School supplies marketer Epylon.com is taking its first baby steps into the promising but volatile world of electronic commerce this month when it begins offering its online procurement service to about 700 elementary and secondary schools across the nation.
The San Francisco-based Web retailer wants to grab a piece of the more than $144 billion education market, selling everything from basic school supplies to capital equipment to institutions ranging from pre-kindergarten through high schools – with a few universities thrown in for good measure, says company president Stephen George.
Epylon.com, formed in April of last year, offers school district purchasing managers, administrators, superintendents and others a centralized forum for acquiring supplies whose costs generally fall below those legally requiring a competitive bid process.
At press time George wasn’t ready to make any revenue projections, citing the volatility and uncertainty of online commerce.
But he does express hope Epylon.com can reel in maybe $1 million in revenue from 30 or so institutions which might collectively spend $2.3 billion a year on supplies and equipment that doesn’t have to be put out to bid. (In California, for example, expenditures of over $50,000 must be put out to bid.)
The site will offer more than 100,000 products, which school officials can search to find the products they are interested in purchasing.
When they do find what they want, they have two options. Items can either be ordered using purchase cards – similar to debit cards – and the vendors deliver the products.
Or alternately, school staffers can fill out electronic purchase orders that must be cleared through school purchasing managers, who in most school districts typically have the final say on expenditures.
As compensation for its services, Epylon.com collects transaction fees from vendors varying between 7% and 15%, depending on the type of product, notes spokeswoman Kim McNair.
To recruit suppliers such as J.L. Hammett, Virco Corp. and School Services of California, the company sent a 700-piece mailing late last year offering them the chance to register as sellers on the start-up Web site.
That initial B-to-B mailing resulted in a 3% response rate for Epylon. Follow-up efforts are scheduled for later this year.
To attract schools to check out the site, Epylon.com is planning a direct response print campaign in several vertical education trade magazines as well as in better-known academic journals like Education Week, says executive vice president Darr Aley.
In addition, the company plans to exhibit at several educational trade shows, as well as send out its 35-person sales force to pursue promising leads.
McNair says the site is relying on its contacts within the industry to help get established initially, backing that foundation up with mailings to schools located in less-populated states.
George is new to both the worlds of e-commerce and school supplies. A former investment banker with Goldman Sachs, he got the idea to start up the business-oriented site after noticing the success of online companies pursuing the consumer sector.
That prosperity, he felt, could be parlayed to the public sector, where George notes a total of $850 billion is currently spent on the Web each year.
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