Plumbing & Mechanical's
NEW
e-Business Column

The Internet makes it possible. Its doors never close, so it's available whenever you're ready - even if it's 3 a.m. The facts prove it - the reach of the Internet is exploding. Web demographics are rapidly changing, and the Internet is gradually becoming more of a mass medium.

With the Internet's endless realm of opportunity comes an endless array of confusion. As business becomes electronic, you're faced with new terminology that you must understand in order to survive and succeed on the Internet. Like any other tool, the Internet is only as good as your ability to use it.

Rather than being just another buzzword, e-business has become a powerful tool that can positively impact your business. So what exactly is e-business? We define it as "any process that involves communicating with customers, employees or other companies through the Internet.

"It incorporates Web-based buying and selling, provides customer service and support, links transaction systems, enables remote access and more."

The following "e-jargon" will help you conduct e-business:

E-commerce: Equal access to a range of online services. Advantages of e-commerce include:

Comparison shopping - The ability to compare equivalent products and product prices across multiple vendors, which can be conducted simultaneously at the same site and lead to product and service savings.

Availability - Online purchasing sources are always available 24 hours a day, seven days a week, 365 days a year because online purchasing sites never close.

Scalable infrastructure costs - Since online purchasing sites are Web-based, minimal infrastructure investment are required; a participant only needs access to the Internet. Your investment can be small to get started, such as purchasing a standalone PC with dial-up Internet access. As your needs grow, so can your technology, such as building a LAN (local area network) that also has an Internet connection via a T1 line.

Tracking - Online systems enable purchasing to be centralized, including tracking orders from the purchase order stage through delivery, receipt and storage.

Overall, e-commerce promises the industry faster deliveries, cheaper prices, improved procurement tracking and more informed purchasing decisions.

E-hub: Web site with a full spectrum of business functions. It is a portal site that offers a full range of products and services, plus an array of value-added functions (e.g., purchase history, preferred vendor pricing, product support, accounting and inventory management, etc). See also portal.

BuildNet (www.buildnet.com) is an example of an e-hub that offers a variety of services to builders, subcontractors and manufacturers.

E-marketplace: Web site that hosts buyer/seller transactions. See also horizontal and vertical.

There are three major types of Web marketplaces:

Buyer exchange - A marketplace dominated by large buyers in an industry or a group of buyers aggregating purchases. Suppliers typically bid to fill contracts at the lowest price in what is often called a reverse auction. Supplyspot.com (www.supplyspot.com) is a source for buying and selling plumbing, HVAC and mechanical products online.

Supplier exchange - Industry distributors/wholesalers band together to create a marketplace to sell their goods online. supplyFORCE.com (www.supplyforce.com) is a marketplace for MRO and construction supplies.

Neutral exchange - Independent marketplace dominated neither by buyers or sellers. It is often set up by independent startups. Contractors eSource (www.contractorsesource.com) helps streamline the business process by matching buyers and sellers and helping contractors find qualified trade partners.

E-procurement: Online purchasing process, which streamlines searches by converting those hundreds of calls into one simple transaction on the Web. The process could include some of the following elements:

Bidding - Comparative bids are easily garnered as some sites host product posting and invite purveyor bids.

Catalogs - Online, searchable catalogs are complete with product descriptions, specifications and pricing.

Reordering - Automatic inventory tracking based on purchase history and usage level can lead to automatic notification of reorder quantities.

Terms - Purchase prices and terms for an individual buyer are limited to vendor-specific negotiated deals.

Settlement - Electronic funds transactions streamline completion of the purchase process.

Transaction - Electronically enabled business transaction, such as a purchase order, invoice, etc., between members of the supply chain, such as manufacturers and distributors. The Internet allows back-office transactions to be completed in real time.

For example, Buildpoint and Citadon offer a full range of e-procurement services. BuildNet offers a catalog for the residential and commercial construction industries, and Plumbingsupply.com offers a catalog specifically for the plumbing industry.

