What Led Thomas Global to Shutdown?

Yesterday, Spend Matters covered the story of Thomas Global's shutdown, noting in detail a number of the reasons that led to the decision to close its doors as well as the staffing and supplier advertising implications. I received a couple of emails and calls about Thomas last night and based on the news, and based on these inbounds, I thought it critical to clarify for the record that Thomas Globals' shutdown is not impacting ThomasNet's operation, at least at this point in time. ThomasNet remains a viable going concern (though the marketing fallout from closing Thomas Global will certainly remain). But what are the real reasons that led to Thomas Global to ramp down its operations? In this column, I'll present a few working hypotheses.

First, I would suggest that Thomas Global is not just the victim of a downswing in the manufacturing economy. Quite the contrary in fact -- some of it competitors (many of which I'll profile in a post on Monday) are actually the recipients of new advertising dollars from suppliers looking to make up for lost business. In our analysis, the fundamental problem is that Thomas Global achieved critical, profitable mass in only two global markets -- India and Brazil -- which unfortunately were two regions which have not been the recipients of the same level as global sourcing attention as China and other new export-focused Asian markets (e.g., Vietnam). In other developing markets, Thomas Global could not hold its own against alternative supplier research tools or approaches. Moreover, Thomas Global never developed the critical mass with local buyers in these regional markets (versus export buyers).

Specifically, our analysis suggests that another main reason Thomas Global is closing down, aside from failing to build critical mass in critical export markets, is that its global competitors simply outperformed it. Alibaba, India Mart, Global Sources and others were able to build local eyeballs and mindshare with suppliers at a level that outdistanced Thomas Global (in some cases, selling suppliers a false bill of goods regarding what types of global buyers were actually using the site). In addition, new business models, such as MFG.com, which allow global suppliers and buyers to manage both the supplier identification and sourcing process in a closed loop fashion, have started to gain favor as well (though at this stage are still a drop in the global supplier sourcing / directory bucket). In short, Thomas Global was not beaten down by a tough market. It was beaten by competitors who outperformed it.

Jason Busch

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