As school purchasing agents seek easier and more cost-effective ways to procure the supplies needed by their schools, online procurement sites have begun to flood the internet.
As reported in the March issue of eSchool News, purchasing web sites offer everything schools need to maintain day-to-day operations, “from hundreds of gallons of floor wax, to grandstands, to pencils and paper,” according to Jared Cameron, vice president of the purchasing site Simplexis.com.
Joining Simplexis.com and its competitor, Epylon.com, are Shop2gether.com, eschoolmall.com (not affiliated with eSchool News), and DemandStar.com, three more sites that promise streamlined purchasing procedures and lower costs resulting from collective purchasing.
DemandStar.com allows agenciesincluding school districtsto post requests for proposals, invitations to bid, and quotes for services directly onto DemandStar’s web site. Sites tailored exclusively for schools, such as eschoolmall.com, offer procurement solutions that aggregate each school district’s vendor list into an electronic catalog that is standardized across suppliers and is specific to each district.
It’s an arrangement that benefits both the purchasers and the vendors, according to Ted Jordan, vice president and chief operating officer of DemandStar.com.
“We bring multiple agencies into the network, and they benefit by being able to reach all our vendors. The vendors, in turn, benefit because they can sign up just once and then [are] available to all customers,” he said.
It’s a far cry from the paper-intensive method of securing school supplies that most purchasing directors still go through.
Before the development of sites like DemandStar.com, school district staffers were entirely responsible for shuffling the paper, making phone calls, and drafting bids by hand.
“Typically, these folks get on the phone or go to catalogs to get information on products,” said Steve George, the founder, president, and CEO of Epylon.com. District employees must then submit request forms, which are shuffled from department to department, taking weeks and using up valuable time before finally being approved.
Nationwide, school officials handle an estimated 25 million purchase orders per year, according to executives at Simplexis.com, and a single requisition order costs a school district $125 (by Department of Education estimates) in the form of labor and paper costs.
“With DemandStar.com, purchasers can place new orders online, send notification of bids, and help purchasers and vendors get in contact with each other,” Jordan said.
“The internet adds value to any industry where there’s no access to information, or where people are acting as brokers,” said Jordan. “Without the internet, it’s far more difficult to do all the tasks related to procurement.”
Competition has also made pricing drop for school supplies. “Online purchasing means increased competitiveness. It’s a better use of taxpayer dollars,” Jordan explained.
School officials who have used the online purchasing sites that are proliferating on the internet agree.
“This has really saved us a lot of time and money by streamlining the purchasing process,” said Neil McDonald, purchasing specialist for Florida’s Osceola County Public Schools. “Purchasing on the internet has probably saved us $25,000 in one year, and we are a small school district with only 3,200 students.”
The collective purchasing capabilities offered by all three sites can save schools money. By aggregating many smaller individual bids, the sites create online buying cooperatives to receive discounts reserved for large bidders.
“Another advantage is that my school’s database of vendors is very small compared to DemandStar’s. And a lot of those are vendors who want to do business with all government agencies, not just my little school district,” McDonald said.
Vendors also stand to benefit from the shift from paper-and-pencil requisitioning to the use of procurement web sites.
Once vendors become members of sites such as DemandStar.com, eschoolmall.com, or Shop2gether.com, they can go directly to the web site using an account number and password. There, they can modify their account to meet the exact specifications for viewing pertinent bids. When a vendor finds a project it wants to bid on, the vendor fills out a bid package and submits it to the school district online.
Vendors can get an idea of their competition by viewing a list of the companies also currently holding a bid package on a particular project.
According to Shop2gether.com figures, the educational purchasing market is estimated at more than $85 billion, excluding capital expenses. Online purchasing companies agree that education purchasing is a prime market for venture capitalists.
“There is certainly a need to streamline the process and enhance both flexibility and accountability,” said Jim Gingery, executive vice president for marketing and sales at Shop2gether.com.
Why the sudden proliferation of purchasing sites in the past two years?
“The business-to-business technology available in the last 12-18 months has become an enabler for the education space to realize the same resource savings as the private sector,” said eschoolmall.com’s director of marketing, Marlene Petter.
“The initial focus of eCommerce was business-to-consumer. Amazon.com is a good example. Now, we see business-to-business all the time as well. The next wave is business-to-government. This is just the next step in the evolution of eCommerce,” DemandStar’s Jordan explained. “There’s certainly a tremendous amount of capital available, and a ton of it is pouring into these online ventures.”
“Everybody is adapting to the online world. In terms of procuring, the online market just makes sense,” added Shop2gether’s vice president of business development, Leonard Asuncion.
School purchasing officials believe it still might be some time until all procurement is accomplished online, however.
“The system is evolving like crazy. Some day, I think purchasing will be all digital, but there are still a lot of people in accounting who want a hard copy for their files. I don’t think we are doing away with paper entirely, but we are certainly reducing it,” said McDonald.
“Is every school district ready for this? Of course not. But I think your bigger districts in particular really stand to benefit from this,” McDonald said. “I’d absolutely recommend that schools try online purchasing.”