Blame the economy
Even with those hurdles, Omnexus could have succeeded if the economy had not turned for the worse soon after the site was launched in October 2000, several sources said.
Omnexus' customers and suppliers both were faced with critical financial factors that put them in a sour mood to try something new, Charles said.
``You combine the economy, foreign competition and the requirements that these companies turn a profit quickly,'' Charles said. ``That's too much for a company to bear and then adopt new Internet technology too.''
Elemica, where some of those companies now could go, faced similar issues, said President and Chief Executive Officer Kent Dolby. Although Dolby said his company is growing at a 15-20 percent compounded clip each month, Internet adoption is nowhere near what he expected three years ago.
``Everybody forecast it to grow faster,'' he said. ``We didn't realize how much companies would need to clean up their own acts internally.''
With many suppliers forced to consolidate and reorganize, they had less time to fret over Internet adoption, said Jean Sirois, North American marketing director for Clariant Masterbatches in Holden, Mass. The additives company was an investor in Omnexus.
Investors grew impatient with Omnexus and could not put more money into it, he said.
``The recession started hitting, and none of us were spending money like we used to on [information technology],'' Sirois said. ``I still think it's going to happen, but we're probably not going to see big growth in the Internet for five to eight years.''
Blame the model
One issue that generates debate is whether Omnexus' business model itself was viable. Many suppliers said that it was, while others with dot-com companies were more hesitant.
It all sounded good in theory, as an easy way for processors to generate multiple purchase orders from many suppliers through a single site. It even offered features to compare resins and discuss technical details.
But with resin companies offering a similar bevy of information, the latter element did not seem crucial, Dolby said. And Omnexus struggled to convince processors of the bottom-line savings in using the site, he said.
``This was a very difficult model to make work,'' Dolby said. ``They had all the capabilities, and Omnexus didn't fail for what it delivered. But many felt the value was not sufficient to generate the returns to stay in business.''
Dolby also pointed out that few other trading marketplaces - besides a few buyer sites focusing on office supplies - have worked.
One that also failed in 2001 was Chicago-based PlasticsNet Inc. Former chief Tim Stojka, now chairman of hot-runner supplier Fast Heat Inc., said the multiple-supplier model has never been proved to work.
``We and others ran the basic business like a resin brokerage,'' he said. ``Everyone thought it was low-hanging fruit. That may happen in the travel business, but online sites are now more of an additive channel but not a re- placement for working directly with companies.''
Others, including Andy DuPont at Dow, disagree.
``People do have to figure out which way to go,'' he said. ``But the Internet is still more about efficiency, productivity and eliminating routine activities. It's been somewhat misunderstood.
``We probably won't have this discussion 10 years from now.''
Education and perspiration
Finally, even those within Omnexus wonder if they could have done more to make processors understand the value of using the Internet.
The savings are real, especially with the company's UltraLite technology, Jukes said. That eliminated having to key orders into an internal system after placing it online.
But the company spent considerable time initially just convincing customers that Omnexus was not getting in the way of relationships with suppliers or distributors, Jukes said. Omnexus wanted to be the go-between making the transaction easier, not a roadblock, he said.
Plus, the savings became difficult to pinpoint directly for buyers, especially those looking for a quick return, he said.
At the same time, the company continually had to convince its suppliers to pay subscription fees to stay with Omnexus, Sirois said.
Still, Cline said he does not think the company could have don a lot differently.
``They failed to educate the end user what the value was,'' he said. ``There wasn't the hardball savings where someone could say, `Wow, I reduced raw material spending by 5 percent a year.' That was a big, open question with them.''
Switch to Elemica?
After Omnexus, where does the plastics industry go? There is no central marketplace, only a bevy of other sites.
ChemConnect Inc. of Houston offers spot trading and exchanges of resin. And Elemica, a former partner with Omnexus, hopes to pick up those buyers wanting to trade resin online, Dolby said.
The company offers a service called Elemica Buyer Direct that is similar to UltraLite, he said. Customers filling in data files or Excel spreadsheets can use those to place orders. The system also ties into warehouses and shipping stations, he said.
But Elemica is a bit different from Omnexus. Elemica provides a way to connect directly with resin companies. But it does not provide a marketplace where resins can be compared from multiple companies or orders placed quickly from multiple users. It does not help arrange contracts, but supports ongoing transactions.
In fact, Elemica does not even offer a Web site for placing orders, just the software to support connections, Dolby said. It is a different model, but one that has been successful with chemical companies trading with each other, he said.
``The idea of switching to someone else is never easy,'' Dolby said. ``And we don't want to celebrate what happened at Omnexus, and we're not happy about it. The overlap between us and them was minimal.''
Wherever the industry goes, e-business adoption could take a hit with the fall of Omnexus. The promise of three years is now diluted, Jukes said.
``It's taken one step back from where it's been,'' Jukes said. ``I'd like to have seen it go a bit longer at Omnexus.
``But we, like everyone else, didn't want to pay more millions to keep it going.''