The Internet is not an end unto itself - North American Wholesale Lumber Distributors Association - Brief Article

Home Channel News, Nov 20, 2000 by John Caulfield

Can e-commerce ever really get off the ground in an industry segment that hasn't gotten the hang of email?

I asked myself that question as I listened to presentations on e-commerce and technology delivered during conferences in Dallas conducted recently by the North American Wholesale Lumber Distributors and the North American Building Material Distribution Association, trade groups that represent companies which are the very essence of the "old economy."

Fewer than two-fifths of NAWLA's members currently have Web sites, and the association projects that only around 5 percent of its members' sales would be transacted online by 2004, according to Joseph Perraton, the president of forestindustry.com, a 5-year-old company that works with NAWLA's members creating and managing Web sites.

Perraton was one of six panelists who participated in a discussion on e-commerce attended by more than 1,000 people on the day before NAWLA's Traders Market. Each panelist had the opportunity to explain what his company provides, and the level of confusion and anxiety that hovers over this topic was evident when Scott Ellensen of BuildNet had to restate no less than three times that his company -- which facilitates online back-office-to-back-office communications to make building products buying easier, and whose growing network now includes 100 manufacturers, 1,000 distributors and 4,500 home builders -- is not an auction site.

This confusion is not entirely unexpected, as the e-business community has made a science out of obfuscation and is rarely specific about what, exactly, is being provided or how to weigh its costs and benefits. Keith Russell, the CEO of forestexpress.com -- the "global e-marketplace" formed by Georgia-Pacific, Weyerhaeuser and International Paper -- proclaimed that "in commerce, you have to have a common language," and that a goal of his organization is to "establish a common platform for the entire industry." But when asked about how much it would cost a distributor to work through forestexpress.com, Russell's response -- that the charges would most likely be based on the "value" of the transaction -- was hardly earthshaking and just inches short of being disingenuous.

In fairness, one wonders how enthusiastic distributors are about e-commerce right now, regardless of how much information received. Let's not forget that this is the same industry which had to be dragged kicking and screaming into electronic data interchange. It should also be remembered that builders and remodelers -- their customers -- were possibly the last business group in the United States to accept using a fax machine, and they haven't been rushing onto the Internet, either.

At NBMDA's conference, Jerry Miner, the vp-marketing for Palmer-Donavin, an Ohio-based distributor specializing in kitchen cabinets, told me that only 34 of the 600 customers to whom he sends a monthly newsletter have responded to his offer to send them the newsletter via e-mail instead of fax.

That e-commerce has not been embraced as the latest business tool, though, should not be mistaken for a lack of urgency. Officials from these distributor trade groups said that they put e-commerce on their conferences' educational agendas this year in response to their members' pleas for help.

But with the recent failures of so many dot-com companies -- what Adam Fein of Pembroke Consulting referred to "B-to-B-to-B: business to business to bankruptcy" -- and the lack of quantifiable benefits, it seems that distributors, their customers and their suppliers are still weary of jumping into anything that's online-related too aggressively.

Fein was among a number of "experts" at NAWLA's conference who hammered home the point that "e-commerce" should be viewed as nothing more than the newest tool to conduct business, not an end unto itself. That message, though, doesn't seem to be getting through clear enough to the building supply segment of this industry.