JuneBox.com drives B2B e-commerce for School Specialty - Internet/Web/Online Service Information

Internet Strategies for Education Markets: The Heller Report, May, 2000

School Specialty, Inc. (Appleton, WI) is aggressively pursuing e-commerce as a way to expand their $600 million in annual sales. The company sells just about everything for the classroom other than textbooks and technology. A significant amount of business comes from selling furniture, and they also supply microscopes, frogs for the microscopes, crayons and tens of thousands of other items. Plans for the revamped business to business site, JuneBox.com, will expand their offerings to everything a school buys, including technology, textbooks and janitorial supplies. Competitive vendors of classroom site may also be included.

School Specialty currently runs three e-commerce sites: JuneBox.com, ClassroomDirect.com and Games2Learn. The JuneBox.com. B2B site is designed for major purchases that fall under a district's budget and procurement restrictions, says Mary Kabacinski, chief financial officer. It is primarily designed for administrators. ClassroomDirect.com is targeted to teachers as a hybrid of a B2B site and a business to consumer site. This site seeks purchases from a teacher's classroom budget as well as from the personal funds that so many teachers invest in their classes. To reach consumers with appropriate merchandise, School Specialty has an equity investment of $3 million in Games2learn (Costa Mesa, CA) and sells select products through that site.

The sites complement a well established catalog business in which School Specialty sends catalogs to two audiences. In the first model, which accounts for about 60% of the company's business, district administrators and principals receive one large catalog with 50,000 SKUs. The mailing is followed by a visit from one of the company's 275 field reps. The majority of the merchandise in this catalog is commonly available, but School Specialty offers volume discounts. The remaining 40% of business comes from specialty catalogs mailed to teachers--catalogs for secondary science or physical education for example. These contain proprietary items unique to School Specialty. Through e-commerce, Kabacinski hopes to move catalog buyers to the more efficient web sites, attract new customers and earn transaction fees from outside suppliers.

JuneBox.com Grows from an Online Catalog to a Procurement System

JuneBox.com, says Kabacinski, has the greatest potential to change the way schools buy supplies. A catalog web site known as JuneBox.com has been available since August of 1999, but the company will unveil an entirely new version of the site by August of 2000. Powered by Ariba (Mountain View, CA, www.ariba.com) e-commerce technology, the new version of JuneBox.com will, like Simplexis.com and Epylon.com (both San Francisco, CA, see ISEM, March 2000 for articles on both companies), provide an infrastructure for school procurement. The site has been spun out as a subsidiary of School Specialty, Inc. which recently committed $50 million in funding to JuneBox.com.

District information fed into JuneBox.com includes data on budget availability at every level. Perhaps, says Kabacinski by way of example, the purchasing officer has a budget of $2 million, building #1 has authorization for $6000, and a teacher in second grade has $400. That information, clearly, is of enormous value to School Specialty. Having that information in the system helps the schools because the system allows individuals to purchase up to their budget limit without requesting additional authority through purchase orders. However, when that second grade teacher spends dollar 401, the system will issue a purchase order for the request. The system also allows users to track orders, and purchasing directors can see purchases and requests in the pipeline. Furthermore, shoppers always see the prices that have been negotiated for their district.

Kabacinski believes that districts will commit to only one procurement infrastructure. To compete with other e-procurement providers, School Specialty will be adding vendors in areas which they do not address, categories such as textbooks, technology, janitorial supplies and office supplies. Furthermore, Kabacinski is prepared to bring on competitors of School Specialty. "We are already competing in the brick and mortar world," says Kabacinski. Including competitors gives School Specialty an opportunity to let schools do all their buying from a single site. If all works out as planned, School Specialty will also get a transaction fee.

Kabacinski says agreements with vendors will be worked out individually based on their motivations to participate in the system. A regional vendor of school furniture, for example, might seek access to the larger consumer base on JuneBox.com. A large text book publisher, however, has sales channels well established. They are likely, however, to be interested in the quick reconciliation feature provided by Ariba. Schools, says Kabacinski, often have the money but don't know what they have received. Managing the reconciliation for schools is expected to significantly shorten the standard 65 to 68 days to payment. The e-commerce system also speeds up the cycle from the time a teacher first places an order when compared to the paper procedure.