Get Vertical

Saturday Jul 1st 2000 by SmallBusinessComputing Staff
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The right online partners can make the difference

by Leanne Italie

Doug Erwin knows his job is done when one of his customers is finally whooshing down a monstrous mountain in Lake Tahoe. But Erwin, president and CEO of the ski services startup tahoecentral.com, can't get them to the top of the mountain by himself. A pilot has to fly them there, a hotel concierge needs to point them to the slope, and someone's got to sell them hot chocolate in the lodge. In fact, Erwin's company specializes in putting all these services together (except maybe the hot chocolate) for outdoor enthusiasts.

In just the same way, Erwin couldn't put together all the services on his Web site all by himself. Click on the photo of a skier, dressed in ominous black against a clear, blue sky, and it gives way to a panorama of colorful frames showing off Lake Tahoe's scenic vistas and icy sunsets, all available as digital postcards for the folks back home. Erwin didn't have to pay for any of the images: The ski resort Sugar Bowl provided them in exchange for sponsorship billing.

To get his business off the ground, Erwin's taking a page from his customers: Get vertical. He didn't poke around on some small business portal that catered to all different kinds of businesses. He didn't sign up for some banner ad swap and then sit back, satisfied that they're taking advantage of all the networking opportunities the Web has to offer. When most businesses talk about online partnerships, this is what they think of ­ but it shouldn't be.

Besides just hooking up with other businesses to drum up traffic, companies can connect to complementary services, provide a platform for businesses without their own Web sites, or sign on as an affiliate of a higher profile company. They can also set up their own affiliate programs and even initiate and complete entire business relationships on line. They don't even need to be selling goods through the Web to take advantage of online partnership opportunities.

PEAS AND CARROTS, MEET CARDS AND CHOCOLATE
Dan Cunningham ships boxes of chocolate from his Wisconsin factory to locations around the country. But when he needed a partner, he looked close to home. Cunningham happens to be friends with Jared Schutz, whose parents founded Blue Mountain Arts, the online greeting card giant. Cunningham has maintained a close partnership, even though Blue Mountain Arts was sold to Excite.

"Occasionally we blanket random sites, but the performance isn't that high," says Cunningham, who shuns the title chief executive in favor of chief chokolada. "Blue Mountain makes a very good relationship because they don't actually have to carry a product, and we do all the work."

With a high-profile partner like Blue Mountain Arts on its side, most businesses would sit back and take a break. Powered by the affiliate and marketing site Be Free, Cunningham set up a small affiliate network of his own, offering 20-percent commissions. Just as Amazon gives its affiliates a small cut from sales generated by its affiliates, dans.com shares the wealth with its partners. He gives away 5 percent of every sale to a select group of charities, including CARE and Oxfam America, and encourages his affiliates to do the same.

Cunningham has been able to put together a network of online partners, but can pick and choose the ones he wants ­ the ones he thinks will complement his particular niche. And he's willing to put his money where his mouth is and pay good money to partners that prove they can deliver the goods.

Still, money can flow both ways in these arrangements. For instance, Tahoecentral.com's Erwin provides banner ad space to ski news service onthesnow.com, in return for free snow condition and ski lift hours that his customers can access via cell phone and pager. He also receives a 12-percent commission for every booking a local masseuse receives through tahoecentral.com. "What I find to be most effective are these co-branded deals," Erwin says. "It makes sense to establish partnerships with existing players. We're all interested in outdoor activities and it helps build credibility."

Like Cunningham, Erwin forged his partnerships without intermediaries. They knew whom they wanted to team up with. Not everyone can be personal friends with the owners of a big Web site, but anyone can identify the big players in their niche and pick up the phone and call them. It may be an old-fashioned idea, but in practice it still works just as well as it ever did.

A CONSTRUCTION SITE OF A DIFFERENT KIND
Just as businesses can find the right online partners off line, it's very possible they'll find great offline partners on line. Springing up in most every sector are buy-and-sell networks and professional communities with streams of news, prices, job leads, and gossip, along with large business-to-business hubs offering suites of software to facilitate collaboration on line in real time. Whether you want to improve the Web site or the offline business, there's a place to go to do it.

Take, for instance, the $3.2 trillion global building design and construction industry. Hundreds of people scattered around the world often work on the same apartment complex or high-rise project, producing dizzying piles of blueprints, meeting minutes, requests for bids, faxes, and overnight packages in an industry where labor costs and razor-thin profit margins make time saved an invaluable commodity.

But recently some Internet companies, including Cephren and Bidcom, have begun to set up online communities for the parties involved. Bidcom, with Cephren soon to follow, has an "e-marketplace" that includes a vast database of construction supplies, an architect search function, and business leads. Both plan to offer online project bidding as well.

But it's the other services offered by these companies that make them effective matchmakers in the online partnership game. Both sites set up work areas where everyone from the architect to the people putting in conduits can communicate. All the important information is in one central location and each participant can quickly respond to revisions that take a week or more to circulate on paper.

"You're fully accountable," says Andrew Ball, president of Silicon Valley's Webcor Builders and a client of Cephren. "There's nowhere to hide. It really cleans things up and produces an efficient process."

Ball estimates he's saved $200,000 on his own costs since he began using Cephren's ProjectNet in 1998, with many thousands more saved in time for his clients. For a $750 start-up fee and a $1,250 monthly connection fee, participants receive passwords to Cephren areas devoted to their projects. Cephren charges an initial training fee of $1,500 and supports its clients throughout the construction cycle.

"Two years ago this was an almost impossible sell to clients," Ball says. "Now we're being asked how quickly we can get on line. People are finally realizing that this really does make sense. It really is the new math."

Webcor has figured out how to turn its real-world partners into virtual ones, as well. Meanwhile, companies like Erwin's and Cunningham's are Web companies that could succeed just as well off. But both have learned lessons about teaming up on the Web that apply to anyone doing business there ­ even if you never plan to sell a single item through the site.

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