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Henry Kauftheil, chairman of business-to-business market-builder eMarketplaces Inc., isn't interested in attracting any-old eyeballs to his Internet sites. Instead, he's assembling what he calls "pinchable eyeballs": identifiable, motivated buyers and sellers of the kind that regularly attend industry trade shows.
To do that, three-year-old eMarketplaces has formed partnerships with leading organizers of trade exhibitions such as George Little Management (GLM) and Miller Freeman. Their shows are gatherings of decades-old B2B communities: the exhibitors and the buyers that browse their booths in hundreds of events across the country. Show organizers' databases and contacts with hundreds of thousands of active merchants are the starting point for eMarketplaces' hybrid B2B model.
In effect, eMarketplaces is expanding the shows into year-round business frameworks by using the Web -- along with e-mail, faxes, and even print publications -- to connect buyers and sellers, whatever their level of technology. Currently, 65% of trade-show users are still unable to do business directly on the Web. These merchant networks continue to be reinforced by personal contacts, which Kauftheil calls "N2N," for nose-to-nose, at the still-thriving exhibitions. "Sometimes, I introduce our bankers to a buyer at one of our partners' shows and say, 'Here, pinch this guy,'" Kauftheil recounts, adding: "He's not a pair of eyeballs that will look at our site a couple of minutes and leave. He has come here to buy."
MASSIVE DATABASES.
He says 80,000 such prospective buyers can come to a typical event organized by GLM, which produces 28 shows for consumer goods annually. eMarketplaces is targeting a series of such sizeable but fragmented industries that it hopes to lock up for e-commerce through exclusive trade-show alliances. GLMmarketplace.com, launched in early 1999, links vendors and buyers of merchandise from giftware and home textiles to personal-care products, a $52 billion U.S. market annually. The Web partnership with Miller Freeman, called Merchandise-Online.com, is a venue for surplus and closeout goods.
Along with credibility and market savvy, these trade-show partners bring databases of around 400,000 buyers and 35,000 vendors for each market. In June, eMarketplaces and Toronto-based publisher MediaEdge Communications, Canada's largest property-management show producer, will launch PMMarketplace.com for property managers and their suppliers of goods and services, from elevators to property development. That market is worth $60 billion annually in Canada alone, and MediaEdge has databases with 60,000 potential users.
eMarketplaces is also discussing partnerships with other trade-show producers in markets from apparel and toys to consumer electronics. Its most potent tool for recruiting trade-show merchants to e-commerce is its proprietary, patent-pending "push technology." Buyers, who currently use the marketplaces free of charge, enroll by filling out a form that profiles their type of business and kinds of products they need. Vendors, who pay a $4,000 annual fee, post their products on Web pages.
"GOOD TOOL."
The system sends notices to potential buyers of posted products that match each buyer's needs. When a buyer responds by requesting more information, the system supplies it -- and at the same time sends notice of the inquiry to the vendor, along with information on the potential buyer. "It's a good tool for us to get leads on new customers," says Mark A. Ginsburg, president of St. Louis-based CWC Inventories, a specialist in closeout merchandise with annual sales above $20 million. Even more important than the immediate sales from CWC's Merchandise-Online postings, he says, is "the potential to do business with these people ongoing, once they've inquired."
In New York, novelty jewelry designer Carolyn Forsman, who sells around $1 million annually of her products, is a vendor on GLMmarketplace, a buyer on Merchandise-Online, and a frequent exhibitor at shows. She says her product-oriented GLM Web site complements her own separate Web site, which is primarily for branding. Closing her booth recently at the end of a Manhattan show, she predicts, "customers will go to my site or the GLM site to take a more leisurely look." For buyers, she says, "this is a way to talk to me later. It's an extension of the shows."
With a current staff of 70 in a former loft building in lower Manhattan, eMarketplaces so far has enrolled profiles of some 20,000 buyers -- a number that's growing fast -- and "hundreds" of fee-paying vendors. These fees are currently the only income stream, producing revenues of "hundreds of thousands" of dollars annually. Other revenues will come from advertising carried on the Web site, e-mails, and faxes, in the magazine, and at the shows. Revenues will also come from freight forwarders, credit companies, and others that are negotiating deals to provide services to merchants. Eventually, eMarketplaces will get a percentage of online transactions starting with auctions that it plans to launch.
"MERCHANTS FIRST."
Kauftheil, who previously worked in advertising and marketing, got the inspiration for eMarketplaces from his experience running an agency that designed and produced catalogs. As an alternative to inefficient "shotgun-style" promotion of products to often-uninterested catalog recipients, Kauftheil conceived eMarketplaces' system for sharply targeting likely, self-selected buyers. Kauftheil also heads an Internet incubator group, I.C.E.S., that has equity stakes in 28 companies including eMarketplaces, its biggest. "This company is owned by merchants, not by techies," Kauftheil says. "We were merchants first, and we came to the techology as a facilitator, not as a revolution."
The biggest challenge for eMarketplaces is the 65% of the B2B trade-fair population that still isn't fully Web-enabled. Still, whether they're high-tech, low-tech, or no-tech, "we're here to serve those merchants," says Cynthia Rogers, who came to eMarketplace as president this year after heading ad agency Saatchi & Saatchi's interactive division. Wherever they are on the technology spectrum, Kauftheil believes, engaging them now will ensure that they stay with eMarketplaces in the future.
John Pearson in New York EDITED BY DOUGLAS HARBRECHT
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