Several manufacturer Web sites offer information on purchasing decisions and purchasing capabilities to manufacturers, such as www.grainger.com. Other Web sites allow contractors to buy and sell excess inventory, such as www.wholesalerdirect.com, which offers hard-to-find plumbing products at wholesale prices.

E-recruiting: Matching employers and job-seekers on the Internet. There are several recruiting marketplaces created specifically for the plumbing industry, including PLUMBINGonlineJobs.com and PLUMBjobs.com.

After you adopt the e-business practices mentioned above, there is some additional general technobabble you may come across:

Auction: Multiple buyers bid for products and services during a specified time frame, and the highest bid is successful. Contractors eSource and uBid.com auction excess materials and tools.

ASP (Application Service Provider): ASPs run and host software over the Internet instead of as a shrink-wrapped software package. Companies can access the applications over the Web for a monthly user fee.

Clicks & Mortar (a.k.a. Clicks & Bricks): Describes the integration of e-commerce with store (or bricks-and-mortar) commerce. Home Depot is beginning to offer e-commerce, opening its first online store (www.homedepot.com) in Las Vegas.

DSL (Digital Subscriber Line): High bandwidth Internet connection.

Dynamic commerce: Occurs in online transactions like auctions, reverse auctions and bid-and-ask deals. Without a set price, it promises to make pricing more efficient.

Horizontal: Multi-industry. Rather than operating in only one industry (vertical), some marketplaces serve companies across numerous industries. VerticalNet (www.verticalnet.com) offers targeted markets and exchanges for more than 50 industries.

HTML (Hypertext Mark-up Language): A language that is used to create pages on the World Wide Web incorporating text, graphics, sound, video and hyperlinks.

Infrastructure: The network that powers the Internet, from phone lines to data centers and servers.

ISP (Internet Service Provider): Enables people to connect to the Internet through their telephone line. AOL and Earthlink are examples.

Portal: Web site serving as a major point of connectivity to a set of resources. See also e-hub and vortal. NetClerk (www.netclerk.com) is a portal offering Internet applications for contractors and building professionals.

Reverse auction: Unlike a regular auction in which the highest bidder wins, in a reverse auction a buyer awards business to the lowest bidder. BidBuyBuild.com allows contractors to submit project information, receive quotes and issue purchase orders to qualified suppliers.

Space: Refers to the industry or market in which one does business. PM readers, for example, are in the plumbing "space" as opposed to the plumbing industry.

Scale: To grow fast. Business models scale by adding customers quickly while limiting additional costs, a positive feature of the Web. "Scalable" e-commerce sites just as easily can support hundreds of thousands of transactions as it can a few.

Vertical: Industry sector. See also horizontal and space.

Vortal (Vertical portal): Web site featuring industry-specific content and resources with business-to-business functions. It is essentially an industry homepage/ASP where members can go for community, information and services. PLUMBINGonline and Masterplumbers.com (www.masterplumbers.com) are portals created specifically for the plumbing industry, offering related content and services.

VPN (Virtual Private Network): A secure, dedicated communications loop uses the public network of the Internet to carry private transactions or other sensitive information.

WAP (Wireless Application Protocol): The communications standard for the wireless Web. It will hasten the day when you can download the Web from any mobile device, such as your wireless phone or computer.

XML (Extensible Mark-up Language): The successor to HTML, it allows legacy systems to talk to one another freely.

Now that you are armed with an understanding of e-terms and technobabble, you are prepared to dive into the new "e-world" and drive your business to further success. Growing Internet usage offers a prime opportunity for development and growth in the plumbing industry, an industry still hindered by paperwork-intensive business transactions.

Moving your business to the Internet and adopting new technology can enable you to easily conduct efficient real-time back-office transactions. And you, along with all members of the supply chain - manufacturers, distributors and contractors - will be able to engage in cost-effective, timesaving online solutions for business transactions, regardless of your company size and existing technology infrastructure.

Next Month: What wireless communications can do for your business.<