Last week marked a sad event in the history of supplier search and supplier directories. Thomas Global, one of the earliest providers of global content and supplier directories, shut its doors. But is Thomas Global's closing -- and the general downsizing of Thomas over the years since the big green book -- indicative of the beginning of the end of supplier directories (including online directories) or does it just signal a more general shift in the direction of the market? At this stage of my investigation, I'd probably argue the latter. And that's because companies are now gaining access to supplier information primarily through four types of online directories and information sources.
The first type of information source companies are using to learn about suppliers represents the online version of offline paradigms. These include ThomasNet and to a lesser degree, even niche industry sites like Surplus Record (owned by Ariba) that aggregates and publishes in print and online listings of used industrial assets. But both ThomasNet and Surplus Record have survived not just by bringing offline listings online -- they've also built out a larger value proposition for both buyers and suppliers. ThomasNet not only offers free directory listings (like Surplus Record) in addition to paid ones, they also build supplier websites and optimize these sites for search engines and its own search capabilities. And in addition, they provide third-party analysis, content and community on their sites for the buying community. Other sites in this category include Macraes and GlobalSpec, both of which, depending on whom you speak to, are taking market share away from others while increasingly growing the supplier directory pie through targeting specific groups (e.g., engineers in the case of GlobalSpec).
The next group of providers are what I'll term global new entrants that started with global or worldly ambitions. Many of these providers have copied the original Thomas model of having suppliers pay for premier placements in directories or online advertising. Perhaps the best known of these is Alibaba, a provider that I've been critical of in the past but recently explored in more detail and look forward to telling Spend Matters readers about in a series of coming posts. Others in this category include Global Sources, Made in China (a China-focused supplier search directory), India Mart and Trade India. In general, these models tend to oversell the benefits of participation to suppliers (as well as the types of organizations that are locating suppliers on their sites). In many cases, small and medium-sized organizations (and inventors) are the ones most likely to identify global suppliers through resources like this versus larger organizations that maintain on-the-ground resources and teams.
The third category of supplier directories and search providers are supplier networks repurposed as supplier directories. Ariba, Ketera and others are in the process of repositioning their networks not only as transaction hubs, but as a way to identify new sources of supply and even to negotiate with suppliers and issue RFQs in an open network format. Ariba has been quietly at this longer than Ketera and I've not heard much about the traction they've realized to date. Ketera, which I spoke to last week, is aggressively transitioning its business model to much more of a network-based approach based as much on charging suppliers for access to business as it is on charging buyers access to Spend Management technology. What's the future of Ariba and Ketera as network and supplier directory providers? Only time will tell, but I suspect we'll be hearing more from both of them in the near future.
The fourth category of suppliers are those with entirely new, commerce-driven business models. In this regard, companies like MFG.com present a platform for industrial buyers and engineers not only to identify a potential supply base, but to manage the entire RFQ and negotiation process online with them in a secure format that protects intellectual property of prints, design specifications, etc. Suppliers pay to become members, and in return for access to the buyer network, they can receive and bid on RFQs and they also, much like advertisers on ThomasNet, can improve their search engine rankings through the web presence that MFG.com provides for them as part of their directory listing. MFG.com has tried to build community rankings into the system as well allowing buyers to see the past performance of suppliers and for suppliers to see the past payment history of buyers. While the MFG.com business model is promising, it has yet to achieve the same level of growth and international presence of Alibaba and others focused on breadth versus depth.
Procurement and engineering organizations have many choices today when it comes to researching suppliers on both a local and global basis. Our own research suggests that Thomas Global's recent unraveling is a signal of just how fast the market is changing rather than a permanent downturn in the use and need for supplier directories and search mechanisms. Stay tuned for additional Spend Matters coverage on the subject -- including deeper dives into ThomasNet, MFG.com and Alibaba -- in the coming weeks on Spend Matters.