PUBNET offers publishers' books to bookstores. It was launched in college bookstores, backed by the 20 publishers who sold 85 percent of all college textbooks. The PUBNET system was advanced technology EDI and required a very big collective commitment. But PUBNET has saved bookstores a great deal of money in processing orders. PUBNET offers a package for small publishers with a PC and modem. About $1250 buys the software and use of a mailbox. The publisher must take direct orders and must have its own warehousing and shipping capabilities.
A publisher pays 25 cents each time it loads into the database plus 25 cents each time it writes in a new price or a change in availability. It also pays 4 cents per month to store each title on the database plus a charge of between 65 cents to $1.10 for each order it receives. The charge varies by the system-wide volume of orders and time of transmission.
PUBNET states in its promotions to retail bookstores that ordering by phone costs the average bookstore $100 a week in people time and phone cost but can be done via PubNet for $5 to $10–without the people mistakes by phone. PUBNET's marketplaces increase book shopping by increasing the range of choice and availability to both bookstores and their customers alike.
PUBNET was offered free to book sellers for the first six months. A bookstore can join the network for $250 and receive a mailbox and software. The software can be used to access the database, to create and send purchase orders, and to receive purchase order acknowledgments. Each purchase order can be created on-line or off-line. Publisher inventory can be kept on the database. Purchase orders sent by the bookstores are processed daily by publishers. When publishers process orders via PUBNET, customers get orders faster. The faster process enables bookstores to have fewer out-of-stock situations. Bookstores get more sales as a result.
PUBNET's E-mail system can be customized so that publishers can notify any store by E-mail when an author will be in the area, what author interviews will be on TV and radio and newspaper, plus other PR are listed along with the availability of the author for a store appearance.
Jim McLaughlin, director of marketing of PUBNET explains: "PUBNET is an advanced EDI network. Publishers can save a good deal of money. Stores write their order directly into the publisher's computer. There are fewer mistakes and fewer workers required. 800 numbers are no longer needed, which also saves personnel time."
Participating publishers on PUBNET report that although they get smaller orders than traditional distribution channels, the greater frequency of those PUBNET orders adds up to more total sales.
A division of the Plenum Publishing Corporation is Career Placement Registry (CPR) in Alexandria, Virginia. CPR is available online via Dialog. The CPR database ranges from 4000 to 9000 job applicants. About 60 percent are students and 40 percent are experienced. Adults pay $15 to $40 to be listed, while a student pays only $8.
Every month, between 400 to 500 firms pay $95 an hour plus one dollar a r‚sum‚ to search through CPR. They extract between 1900 to 2600 r‚sum‚s at an average cost of $25 to $40 (including both search charge and the $1 a r‚sum‚). CPR estimates that it costs $4000 to $6000 to qualify a typical job applicant for interview, versus only $250 using CPR.
How big is a marketplace? Edvent II lists more than 125,000 seminars, workshops, training programs and meetings in North America, run by over 5800 organizations. Inventory Locator Service, Inc. (ILS), of Memphis, Tennessee, offers online 16 million items. ILS processes over 45,000 part number inquiries per day from its 2000 customers worldwide. CBD (Commerce Business Daily) OnLine reports on over 200,000 upcoming government procurement offerings worth more than $400 billion.
The many wide-appeal marketplaces include US GasNet of Denver, Colorado, which identifies natural gas buyers and sellers in the gas market on any given day. MEMA has a bulletin board of after-market auto parts. Pronet tracks wholesale prices and commercial availability for the produce and floral industries 24 hours a day. Fish Exchange Inc. of San Francisco, California, runs an online marketplace to link buyers and sellers of fresh fish nationwide. Dun & Bradstreet's BBS, BidNet, lists the latest requests for bids from the thousands of state, local, and U.S. government purchasers nationwide. J. P. Morgan sells bonds by computer auctions via Capitalink. Globex, developed by Chicago Mercantile Exchange and Reuter's Ltd., enables markets to operate online after hours. Conway Data, Inc. of Norcross, Georgia, offers SiteNet, an online directory of commercial real estate with 20 research files. Worldwide Exchange is an electronic bulletin board for people who want to swap houses and apartments. Travel Scan has a service called "The Last- Minute Club" that reports on discounts being offered by tour operators to sell seats in the final days before departures. American Gem Market Systems of Moraga, California, provides an online marketplace and laboratory for the gem industry.
BUC President Walter Sullivan says, "The average price of a boat sold via BUC is close to $300,000, although vessels ranging in price from $5000 to $36,000 are available. And over 90,000 vessels have passed through BUCNET in its six-year history." For most business-to-business marketplaces, the average size of purchases range in the hundreds to thousands of dollars. For job bank marketplaces, it can represent a number of years of executive income. And for an online bond issue marketplace, it can run from hundreds of thousands to millions of dollars.
When Williams & Watts purchased the Jacques Group, a business supplying fastener parts, and decided to sell off below-market about 3800 of its 6000 items, it used FastFinder. President William Van Etten told me:
We have been on FastFinder for three years. We list all our inventory and sell discontinued inventory at slightly below market. For FastFinder's charge of $35 a month, we have sold $600 to $700 of inventory each month. In the last nine months, we sold about $5500 worth for $280.Ruklic Screw Company has done even better. Vice president Jay Ruklic says:
We've been online for two years with about 300 items. We sell excess inventory to other fastener firms–under the market price but at profitable discounts. In two years we have sold over $200,000 for a total listing cost of $2400, a 1.2 percent selling cost, with no production cost, and no special software.
