What happened to the Dot Coms?

Goodbye, CyberCleaning.com. So long, GlobalSupplyNet. See you later, JanCentral.

Just three years ago, all of these Web-based companies and many more were competing for the attention — and business — of building service contractors. At trade shows, e-commerce vendors lined up to present their wares to receptive crowds. In November 2000, Contracting Profits listed 18 Web sites among those BSCs could utilize to buy supplies and sell services; similar Web sites were profiled in the recent past. Investors in these ventures were convinced they were about to strike gold, even as they were burning through hundreds of thousands of dollars of venture capital on eye-popping designs, powerful software and marketing.

These ventures represented grand promises. Get everything you need to run a successful cleaning operation, at rock-bottom prices. Streamline your operations, track your purchases, and do so quickly and conveniently, without ever picking up a phone or listening to a sales pitch.

Convinced these online consolidators, mega-malls and one-stop shops would revolutionize the industry and outprice and outperform them, traditional distributors scrambled to get online, often signing up with third-party e-commerce providers that knew little about the cleaning business.

But three years later, a quick check shows eight of those Web sites listed in Contracting Profits are no longer around, including some sites touted in mainstream media as the next big revolution is a particular industry. In spite of capital outlays, assembled expertise and sophisticated promotions, those sites that did survive were forced to rethink strategies.

An e-commerce autopsy
Part of the decline in cleaning-related e-commerce sites was part of a snowball effect triggered by rapid bankruptcy and dismantling of thousands of once-promising Internet companies (sometimes referred to as the “dot bomb”) and concurrent economic downturn of the last few years.

Most of the defunct sites were online national distributors, such as JanCentral.com, Maintenance Mall.com and PurchasingCenter.com. Although the mechanics of these sites differed, the basic idea behind them was that BSCs, in-house cleaners and other professionals (and sometimes, the public) could log on and buy from an open catalog. Some of these sites functioned much in the way that an Amazon.com does for consumer products — anyone in the United States could log on, order some supplies and have the products shipped from the company’s own warehouses via a delivery service such as Federal Express or the post office.

A few sites established relationships with traditional distributors for fulfillment, or were even able to provide preferred pricing for a distributor’s existing customers. But contractors were slow to sign up, and even those sites with growing customer bases were struggling.

“Their business model was all wrong,” says Timmy King, chief information officer for ProLink Inc., a distributor group based in Canton, Mass. “They spent hundreds of thousands of dollars on software, but they were trying to get revenue from the wrong places.”

Some e-commerce sites tried to generate cash by asking traditional distributors to pony up thousands of dollars to become fulfillment centers, King explains.

This model was doomed from the start, suggests Samuel C. Harrell, founder of flxnet.com, a surviving venture offering e-commerce service for distributors and their existing customers, rather than an open market.”

“Most of our competitors appear to have invested in the idea of making a lot of money over a short period of time by offering their customers specialized services based on an Internet technological solution,” Harrell says. “With this concept in mind, they would not only own the technology, but they would operate and administer the system, thereby, control their customers’ interest, while charging for the service.”

Viewed another way, these providers become a costly extension of their customer’s operation, says Harrell. Not only does this approach place greater emphasis on the number of orders transacted through the system (for a fee) it requires a staff of highly paid professionals to run their business.

But, the distributors were reluctant to join, believing the cost was too high, so the sites lowered their buy-in prices. Many of these sites simply couldn’t subsist on low per-transaction fees and high overhead, so they shut down, King adds.

Another problem was with the sites themselves, suggests Robert Kravitz, a Chicago-based industry consultant who has been involved with electronic commerce before and after the dot-com bust.

“A lot of the early e-commerce Web sites just did not work,” Kravitz says. “They had no content, they were too cumbersome to work with, and people were uncomfortable with and concerned about the security of making purchases online. Management, evaluation, and long-term planning was of little concern. As a result, many were poorly managed.”

Another problem was that some BSCs are notoriously slow upgrading their technology, says Jonathan Williams, founder of BigMop.com. Many of these old companies used highly technical, stylized interfaces for their Web sites, and contractors, with aging computers and slow Internet connections, couldn’t log on properly.

“Lots of small BSCs are still on dial-up [modems],” Williams says. “There was, and is, a problem with great-looking sites that don’t function.”

From the ashes…
Of the e-commerce Web sites that have survived, most of them transcend the jan/san industry. There are portals for the entire building-operations field, or clearinghouses that match companies in every industry with excess inventory to sell with those who want to buy it. But those cleaning-only e-commerce sites that have survived have some things in common — in-depth industry knowledge, prudent management and content beyond the product catalog.

