaluation step that needs to happen. And that step requires more interaction between the manufacturer, distributor and customer so that the end user can make the appropriate decision. It's not like buying sheet metal screws.”
In fact, online buyers may not be choosing the best products for their applications. Management at Prudential Cleanroom Services (Irvine, CA) believes vendors and users should work together to identify the right product for an application before users order online. That's why the consumables distributor and reusable garment supplier, in the midst of building an e-commerce capability, doesn't plan to de-emphasize its on-site customer service presence, says Director of Marketing Jerry Martin.
Prudential's on-site cleanroom experts are trained to match products and services with applications. Once the appropriate consumables have been identified for an application, it makes sense to order by case or lot over the Web, says Martin. But the reusable garment business is a different matter altogether. “Reusable textile products require a lot of consultative engineering. It's not a matter of pointing and clicking,” says Terry Lahn, Prudential's vice president of cleanroom operations.
That opinion is shared by many in the industry, including Tom Mulligan, president of American operations at Dycem (Warwick, RI), which manufactures permanent contamination control mats, flooring and ancillary products. Dycem's highly customized products simply can't be sold over the Web, Mulligan says. Instead, the company must rely on an ever-decreasing pool of distributors, especially the on-site integrated suppliers at major cleanrooms—the VWR, Prudential and other distributor representatives. But the company can use the Web to its advantage by educating potential customers about the mats' utility, and thus, creating something of a grass-roots demand for its products.
Both The Texwipe Company and Dycem have no immediate plans for online sales. Instead, the companies have designed their sites to provide information and be a communication venue between each company and its customers and distributors. The Texwipe Company hopes that the Web will help offset the cost of the tons of paper-based information it prints yearly. For Dycem, the Web “eliminates one sales call, one step in the gestation period of a sale,” says Mulligan, and allows users to gather information about a product line in hours, as opposed to weeks. In addition, the company has made its Web site as industry-specific as possible so that cleanroom managers can begin to fit product to application. But a face-to-face consultation with a technical expert is still required for the final custom solution, and Mulligan doesn't see that changing.
There's one company, however, that believes the Web will work best for complex products. eFiltration.com (Chicago), a start-up formed in 1999 to sell industrial and commercial filters over the Web, says it is developing an expert system that will guide users through the filter selection process. “It's our secret sauce,” says CEO Brandon Ost. Buying complex products, like gas phase filters, over the Web requires users to move out of their comfort zone. “Our job is to make it easy, understandable and intuitive to help customers find what they are looking for to solve their problem. They can log on and say, 'Here's my application. How do I get there?'” While development on the virtual expert continues, a human Ph.D. is available online to answer users' questions.
 Matthews |
RIGHT. Matthews: Expects Web site to show a return.
The company has been on a steady ramp-up since receiving $10 million in venture capital funding and plans an IPO in a year or so. Its 25,000-filter inventory includes products for high purity water pumps, HVAC systems and molecular filtration. Filter manufacturers are using the Web site to reach different market segments, Ost says. “Not every cleanroom is an Intel Corp. There are a lot of small cleanrooms out there and the cost is very high to sell to them. Manufacturers look to us to serve the small- and mid-sized market customer.”
Ost doesn't consider eFiltration.com an online distributor, nor does he think the company is supplanting the role of the traditional distributor. “As long as the middlemen can add value, technical support and immediate stocking capability, there will always be a place for them.” Still, Ost says some distributors are rejecting online companies like eFiltration.com because they believe the e-commerce models are out to replace them. Others realize that e-commerce can help expand the breadth of a product line, as well as the technical support capability.
 Jordan |
RIGHT. Jordan: “This is the way the industry is going.”
Most everyone agrees that traditional distributors are not a dying breed. “The capability that a distributor brings to the table cannot be replicated by a manufacturer, even when the tool of the Internet is added to the equation,” says Mike Gaburo, cleanroom group vice president for Cintas Cleanroom Resources (Cincinnati), a consumables distributor and cleanroom laundry services supplier. Cintas is attacking e-commerce through multiple channels: its Web presence, custom sites for users and third-party business-to-business portals and purchasing hubs. Says Gaburo:”There are things customers require that can't be done in the cyberworld” such as just-in-time inventory management, the actual physical distribution and real-time, on-site troubleshooting. Distributors are not just order-takers, says The Texwipe Company's Paley. “As a transaction tool and an information tool, the Web will create opportunities we can't foresee right now, but it won't supplant the existing value-added functions provided by a distributor.”
