SciQuest.com's B2B E-Marketplace

The Future

SciQuest attempted to position itself as a vendor neutral partner for both buyers and suppliers. It secured over 100 enterprise customers and contracts with 850 suppliers around the world by March 2001. The company had more than 1.5 million stock-keeping units, ranging from reagent and antibodies and latex gloves costing 50 cents, to high-end, $20,000 spectrometers. About 300 transactions were handled through the exchange each day, involving approximately 700 orders to suppliers. SciQuest had the capability to customize its marketplace and integrate it with its customers' enterprise systems, internal inventory systems and libraries. The company's catalogue had increased to one million products in 2000 and its services had received the approval of major global product suppliers and research organizations, including Dow Chemicals, Du Pont pharmaceuticals, Glaxo Wellcome, Merck and Monsanto.

SciQuest derived its revenues through commissions from auctions & e-commerce transactions and from advertising and sale of information on its site. The increase in SciQuest's revenues from $0.48 million in 1998 to $3.88 million in 1999 and $51.7 million in 2000, was largely attributed to the establishment of the e-marketplace, since 90% of the revenues was generated through e-commerce transactions. Though SciQuest benefited from its relationships with large buyers and suppliers through transaction volumes, it found itself working on very thin margins. This was reflected in its bottomline, with the company consistently posting net losses during the 1998-2001 period. While the net loss was $4.22 million in 1998, it increased to $84.35 million in 2000. For 2001, while revenues declined almost 55%, the loss remained almost the same, at $82.84 million (See Exhibit III).

According to analysts, SciQuest's losses were expected to go up further in the future as spending on sales and marketing, content development, technology and operating infrastructure increased. The global slowdown in the infotech business in the early years of the 21^st century, coupled with the fact that SciQuest's business model was new and unproven, did not augur well for the company.

Exhibits

Exhibit I: Sciquest B2b E-Marketplace
Exhibit II: Sciquest's Products and Services
Exhibit III: Sciquest's Consolidated Statements of Operations

Case Details

Case Code : ITSY008
Themes: Internet Companies
Case Length : 09 Pages
Period : 1990-2001
Organization : SciQuest.com
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Information Technology (Electronic Commerce)

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