A traditional publishing house has purchased e-business pioneer PlasticsNet and 58 other online marketplaces, as those sites attempt a rebirth in a changed business environment.
Corry Publishing Inc., the owner of several information-technology magazines, bought the Internet properties from Verticalnet for $2.35 million in cash and a four-year, performance-based payout of $6.5 million.
The deal, which closed June 28, ends a short marriage between Malvern, Pa.-based Verticalnet and the often-shuttled PlasticsNet Web address. After buying the resources-and-content hub in February 2001, Verticalnet became a fickle parent.
On Jan. 1, it shunted its online sites to discontinued operations and said in March that it would sell those storefronts. Verticalnet's stock price - which reached $138.88 in the first quarter of 2000, at the height of the Internet revolution - has plummeted, and closed July 11 at 14 cents a share.
Verticalnet built its Web business in the late 1990s by offering a host of storefront manufacturing sites, providing information and purchasing in such areas as machine tools, adhesives and packaging products.
The company plans to make its next move by focusing on software to connect the supply chains of companies, said Nate Lentz, Verticalnet senior vice president for strategy and marketing. That area, not online hubs, offers better value to Web-wary customers, he said.
``The need still exists for [online marketplaces],'' Lentz said. ``But people might have overanticipated the speed that adoption would occur or how disruptive it would be to existing processes. We want to use the Internet today to offer a broader set of services to customers.''
Corry, based in Erie, Pa., publishes such titles as Business Solutions magazine and Mass Storage News. The company will retain the 40-50 employees at Verticalnet's former Web sites, who will continue to work from a separate office in Horsham, Pa., Lentz said.
A Corry spokeswoman referred all calls about the purchase to Verticalnet officials. The company has not commented on its plans for the Web sites.
An online pioneer
PlasticsNet was one of the first Web sites in the plastics industry. Commerx Inc., now based in Westchester, Ill., launched the site in 1995. The site offered resin purchasing and sourcing catalogs, an innovative approach at the time. It also assembled an experienced roster of executives from other plastics companies.
Although starting with great promise, the site met resistance from processors unwilling to use its services and an investment community with shrinking wallets. PlasticsNet's transaction model was scrubbed before Commerx sold the site to Verticalnet.
Today, transaction-based hubs face an uphill struggle, said Dan Garretson, senior analyst with consulting firm Forrester Research Inc. of Cambridge, Mass. Those hubs that are thriving help companies with internal business practices and in connecting seamlessly with customers, Garretson said.
Industry-backed hubs, with deeper pockets, seem to be more successful than earlier models, where a start-up company would raise capital and work on a wing and a prayer, he said.
``The original e-commerce marketplaces set out to reduce prices and aggregate supply and demand,'' Garretson said. ``The problem was that a lot of its [potential] customers already had purchasing power on their own and knew who their suppliers were. There was never a real value proposition there.''