However, instances may arise where suppliers will bypass middlemen and go straight to the user. For example, some suppliers are turning to alternative distribution platforms, such as FreeMarkets.com, SciQuest.com and BioSpace.com. These Web sites provide e-commerce procurement for the manufacturing/high technology, science and life sciences industries, respectively. When suppliers offer these online companies the same prices as their longtime distribution partners, they create a source of tension with their traditional distribution chain. Moreover, the dot-com companies providing these alternative platforms have no facilities or warehouses and are “nothing more than aggregators of information,” says one distributor who prefers anonymity. “They are fleeting opportunities just watering down the distributor/supplier relationship.” Some distributors fear that their slim margins may get slimmer as suppliers seek alternative channels, that cooperative marketing dollars may dry up and field support may dwindle.
 Terra Universal’s website has been generating a steady stream of online sales. |
One distributor who plans to beef up its e-commerce presence shares some of these concerns. Scott Matthews, president of Filtration Technology Inc. (Greensboro, NC), hopes to have a full online purchasing capability on his company's Web site by fall. Filtration Technology distributes cleanroom supplies and gas and liquid filtration products, and also offers design/build construction services. Among other concerns, Matthews is struggling with how to manage supplier hyperlinks on his updated Web site. If users click out of Filtration Technology's Web site to purchase a product direct from a manufacturer, Matthews is worried that his company wouldn't get credit for the sale. “I lose an order and the manufacturer loses an additional opportunity that a distributor would provide by asking other questions and meeting customers face-to-face.”
Matthews figures it will cost about $20,000 annually to run the site, and he expects it to show a return. Indeed, several of these suppliers and distributors question whether cleanroom e-commerce will provide the kind of return on investment that makes it worth the trouble.
“We have learned that keeping a Web site up to date is a lot more of a resource commitment than we had originally anticipated,” says The Texwipe Company's Paley. “It's one of those things that if you are going to do it, you have to do it right. When you consider the updating, maintenance and technology upgrades required, it's easy to bite off more than you can chew.” Says Cintas' Gaburo: “If e-commerce is a poker game, you've got to be willing to ante up seven figures to get into the game. It's not cheap.”
But it may not be an option any longer, either. “This is not something that is going to go away,” says Prudential's Martin. “For companies to be successful in the distribution of cleanroom products and services, they will need to embrace this concept.” A company's future success is limited if it isn't Web-enabled, agrees VWR's Brandon.
Online selling is just one of many changes impacting the distribution of cleanroom products. Smaller distributors are being absorbed into new mega-companies, and that means fewer distributor choices for suppliers. As users strive to compete globally and drive costs down, they are downsizing their purchasing groups. The remaining personnel have little time for sales calls. Users are also demanding more support from both distributors and suppliers for tasks such as off-site inventory management, planning and forecasting, and on-site technical expertise and purchasing. Moreover, traditional lead generation is changing. If users can get information over the Web, why would they mail in a trade magazine bingo card for the same information?
The irony is that the Web has both contributed to and may help the industry respond to some of these changes. Comfort levels with online purchasing are bound to increase and more products will be sold via the Web. “But it will never be the exclusive distribution channel,” says Gaburo, “at least not anytime soon.”
Find them on the Web
Following are Web site addresses of the suppliers and distributors mentioned in this article.
- www.vwrsp.com
- www.terrauniversal.com
- www.texwipe.com
- www.pos-clean.com
- www.dycem.com
- www.efiltration.com
- www.cintascleanroom.com
- www.filtrationtechnology.com
By the numbers
Are you ready for a trillion-dollar business-to-business e-commerce market? That's what Forrester Research Inc. (Cambridge, MA) expects the market to hit by 2003. Here are some key predictions from the Internet research firm:
- By 2003, U.S. consumers and businesses will spend $2 trillion over the Internet.
- Business-to-business sales will reach $1.8 trillion.
- Online retail sales will hit $144 billion.
- Companies will spend 1 percent of total revenues on e-commerce initiatives.
- Whether by choice or market pressure, many firms will be forced to channel their e-commerce through third-party intermediaries.
- By 2002, most companies will be doing hands-free procurement through e-marketplaces.