E-commerce puts pressure on prices

By By Jianfeng Pei -- Purchasing, 7/13/2000

Prices of laboratory equipment and supplies are expected to remain stable this year, even though demand will continue to grow robustly. Electronic commerce is a new trend in the market and will drive prices down in the long term.

The market for laboratory equipment is expected to grow 5% to 7% this year, says Jim Woldenberg, president, A. Daigger & Co., a direct retailer of laboratory equipment based in Lincolnshire, Ill. "More laboratories are being built in the country in recent years, which is pushing up demand for lab equipment," he says.

When the economy is good, more money is invested in research and development programs. "Industries and the government are increasing their investments in laboratory research as the economy remains strong," says Don Westall, president and owner, the Lab Depot, Alpharetta, Ga. He expects demand for lab equipment to increase 8% to 9% this year.

Prices of lab equipment and supplies have been quite stable during the past few years. "The overall prices will continue to remain stable this year," says Woldenberg of A. Daigger.

The competitiveness of the market and cheap imports from foreign countries prevent prices from going up, says Westall of the Lab Depot.

Electronic commerce is gaining popularity among buyers and will exert impact on prices. In the long term, e-commerce will help drive prices down, according to both Woldenberg and Westall. With e-commerce, buyers have easy access to information. They can search and compare prices and find good bargains.

Supply is not a problem for buyers. For most products, buyers can get them off-the-shelf.

Electronic commerce

Many laboratories have streamlined their purchasing process in recent years. In many cases, researchers are ordering their own laboratory supplies. Many of them find e-commerce is the best way to buy equipment they need.

Suppliers also find that e-commerce is an important tool to serve their customers and attract new businesses. Many big suppliers have e-commerce Web sites and are doing transactions online.

The Lab Depot began to sell lab supplies online this year and e-commerce has become an integral part of its business. "E-commerce is still a small part of our business, but we expect it to grow rapidly in coming years," says Westall.

A. Daigger's e-commerce site, daigger.com, went live in January 1999. It offers an online catalog of more than 18,000 lab products at discount prices, and it is constantly updated with special offers and new products. The Web site was selected as one of the nation's top 50 business-to-business Web sites for 1999 by the Business Marketing magazine.

"There is a big difference between a traditional 'bricks and mortar' distributor and a dot.com company," says Woldenberg of A. Daigger. "We are trying to combine the two roles and integrate the Internet into our traditional business in a bid to better serve our customers."

A. Daigger is making substantial investments to enhance its e-commerce site. Over the past few months, the company unveiled a new design for the site and installed new software to improve services. A new inventory feature allows end users to check the availability of products at all times. If a product is not in stock, estimated leadtimes are provided to customers. Buyers can also check their order status, receive order confirmation via e-mail and get electronic updates on backorders.

Fishersci.com, the e-commerce site of Fisher Scientific, Hampton, N.H., is claimed to be the world's largest and most comprehensive virtual marketplace for scientific supplies. Sales through the Web site rose from $3 million in 1998 to $55 million in 1999. The number of registered users reached 72,000 in May this year.

The Web site features interactive order processing, real-time pricing, and up-to-the-minute product availability. Users can browse through multiple layers of product details contained in up to seven catalogs.

Fisher Scientific recently combined its e-commerce businesses in a new subsidiary, Alchematrix Inc., and intends to take it public within 12 months.

In March, Alchematrix joined a group of Commerce One Round Trip suppliers to link into the newest addition of Commerce One's suite of content and transaction management services. Round Trip enables suppliers to maintain branded content on their Web sites and gain greater access to large online communities of buyers through Commerce One MarketSite portals. Suppliers can offer value-added services, such as specialized search engines and product configurators that simplify and enhance the buying experience. Round Trip also allows buyers to interact with a supplier's Web site while still maintaining their own business rules and processes.

Market at a glance