WILMINGTON, DEL. (June 8, 1:15 p.m. EDT) — In the past year, DuPont has been formulating e-business initiatives almost as fast as it produces Tyvek, Corian and Mylar.
Last month, DuPont announced a new e-commerce venture — a chemical e-marketplace with BP Amoco plc of London, Dow Chemical Co. of Midland, Mich., and other industry giants.
The yet-unnamed e-marketplace, expected to launch by year's end, underscores a turnabout for the $26.9 billion chemical company, which began its e-business efforts with Internet start-up alliances. Lately, however, DuPont has turned instead to other old-line corporations. Its latest venture may even compete with CheMatch.com Inc., a Houston-based chemicals exchange in which DuPont took a minority stake just last December.
"We've learned that the real power in these marketplaces is not in the dot-com companies," said Jeff Peterson, vice president for e-business and the leader of DuPont's Web strategy. "It's in the domain knowledge and products and logistics that the clicks-and-mortars have."
Wilmington-based DuPont is a case study in how huge, multinational corporations have acquired an Internet swagger in recent months. Initially, the Web was seen as a medium that would empower small companies and newcomers. But now some observers say the Internet will offer even greater advantage to deep-pocketed companies like DuPont — even if few of those companies' initiatives have seen their first transaction.
While DuPont insists it will continue to pursue its varied strategies, its alliances with dot-coms — at least as equal partners — seem to be a thing of the past. Peterson said DuPont has learned many things already from its dot-com alliances, especially those with Internet Capital Group of Wayne, Pa., Ventro Corp. of Mountain View, Calif., and CheMatch. For one thing, it may have underestimated its own e-business strengths.
According to Peterson, DuPont brought two key strengths: a critical mass of customers and procurement dollars and a deep understanding of its marketplaces. Its dot-com partners brought Internet experience and technology platforms.
Just a few months ago, DuPont calculated that the expertise it brought to any dot-com alliance was roughly equal to the knowledge brought by its Internet partner. Today, that assessment has changed. Recent ventures have shifted suddenly from equal partnerships with dot-coms to projects in which the partners are old-line manufacturers. As a consequence, its technology providers have become merely vendors, not equity partners.
DuPont officials are learning "that they don't want to give away the value of their products to third-party aggregators," said Garrett Gee, business manager-plastics at consulting firm Kline & Co. Inc. of Little Falls, N.J. "They've woken up and realized they, too, can do it."
"The large players may have an opportunity to actually solidify their position and increase it," said Leif Eriksen, research director-process industries for AMR Research Inc. of Boston.
There's little question DuPont is an old-line company. Founded in 1802 as a gunpowder manufacturer, it evolved into a chemical producer with operations in about 65 countries.
Like most big, old-line companies, DuPont moved comparatively slowly toward e-commerce, but it has opened the throttle in recent months. Peterson came to DuPont in January after a stint at GE Capital, where he was vice president of e-commerce/e-technology. General Electric, he acknowledges, has a much different approach to the Web than DuPont, preferring to conduct e-commerce from its own proprietary sites rather than aligning with dot-com or smokestack partners.
"Well, de facto, they're hedging their bets," said Alexander Hittle, an analyst with St. Louis-based A.G. Edwards & Sons Inc., describing the apparent mix-and-match character of DuPont's initiatives. The company's e-business experimentation has garnered support from Wall Street and industry analysts.
Eriksen characterized DuPont's approach as a fact-finding mission.
"They have to pursue a number of different initiatives, if only to educate themselves on how things may work out (in the future)," he said.
Peterson agrees that DuPont's experimental process with various e-business strategies has been a learning experience, but he also argues that no one method of e-commerce will dominate in business-to-business.
"There will be customers who thrive and buy in a neutral market, like people do at Wal-Mart, and there will be other people who buy and thrive at Neiman Marcus in a strongly branded world," he said.
William Kirk, group vice president for DuPont's agricultural enterprises, expects the e-mall environment of DuPont's Rooster.com venture to help the company expand share in markets where it currently controls a low percentage of sales. At the same time, he expects DuPont to do most of its e-commerce sales on its own extranet in market segments, such as high-oil corn, which the company dominates.
DuPont will pursue both strategies aggressively.
"You must win this (Internet) game. There's no fun in second or third place. It's winner take all," Kirk said.
Indeed, Kirk's colleague Peterson hints that some dot-coms could be takeover targets.
"Because of the NASDAQ correction, these dot-com companies have become somewhat inexpensive to us now," he said.
It may turn out, of course, that DuPont's surge in Web confidence is a case of too much bravado too soon. The company's approach has yet to be proven in practice. Although Peterson expects DuPont's Corian extranet to do $400 million in e-commerce sales by the end of 2000, most of the company's ventures have yet to handle their first transaction.
But then again, DuPont's sheer size ultimately may make it a winner.
"They don't necessarily have the first-mover advantage," said analyst Hittle. "But they have a huge mover advantage once they get going."