supplyFORCE Buries Dot-Com Past
SupplyFORCE.com was founded during the dot-com boom with an aggressive, ambitious agenda and seed money from venture capitalists and a small group of electrical, industrial supply, and PVF distributors. A financial restructuring of the company in early October saw the VCs leave and the company mutate. Now it's no longer in the dot-com or Internet businesses and has become a distributor-owned entity.
The focus now: National accounts sales for the 250-plus member distributors. Affiliated Distributors and its chairman/CEO, Bill Weisberg, served as the original drivers behind supplyFORCE.com. Unlike the now-defunct SourceAlliance.com and the still-extant Vantage Group, supplyFORCE.com was not limited to electrical distributors.
In the heady dot-com mania days, supplyFORCE.com was able to raise more than $80 million. While venture capitalists reportedly were the prime investors, as many as 10 electrical distributors also invested in the entity. MDM was not able to discover how much of the $80-plus million is gone, how much the departing VCs took with them, and how much remains with the redirected company. President/CEO John Eggleton would not provide numbers. Eggleton did tell us that supplyFORCE has “substantial capital” and that a reduction from the current full-time staff of 30 would not be necessary for financial reasons.
According to Eggleton, the company did have a significant “reduction in force” in the spring. This reduction was made when it became clear that the company - which then had five classes of stock - would soon transition to something other than a fast-growing investment. Most of those let go five months ago, he said, were legal and accounting staff.
New DirectionsKey aspects of the new direction:
1. supplyFORCE has nearly $150 million in annual national account sales. The company will focus solely on increasing that total as a service to member distributors.
2. The company will not seek large returns for itself. What little profit from these deals supplyFORCE retains, Eggleton said, will be earmarked for investments in technology and human resources.
3. Fortune 500 companies - especially industrial concerns attracted by MRO solutions - are the prime target in national account sales. Eggleton indicated that the company will not target universities and hospitals, for example.
4. Member distributors now own more than 98% of supplyFORCE. The board of directors includes three electrical distributors, two industrial supply distributors, one PVF distributor, and one representative of Affiliated Distributors (the buying group).
5. Peter R. Lemman, president of North Coast Electric Supply (Seattle), chairs the company's board. While Affiliated Distributors was integrally involved in the company's founding, it does not own the company. Ties between the two entities remain tight, however; Eggleton says more than 90% of his company's members are A-D affiliates.
What about the future? With “substantial capital,” remaining, Eggleton projected that supplyFORCE could double national accounts sales to around $300 million within three years. “We will be as big as we need to be,” he added, “as long as our distributors are willing to fund the growth.”
An analysis by this reporter allowed that, despite its dot-com aspects, supplyFORCE was likely to be a force in national accounts sales on behalf of member distributors into the future.