A Whole New Business

David Perry, president and CEO of Chemdex Corp., a Palo Alto, Calif., reseller of life-science products such as hormones, enzymes, and antibodies, used E-commerce packages to set up a whole new kind of business. Chemdex, established last September with $2 million in funding, offers 250,000 products online from 2,000 manu- facturers to 300,000 scientists across the country.

In the beginning, Chemdex faced three challenges, Perry says: Get suppliers on board, get customers interested, and get the two to interact. Early success was important since Chemdex wanted to do a second round of financing as quickly as possible.
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Speed to market was the key for Chemdex. "Internet businesses are about market share and first-move advantage," Perry says. Anybody with a computer and access to the Web can do business on the Web, he explains, so "If you can get out there first and do it very very well, you can build traffic before they do."

Chemdex tested various software packages to see which would let it get to market fastest. Also, because the company deals in sophisticated technical products, any software it purchased would need customization. "It's not like selling boots online," Perry says.

Chemdex chose Connect Inc.'s PurchaseStream, a Web-based distributed requisitioning system that automates routine transactions and lets customers serve themselves.
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"PurchaseStream had a lot of the functionality we needed-a database, a transaction engine, and a front end-all built together," Perry says. "It let us get up and running in a real hurry." It took six weeks from the time Chemdex bought PurchaseStream to have a prototype to show to prospective customers. "There's a tremendous difference between talking about a plan and having a system that's running even though it's not perfect," Perry says.

Connect has since leveraged much of the customization it did for Chemdex to create its latest product, MarketStream, a multiseller-multibuyer marketplace application for companies selling on the Internet. Features include the ability to search multiple suppliers' product lists and provide users with customized product lists and pricing. The product also provides administrators with reporting tools.

Managing sales over the Web is a popular E-commerce application. But doing it in a way that customers are comfortable with isn't always easy.

John Landwehr, director of product marketing at smart-card manufacturer Gemplus Corp. in Redwood City, Calif., found that his personal experience ordering flowers over the Web colored his view of the technology. Landwehr had waited six hours to find out what happened to his order because the front-end and back-end systems were synchronized only four times a day.
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Landwehr swore he wouldn't put his company's customers through a similar experience when Gemplus set up its Web-based store. "I wanted more than just a simple Web front end," he says. "I wanted to combine an internal call center with a Web interface so the front and back ends were always synchronized, whether orders were placed over the Web or the telephone."

After a long search, Landwehr selected Orders of Magnitude, an order-management package from Dover Pacific Computing Inc. Orders of Magnitude lets companies control and integrate every aspect of taking, processing, fulfilling, and shipping orders. The software also works with existing back-end systems. Landwehr rolled out the Web site in March during a product launch.

Gemplus customers get product support and updates on order status in real time. Orders of Magnitude also sends orders electronically from Gemplus' Web site to its fulfillment company, which ships orders and sends back confirmation information using the shipment-tracking number.
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"We couldn't have gotten the storefront up and running as quickly with another product, and I don't believe we could find another product that would let us do exactly what we're doing," Landwehr says. Orders of Magnitude also can create customized reports on all incoming orders. "It's nice to be able to track leads as they come in," Landwehr says. Eventually, he'd like to develop a system for repeat customers that will let sales reps have information about the customers on their screens before they even pick up the phone.