For example, one of the smaller companies, BigMop, was founded by Williams, the former CEO of Environmental Services Inc., Snohomish, Wash. Although the site does offer a catalog, it was never intended to be used solely as a purchasing site, because, as a former contractor, Williams knew that wasn’t what his audience wanted.

“BSCs are looking for something to help them run their businesses,” says Williams. “On our site, the invoice generator and bid calculator had the most traffic. The supplies are just frosting on the cake.”

The site, undergoing a major renovation, also features bulletin boards, forms, bidding assistance and other resources. BigMop’s revenue model is based on BSC membership. For a monthly fee, contractors can get access to those detailed tools, but they also get a significant discount on catalog purchases. Non-members still can order supplies for the full price, but they can’t access the special features.

Williams admits things have been tight during the economic downturn, but he credits a good team and strong discipline for his success.

“I hired a smart CEO,” says Williams. “When things started getting bad, we needed to choose — conserve or shut down. We decided to conserve. We stopped spending money, we rebuilt the site and we gave it another shot.”

Another surviving company, CleanWise, is primarily a purchasing-management site, but its business model differs significantly from those it outlasted. CleanWise, based in Marlborough, Mass., was founded by several former employees of The Butcher Co., a cleaning-chemical manufacturer. The site isn’t open to everyone, and CleanWise doesn’t provide the products, warehouse or delivery — large, multi-state BSCs can sign on and order from a set catalog and get service from existing jan/san distributors.

“We never tried to create an open Web exchange,” says Keith Alsheiner, president. Rather than requiring contractors to order from a centralized, online supplier, CleanWise acts as a conduit between BSCs and traditional distributors and manufacturers. A BSC in Tuscon and his branch manager in Pittsburgh, for example, can use CleanWise to order from their set catalog, with custom pricing and with local fulfillment. The company currently works with 70 distributors.

Similarly, Harrell believes flxnet.com survived because it never was intended as a portal or online mall, but simply as a purchasing tool.

“It had to be adaptable to the environment into which it was being deployed, it had to be easy to operate, and it had to be capable of handling whatever demand placed upon it,” Harrell recalls. “Not only should it respond to these minimum criteria, it should also be priced so that every supplier could afford it.”

Sticking with tradition
Another reason CleanWise still works is because it allows traditional means of ordering in addition to its Web forms. Many BSCs have been reluctant to bring all of their purchasing online.

“Most orders still come by fax and phone,” says Alsheiner.

Still, even fax and phone orders can be tracked on the Web site, so if the Pittsburgh branch manager calls in an order for a vacuum cleaner, the Tuscon-based office can log on and review the purchase immediately.

All things considered, BSCs still are slow to embrace online ordering. For example, occasionally Milwaukee-based CleanPower Inc. will purchase specialty items from online retailers, says Barbara Whitstone, business development manager. She recalls a customer who wanted a day porter to use a smaller janitorial cart that wasn’t part of the company’s standard equipment roster, so a staff member went online in search of it. For the rest of the supplies, CleanPower orders the old-fashioned way, via phone, fax or in person through traditional jan/san distributors.

On the flip side, those traditional distributors are beginning to offer online ordering — but not to the whole world.

“If you have a bricks-and-mortar distributor in the San Francisco Bay area, I think they’ll provide online purchasing to their current clients, but you won’t see huge nationwide distribution,” says Williams. “That’s not viable because of warehousing and stocking, and you’ve got shipping issues.”

Although some distributors are signing up with third parties such as CleanWise, many are simply adding online-ordering capabilities to existing Web sites.

“Most distributors have an existing software package, and most of those software vendors have an e-commerce module,” King says. “It’s an affordable way to do an online store, directly linked to inventory and to the customer’s pricing.”

Kravitz isn’t quite giving up on the national model. His firm, Altura Solutions, is representing a new venture. JanitationDepot, an online-only extension of Office Depot, offers supplies, equipment and information to BSCs and other cleaning professionals. He doesn’t expect Janitation Depot to meet the same fate as some of the other national jan/san sites, because the brand recognition and extra resources will set it apart.

In the future, there may be more room for a variety of e-commerce options, including mega-malls, national distributors and consolidators as people become more comfortable with buying everything, from airline tickets to houses online.

“New generations of people are becoming managers,” Kravitz says. “They grew up with the Internet. They went to school with the Internet and took courses online. They have no fear of technology. Remember, these are the same people who do not understand why we say we are ‘dialing a number’ when we make a phone call on a touch-tone cell phone. For them, e-commerce is a way of life.”

“I got into this business because I believed then that Internet-related business was the future,” agrees Harrell. “I have seen nothing to date that conveniences me otherwise. In fact, if there’s anything that the events of the day have taught me, it’s that with the growing need for cost containment and immediate access to information, Internet-based technology will be needed more and more as time goes on.”