Anonymous Exchange proves to be enduring
ThePlasticsExchange.com is still around because of its anonymous nature.
That's how Michael Greenberg, chief executive officer, described the company's longevity in a market that's littered with companies that did not survive.
He said the key behind the firm's success is that it offers traders commodity resins loaded in either rail cars or trucks without the burden of establishing a trading relationship. That means someone could be buying from a competitor without ever knowing.
Greenberg spent 19 years on the Chicago Mercantile Exchange.
He said that when he formed the company he had the opportunity to look at others' mistakes, and it helped.
``When you look at the others [in 2000], there were a ton of them,'' he said.
Greenberg went on to say that they all had flaws in their business plans.
``There was a lack of clarity. If you made a transaction, [the customer and buyer] had to work out the logistics. So clearing provides anonymity and anonymity is crucial to the market.''
In June, according to Greenberg, his exchange was providing 10 million to 30 million pounds a week of spot commodity-grade resin.
``We weren't out to be a dot-com, but we were out to create a market.''
What sets his business apart is that it provides a variety of information and the clearing function so that buyer and seller never know who they are dealing with, he said.
``We do business with most every distributor, producer and reseller in the industry,'' he said.
ThePlasticsExchange has become the exception to the rule, Greenberg said, in that the exchange provides a place to buy resin when it is not available in normal channels.
ThePlasticsExchange started with six people. Today it has 12. Greenberg said the company has grown by providing information to its customers. A monthly market update used to have 68 clients - now nearly 20,000 receive the update.
ChemConnect grows through acquisition
ChemConnect Inc., now based in Houston, started as a bulletin board in 1995, but has grown to be an independent, neutral, third-party commodity exchange and auction provider.
The company fueled its growth partly through acquisition. It merged with Envera ERP in 2001, added rival CheMatch and Altra Energy's Chalkboard platform in 2002.
Eric Paulsen, vice president of commodity markets, said he signed aboard in 2001.
``It's evolved to a variety of e-commerce solutions,'' he said.
Paulsen added, ``What's happened in the past 10 years? People more or less adapted to some procurement process. There is much more functionality of the software.''
He said that ChemConnect is a way for companies to negotiate a solution to their procurement and sales issues.
``There's a wide variety of participants - a lot of the major oil and plastics companies are online every day buying,'' Paulsen said.
He added that providing more information does make for good business.
``What we do today is provide some market info to plastics about what is going on upstairs, and that's what drives ethylene prices.''
He said his company provides daily reports to customers so they can compare prices.
The addition of CheMatch helped boost its commodity exchange, he said.
The combination has enabled ChemConnect to run with about 30 employees, where formerly there were upward of 150 employees.
Paulsen said that the company does tens of thousands of transactions a year with a value of more than $8 billion.
The company has been profitable since 2004.
Dovebid Inc. shifts auctions to Internet
Dovebid Inc. has been involved with auctions since the 1930s. President Kirk Dove said the first step to joining the e-commerce revolution was to develop a Web site.
As interest grew, the company obtained venture capital money to research and develop ways to reach global customers via the Internet.
``To reach more people, my grandfather would put an ad in the paper. If he had a big budget, then he'd put the ad in two papers,'' Dove said.
He said the Web site created much interest, but the first hurdle was to give everybody equal access. Some had dialup and others had quicker connections. To give customers an equal chance, Dovebid posted pictures online and let customers visit to see machines, but they had to sign up and then use a toll-free telephone number to make bids during auctions.
The problem with the phone-in process was that it was not user-friendly, since when it was 10 o'clock in New York, it was three hours earlier in California. There was also the time lag with Europe, China, and around the world.
When the company shifted to a 24-hour time frame to allow bids, that allowed buyers to bid during their own time period. Having auctions online also helped those who did not speak English.
Users still could bid by looking at the dollar amounts.
``Now it was much easier for the buyers to see the numbers - in particular for the buyers offshore, like Asia, India and Pakistan,'' he said.
``The buyer audience is now conditioned to go to a central place. All the search engines and people find us and then do the purchasing when they want.''
The turn to the Internet came in 1999 and 2000. Dove said that the comfort level grew as larger transactions could be made safely.
``For large industrial auctions, the most efficient way is to sell online where the world can see it,'' Dove said.
Quickparts thrives on instant price quotes
The message was clear right from the start for Quickparts Inc. in Atlanta, according to Mark Mackie, executive vice president and co-founder, and that's why the company is thriving.
He said that the idea for instant price quotes was born in 1999 and came to fruition in 2000. He worked with Ron Hollis, president, and Michael Maurice, vice president of operations, both with engineering and rapid prototyping backgrounds, to provide a service. The idea was to provide instant price quotes for plastic and metal parts from three-dimensional computer-assisted-design files.
``This was when the Internet was really heating up - you could see big business and funding of millions of dollars - and we thought that we should think about it,'' Mackie said.
He cited three reasons why it was the right time: growth of broadband Web access, wide acceptance of e-commerce and the development 3-D CAD systems.
``With geometrics, you could do a bill times a machine rate and could accurately come up with a price of a part,'' he said.
He said the principles funded the company with some partners. They built their own Web site, because ``nobody dealt with anything like this - there was no one experienced out there, so we had to integrate 3-D solid models to the Web site.''
Mackie said the Web site took 10 weeks to develop - it meant inventing an underlying code and a way to upload to the server.
``We're proud of ourselves for being a leader,'' he said, noting it took some work to make the site function perfectly.
``We've always been profitable, but it was not a Web model. We were very good at using the Web at what we were good at,'' he said, noting that what they did was automate a task and then make it available to customers.