LV Internet sales company grows quickly

Charles "Junior" Johnson knows it wasn't McDonald's food that made the Golden Arches one of the world's greatest business success stories.

It was the service.

Johnson, 37, quickly learned how product delivery is as important as the product itself.

Using that strategy and a willingness to listen to purchasing agents that buy everything from paper clips to computer systems, Johnson developed Purchase Pro Inc., a business-to-business Internet commerce company based in Las Vegas.

The company is on a rapid growth track as managers add more industries to the Purchase Pro universe and open more offices in other cities to spread the company's concept of real-time direct buying and selling over the Internet.

"They have a chance to become THE player in business procurement," said Bruce Smith, Internet analyst for Jefferies & Co., a New York-based brokerage. "I'm extremely excited about this company. When you look at true e-commerce, business-to-business operations are about 10 times as large as business-to-consumer, like Amazon.com."

Amazon.com, considered one of the giants of Internet commerce, calls itself the world's largest online bookstore and sells directly to consumers from its Internet World Wide Web site.

Johnson's Purchase Pro uses the Internet to link companies with other companies. There are plenty of competitors selling to businesses on the Internet, but none do it quite the way Purchase Pro does.

Specifically, Purchase Pro has developed a software program that uses the Windows environment to link suppliers with buyers. The company has built a community of about 2,000 subscribers in a network that interacts whenever a company needs to make an acquisition.

If a company wants to buy office supplies, its purchasing agent prepares an order describing all the specifications. That order goes out on the network, where it can be examined by subscribing suppliers.

Bids are returned to the buyer in a spreadsheet format for easy analysis. The top two are highlighted but every bid is presented and if a bidder has specific notes, they are incorporated into the report.

Proponents say the system levels the playing field in the industry because a small growing company's bid presentation has the same information that an established player would have. A buyer can choose strictly on the merits of the bid analysis.

Not a bad setup from a man who says he was a computer illiterate when he started the company two years ago.

"We had to make it affordable and understandable," Johnson said between meetings with investment bankers in the Midwest recently. "Our plan was to identify business problems, then create business solutions in the king's English. We wanted to use business language, not computer language, in our solutions. That way, everybody would understand, including those who aren't computer literate."

Johnson consulted with purchasing agents in the hospitality industry with the idea of using the Internet to build a procurement network. Johnson, a former basketball player at the University of Cincinnati where he earned a business degree in 1983, said Mirage Resorts Inc. was one of the first companies to look seriously at his proposal.

"It started with general purchasing items, but there wasn't a full complement of vendors," said Dennis Macready, director of purchasing for the Mirage hotel-casino. "We saw something that we thought could work, so I made my people available to Mr. Johnson."

Johnson's meetings with Mirage eventually convinced him of the need to go to the Windows environment, since most agents already were familiar with the easy-to-use operating platform.

"For people who don't have a lot of computer experience, this offered some real benefits," Macready said. "It's easy to get through, there's a lot of point-and-click. It (the program) does a lot of the work for you."

Macready said Mirage started using the system for plates, cups and other restaurant supplies, but then it evolved into other areas, like engineering, entertainment and one of the resort's biggest purchasing sectors, food and beverage.

"Now, it's allowing my buyers to be buyers instead of clerks," Macready said. "A job that at one time took six or seven hours to do now takes about 45 minutes to an hour."

David Weild, head of the high-technology group for Prudential Securities, said the simplicity of the technology is appealing as is the cost.

"Because the entry point (of signing onto the system) is so low, it makes it very attractive for a company to try it," Weild said. "It costs about $100 to respond to dozens of RFPs (requests for proposals) from buyers. The system is elegant in its simplicity."

Weild said the only gray cloud on the horizon for Purchase Pro would be its ability to react to its rapid growth, "but that's a problem many companies face and this group seems capable of meeting those challenges."

The price -- actually, it's $99 per month -- gets a company the software and a packet explaining how the system works. Subscribers also get a three-page web site to advertise products. Those sites also are capable of linking to a company's existing online catalogue for more detailed product descriptions.

Companies that sign on promise a three-month subscription commitment and must give 30 days notice when they intend to leave it.

A team of about 80 Las Vegas-based employees operate in sales and technical support from company headquarters at 3291 N. Buffalo Drive, next door to MGC Communications.

MGC's chairman of the board, Maurice Gallagher, founder of ValuJet Airlines, was an adviser and mentor to Johnson as he got his company started. When MGC moved into its new facility, he tipped off Purchase Pro's management team, knowing the company was poised for growth.

The company moved into the new 16,000-square-foot building from a 6,900-square-foot office. The day-to-day operations are coordinated by Chris Carton, president and chief operating officer.

This summer the company hired Daniel Copp, formerly an executive at Circus Circus Enterprises and Casino Data Systems, as chief financial officer.

"We look at ourselves as having a service that is like what the fax machine was 20 years ago," Carton said. "Not everybody had one back then, but now they are invaluable in business communications."

The Purchase Pro product, Carton said, is designed to reverse the amount of time spent seeking and servicing customers. Most businesses spend 80 percent of their time serving existing customers and 20 percent seeing new ones, he said.

Of the 2,000 total subscribers, about 1,300 are in Nevada, Carton said. But part of Purchase Pro's growth strategy has been to branch out beyond the hospitality industry and into other states.

The company used the hospitality procurement field in Las Vegas as its proving ground, and has expanded to Reno; San Diego; Phoenix; Tunica, Miss.; Orlando, Fla.; and Washington, D.C. Among the largest clients: Disney Regional Entertainment, Sea World of California, MGM Grand, Luxor, Nevada Power, Bechtel, the Clark County School District and the University of Nevada, Reno.

One of the company's biggest moves in the summer was to bring on Carnival Cruise Lines as a subscriber. That signing was partially responsible for an increase of 300 subscribers in August as potential suppliers signed on to provide products for the Florida-based leisure company. The company added about 175 subscribers in September.

Johnson, who was born in Lexington, Ky., and owned his first business there -- Johnson Security -- when he was 25, is now looking to move into Louisville, Ky., and Cincinnati.

He said another of his goals is to take the company public and recently he met with financiers from Prudential and Jefferies to explore that alternative.

"We're providing what we think is an exciting product," Carton said. "It's easy to use and one of the things we think it does is level the playing field in the purchasing field. It works for small companies as well as Fortune 500 companies."

archive