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Fulfillment is key when
building online business
Now that Christmas is over, I have come to the conclusion that e-commerce is finally real.
Although it has been hyped for years, most of us have never felt comfortable about buying things over the Internet. Even though I've been comfortable buying stuff on the Web, I've never been convinced of its reliability until now.
Virtually all of my Christmas shopping was done online. For a couple of gifts, I was early enough to have them conveniently shipped directly to my office. Every major shipper has some means of accurately tracking your orders on the Web. It's always a good idea to ask for a tracking number when ordering anything online. However, my superior procrastination skills forced me most often to pick up my gifts at local stores after purchasing online. Then all I had to do was pop in at a convenient, less-hectic time of day, confirm my identity and pick it up.
This worked very well with such venerable "bricks and mortar" retailers like Circuit City, Lowes', CompUSA, and Sears. I got on their Web sites, surfed for a while, made my choices, confirmed that they were available at the local shop and paid for them using a credit card. After a relatively short visit, I found the biggest challenge for me would be wrapping the gift. Although, for a little extra money you can save a lot of aggravation by taking advantage of gift wrapping services offered online by many stores, or so I've heard.
What really intrigued me, however, weren't the purchases from large retailers, but from the little ones. For example, I bought some praline candy from a small confectioner based in Austin, Texas. If you don't know what a praline is, think Texas equivalent of macadamia nut chocolates. While I wasn't able to take advantage of a free taste test, I was able to easily purchase a few boxes of candy from what is basically a Mom-and-Pop outfit that has a handful of shops in and around the Austin area.
OK, great, I had fun shopping online. Why should you care? Well obviously, you, too, can buy things off the Net. As long as it is a secure site, usually evidenced by the little lock that shows up (usually) on the bottom right-hand corner of your browser window, your credit card will be as safe as it is when you hand it to a waiter to pay for dinner.
But more important, just about any business can afford to sell its products online. Here at home, products with the "Made in Hawaii" label are extremely popular with locals and tourists alike. If these same products were available all over the world via the Internet, sales could multiply.
Be careful, though. While it is affordable to sell your products on the Web, you have to do it right. It is relatively simple to put up a Web page, take orders and charge customers' credit cards. You might consider hiring someone for a snazzy, professional looking page, but the cost of doing so is not prohibitive.
The real challenge is delivering the goods. How do you get the correct product shipped to the customer quickly and efficiently? What happens when something goes wrong? How do you know the customer actually received the product? What about returns or exchanges? Do you want to offer electronic coupons or gift certificates? What happens when you introduce new products? How do you know what your hot-sellers are? How about products that should be retired? How are you going to advertise your products?
These are the questions that, too often, are not asked until after a few sales have gone bad. Addressing these issues up front make your chances of success much greater. The buzzword for this process is "fulfillment."
The good news is that you don't have to do it all yourself. There are many fulfillment companies out there to choose from that can handle all, or part, of fulfillment process. These range from companies that cater to smaller organizations, such as www.ifulfill.com, to large multinational corporations, such as UPS (ups.com). Locally, E-Commerce Systems Hawaii (ecommercesystemshawaii.com) provides a full range of fulfillment services.
What do fulfillment companies do? In short, they take care of the getting your product to your customer, and address all the attendant headaches described above. This allows you to focus on making your products.
How does this work? Well, first, you need an online store. This would include a Web site, product listings, secure shopping carts, credit card processing, etc. Note that the fulfillment company does not necessarily need to put up the online store, although most are quite capable of doing so.
Once the store is ready, you send your products to the fulfillment company when they are ready to be sold. The fulfillment company receives orders from the Web, or sometimes over the phone, and then packs and ships your product to the customer. The better fulfillment companies provide a real-time means for you to check your inventory; alternatively, sales and inventory reports are sent to you on a regular basis. This alerts you to what's selling and what's not. Most fulfillment companies can handle perishable items but of course there are practical limits. Don't plan on selling lilikoi sherbet!
What are the costs? Once the store is up and running, a nominal monthly hosting fee of as little as $40 is incurred. Of course, you get what you pay for. The less you pay, the less support you get from your store provider; $40 gets you the no-frills version. For a "no worries" full-service store, expect a fee of a few hundred dollars per month.
The fulfillment company usually assesses a handling fee for each transaction. If you don't sell anything, they don't charge you. So it's in their best interest to help you increase sales because that increases their revenue. The handling fee varies from company to company and is usually dependent on volume, as well as the base price of your product. Expect to pay storage fees because the fulfillment company must keep an inventory of your products. Fees for returns and exchanges are usually included in the base price and shipping costs are typically passed straight through to the customer. Most online customers expect to pay for shipping anyway.
Many fulfillment companies also provide additional services. Customer service via the phone, for example, can be a nice touch. Surely, everyone has experienced some sort of frustration when customer service is limited to e-mail. Online advertising is also available, usually as an add-on service. Be careful not to become a spammer!
If you don''t have visions of grandeur, you can always sell your products on a much smaller scale. Try checking out eBay (www.ebay.com) or Amazon (www.amazon.com). They provide a low-risk, low-cost means of selling your products.
John Agsalud is president of ISDI Technologies, Inc., a Honolulu-based IT Consultancy, specializing in software development, systems integration, and outsourcing. He can be reached at jagsalud@isdi-hi.com or by calling 944 8742.
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