Perceived Value

If you have a highly integrated ecommerce system you can make considerable labour savings either by employing staff or redeploying existing staff. Of course you need to invest to achieve this but I constantly come up against stiff price resistance. ‘What! You want £X,000 for a website?’ An ecommerce website can sell to the whole world but customers who will pay £25,000 for a new van or £100,000 to fit out a shop will not pay for software.

Perhaps if they could touch it or smell it they might pay more!

Getting the Integration Balance Right

The perfect business would be fully integrated and have no staff (actually the perfect business makes money without staff or customers!) but we must balance the cost of that integration against the return it is going to give. In the beginning of Internet time (1999) a successful businessman set up WebVan, an online grocery delivery business in the US. It was fully automated with 300,000 sq ft distribution centres and special vans. Ultimately the business failed because the margins were too thin and as a start up it was costing $210 to acquire each customer. Tesco started a pilot web grocery business at the same time. After running it for 6 months they shut it down and reflected. I was lucky enough to be at the Manchester Business School at the time and listened to a talk on the lessons learned from one of the directors. They re-launched with in-store picking, special vans and sold to existing customers; they were profitable by 2001.

You can read more about this in John Mullins excellent book ‘The New Business Road Test’ (ISBN 0-273-70805-8). What this shows us is that we need to look at the savings to be made from integration against the volume and margin of sales expected. For new Internet ventures what is the cost of acquiring a customer? The Field of Dreams approach; ‘I will build and they will come’ only works in the movies!

On the Road

We are on the road with Sage at the moment on their 6 monthly Business Partner events. It is really useful to talk to the partners and hear about their successes and the challenges they are facing. One partner thinks our solution might suit one of his customers who imports fishing goods from China. He could see how the automatic stock allocation when an order is placed would really help – however, the real problem the business has is they don’t even allocate stock when they place orders manually; they just wander around the warehouse. So no matter how good your integrated process are they only bring benefits if you are prepared to use them.

The other great thing about these events is it gives you the chance to hear what is going on at Sage. Some interesting snippets:

• There are 201,000 companies using Sage 50
• It is believed there are still 600,000 companies using manual accounting
• ACT! is the worldwide leader in CRM with 2.8M users
• ACT! stands for Advanced Customer Tracking!

Simplifying Shipping

Shipping is one of the most difficult aspects of ecommerce. How much do you charge? Which service should you use? A single carrier does not always have the best rate for every size of parcel to every destination – however if you use multiple carriers the web site needs complicated logic to work out which carrier and your warehouse need to have all the relevant carrier systems installed. You probably then have to rekey the parcel details into each system introducing the possibility of more errors.

A brilliant service called MetaPack solves all these problems. It abstracts all the UK shipping companies to one software interface so that you only need: one printer; one tracking page; and one means of calculating shipping charges no matter how many carriers. It also means you only have to integrate you back office systems to one shipping system and you can then change carriers at the drop of a hat.

Aspidistra integrate their Shopfront ecommerce product to MetaPack and can provide back office integrations for Sage 50 and Sage 200.