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Online plastics marketplace dies dot-com death

January 1, 2004

4 Min Read
Online plastics marketplace dies dot-com death

Commenting with an insider''s information and an outsider''s objectivity, former Omnexus VP David Jukes sat down with MP in October, offering insights that now seem prescient, given the online marketplace''s November demise.

If Omnexus was guilty of anything, it was being too early out of the gates," Jukes said. "I think it went too far for an industry that wasn''t quite ready for it. The industry will catch up. The only question is, will Omnexus still be around when they do?"

The short answer for Jukes, who left Omnexus to become CEO of European material distributor Ditsrupol, is no. Launched in the e-commerce clamor of 2000, the site shut down despite the big-money backing of its founders Bayer, BASF, Dow, DuPont, and Ticona, and the glowing outlooks for B2B online commerce. Those rosy predictions remain—a report by PurchasePro.com for the U.S. Federal Trade Commission said online B2B in America was currently a $336 billion industry and predicted revenues would hit $6 trillion by 2005—but Omnexus is no more.

Offering online resin ordering, material data, RFQs, and ERP integration, Omnexus did show steadily improving sales, rising from $28 million in 2001, to $120 million in 2002, and almost $400 million in 2003. A portion of these gains was attributed to its UltraLite ordering process. Originally orders took nine steps, but Ultralite and other streamlining shortened the process to three steps, helping the company to a 60% increase in Q3 2003 orders.

Now, as Omnexus closes its Internet portal, Elemica, with which it formed a partnership in January 2002, will move forward with a "significant portion" of Omnexus''s transactions being directed towards it, according to a release.

As for Omnexus''s content-related resources, which included news and seminars, it was announced in early December that the online service company for additives, adhesives, paints, and inks, SpecialChem, would take Omnexus''s online content resource platform.

Systems failure analysis

Ultimately, according to Omnexus COO Michael Walsh, the company battled ingrained business practices more than any market force. "Our primary challenge was traditional ways of doing business—fax and phone," Walsh said. To Jukes, Omnexus was not seen as a material sourcing solution.

"[Omnexus] isn''t an obstacle," Jukes explained. "It''s no more an obstacle than a telephone is, it''s just a conduit. I think maybe people didn''t understand it. [They] saw it as another redistributor, but it isn''t. It''s a conduit enhancing the relationships you already have. If that''s how you use it, it doesn''t get in the way."

Omnexus did compete with other conduits, however, including those of its founding companies, which operated online sales from their own websites. This would appear to undermine Omnexus'' efforts, but Walsh said that wasn''t the case.

"Certainly companies had their own private sites," Walsh said, "but we worked in tandem with them to become part of their e-commerce strategy."

For Jukes, Omnexus investors who spent money on their own portals and Omnexus weren''t maximizing their investments.

"Why spend money twice on a nondifferentiated business process?" Jukes asked. "Why not put the money into where you really get a competitive advantage? Throw your money into other places, and webify those if you want to, but when you click on order entry, it pops up [at Omnexus], and then when the process is done, you can go back to your own site."

Perhaps Omnexus'' largest obstacle was gaining understanding and acceptance. Three full years after its introduction at NPE 2000, it summed up its continued struggles to resonate with processors, offering a conference entitled, "Achieving e-Adoption in the Global Plastics Industry" at NPE 2003.

Efforts like these did not secure the foothold for online procurement Omnexus needed to be a market force not just a technological novelty, according to Walsh.

"Ultimately, businesses have to stand more on their own," Walsh said, "and we had been in business three years and in that time period we didn''t receive enough adoption."

For Jukes, that lack of adoption is a chance missed. "I do think as an industry we have failed to deliver on the vision spectacularly," Jukes said. "It''s a terrible shame. It will be a missed opportunity if it''s ever allowed to die."

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