American Airlines Chairman and President Robert L. Crandall, in a series of brilliant moves, transformed American into a winner by the following:
Other airlines set up their own online airline reservation systems. Today, travel agents account for 75 percent of all tickets sold. In the United States, 95 percent of the travel agencies have a computer reservation system, and 88 percent of all airline tickets are issued through these systems.
Before SABRE, booking a round trip from New York City to Buffalo required a dozen employees performing a dozen separate steps in a three-hour job. Now SABRE connects over 160,000 computer terminals, with ticket and boarding pass printers in airports and travel agencies around the world. The SABRE is used by over 17,000 travel suppliers worldwide. It has information for over 650 airlines. Besides airfares, SABRE accesses over 22,000 hotel properties, over 35 tour companies, and 57 car rental agencies. All told, SABRE has information on more than 45 million fares.
SABRE's Bonanza of Bonuses.
When a SABRE-originated ticket is generated for another airline, American Airlines benefits from the "float" of money. That's because the money is held by the airline that collects it until the flight coupon is used. The flight coupon is then turned in and the money paid.
Moreover, to book through SABRE to, for example, New York to Paris then to Rome, there is a charge for each segment of the trip. SABRE charges other airlines (and its parent company) $2.25 for each segment. The round trip brings it to $13.50. SABRE charges for billions of segments. The profit from SABRE alone for American Airlines over the years has been well over $1 billion, with other benefits:
Do-It-Yourself Travel Marketplace. AA became a true online marketplace when it introduced Commercial SABRE and EAASY SABRE Systems to corporations and individuals with PCs and terminals. Modem users can log on and make their own flight, hotel, and car reservations and arrange to pick up tickets at a travel agency or ticket office or even receive them by mail.
Other airlines offer their marketplaces for do-it-yourself travel, from the WorldPerks Program of Northwest Airlines to TWA's Frequent Flight Bonus Program.
How does a small business get involved in these large electronic marketplaces? If you are in the hotel industry, VIP Reservations Inc. of Menlo Park, California, will list your hotel in all the major airline reservation systems. Bookings are received online and printed out in hard copy at your reservation desk.
Travel agencies book adventure travel online for clients via Ultran of Colorado Springs, Colorado. Qualified tour operators, from the United States and 60 foreign countries, provide information in a database of over 6000 trip departures.
The Official Airline Guide Electronic Edition Travel Service (EETS) is an online travel service that offers millions of direct and connecting flights for over 600 airlines worldwide. Fares are displayed from the lowest to the highest price. The service can be subscribed to directly or through many online services by anyone with a modem.
What makes it a marketplace? Besides being able to purchase tickets through Thomas Cook Travel, you can also make hotel reservations and car rentals. Plus, there's information on actual flight arrival/departure times; over 35,000 hotels and motels; tours and cruise discount packages; over 85,000 vacation and leisure choices; frequent flyer programs; flights that arrive on time more often; the weather in cities all over the world; the quality of lodgings nearest any destination; other travel news; and last-minute travel bargains with savings up to 63 percent.
Starting a Marketplace
It is more profitable to create and own an online marketplace you also use to distribute your own products or services. It is also much more dangerous. Success requires a combination of the right idea plus talent and experience. For example, the concept behind the Inventory Location Service (ILS) market started when the founder wanted to create an online catalog listing with all his airplane parts. But then he thought, "Why not pull together everyone who has aviation parts–all the different aviation parts in the world–and put them on one listing, and become the service between buyers and sellers." This idea blossomed because John Williams, ILC's founder, knew the aircraft parts industry intimately; because he was a born entrepreneur; because he combined his talents with those of his sister, Minnie, who was a skilled computer programmer; and because there was a need and the time was right.
Official Airlines Guide online started as an information service, a variation of its print edition. When people kept requesting the ability to make travel purchases, it became a marketplace.
Sometimes, a marketplace existed before in another form and is just reformatted to online. Auto Info President Martin Rubin says, "In our industry, parts have always been traded. In the 1940s this was done by teletype, in the 1950s by voice network, and in 1983 we pioneered trading by computer via satellite."
Caution! Any risk can be a loss. Play safe. Listen to CUC CEO Walter Forbes, who says:
From inception, we've gotten 17 million members by direct marketing through third parties, including more than 6000 banks, with no risk. The shopping catalog is no risk; it's part of what a member pays for with the membership fee.
99 percent of our U.S. business is not by computer. But members from online buy totally online, with the highest renewal rate and the highest average order. In France due to the Minitel system, 60 percent of our business is via computer.
That's why we're on every major computer media network but we don't invest heavily in marketing technology. Everything to date is basically the same, and interim. Only real pictures can change this. The technology just is not here yet.
Meanwhile, we will participate with any real service but take no technology risk. The result is that, while there have been huge losses for others, we're here 17 years later. Our sales are in the hundreds of millions, up as much as 50 percent in a single year.
CEO Walter Forbes has held to a visionary concept with iron risk control. His example is particularly applicable if you sell consumer goods where color illustration is important. For business marketplaces, often computer matching ability is vital and color is far less so. The higher the cumulative transactions the more this is so. But Walter Forbes's attitude can help keep you safe, however promising any area of electronic marketing is.