Secure eBusiness Solutions

Tuesday, 24 February 2009

eCommerce Supports Bricks & Mortar

Why are Bricks & Mortar (traditional retailers) worried about selling online?

Over the last few years we have built and deployed websites that sell products for many traditional retail businesses some with just one shop and some with hundreds. After the dust settles the general comment we hear is "why didn't we do this earlier". We have found that the online sales model can work for any retailer if they are willing to embrace new ideas and make some concessions. The main concession, if you can call it that, is to take the online stores seriously and treat it like a real store in most ways. The big exception is that it is open 24/7/365 and as a retailer you still have to be prepared to process orders even when your other stores might be closed. But once the processes are established and the objectives defined then there are no major issues. The benefits:

  • Open 24/7
  • More business exposure
  • Greater geographic and demographic reach
  • More channels and at a lower cost base
  • Compete with the pure eTail model
  • Better customer service
Why now?

Well why not.

You can sell anything online. We have had retailers tell us that "my product is too difficult to deal with online". The truth is that you can sell anything online but it may mean making a few changes. As an example we have a customer who has a butcher shop and they have now been successfully selling online for a year. It is at and they were overwhelmed by orders over Christmas 2008.

The statistics are with us.

There are around 1.8 million small businesses in Australia of that there are over 200,000 retail outlets in Australia. Less than 50% have a website that can promote their products or services and less that 10% have an online store to sell products.
Many traditional retailers see the Internet and selling online as a conflicting channel to their business. So there is a great deal of reluctance to allow products to be sold online. However the reality is that today more and more there is a search and buy attitude. This can best be seen is some basic statistics collected by Nielsens Netratings looking at how products are found online:

Traditional retailers are behind the 8-Ball when you look at worldwide trends. So often a new online only start-up may be able to capture market share and attention away from the the traditional businesses. But rather than see online as competition the traditional business owners need to embrace these channels and new opportunity for their business.

Traditional Retail vs eTail Only Values

When a new online retailer starts up there is an immediate belief that the look and feel of the website and the number of products in the most important focus.

Those that last the distance find out (sometimes very quickly) that is not the case. The issues are all about the visitor access and customer satisfaction these are paramount if you want to build up a return customer base.

Once a sale is made the fulfilment and follow up are important to good customer service.

Promoting Your Business

Promoting an online business can be expensive and again newcomers believe that you get found by Google and you just make sales. Search Engine Optimisation (SEO) and Search Engine Marketing (SEM) have become a critical part of being successful. Being found online is not difficult but getting the results that you require takes both time and money.
So it is all about having a quality customer base and promoting your business.

What the traditional retailers already have is a quality customer base and they know how to promote the business through that customer base. Often this is done by word of mouth, mail drops and direct marketing. Just by promoting the website on all the current marketing material can result in immediate visitors and buyers.

Online Retail is Growing

Australian online spending will grow by about 5.5% annually for the next five years, from $15.1 billion in 2007-08 to $21.2 billion during 2013-14 according to research firm IBISWorld.

In the USA Internet Retailer Magazine reports etailing has grown from $8 billion in 1998 to $156 billion in 2008 and is expected to reach $1 trillion in 2020 a third of all retail.

At the same time sales from traditional retailing are flat and in some sectors falling. So it is clear that there is an opportunity for the "bricks and mortar" retailers to embrace a new channel to market.

What makes this so sensible and easy for the existing retail business is that they have the stock, infrastructure, fulfilment and business processes already in place.

Moving to an online sales model has no downside and a great deal of upside to the business.

Some of the issues.

There are issues that you need to address when you want a mixed eTail and Retail business.

Logistics is important but in general most retailers already have a successful fulfilment process that works. So unless it is broken don't change it. Offer the simplest shipping method and in Australia that is by Australia Post eParcel. It will work for packages up to 20kg. If you are in the perishables business (meat, food etc) then offer delivery in a known geographic area.

Payment online is simple and you can accept credit cards safely using a payment gateway like eWAY or PayPal. But you can also offer pickup and pay in store. There is nothing wrong with ordering online and pickup and pay.

Some retailers have an eftpos machine and want to get credit card details and process them manually. Do not do that, it is not PCI (
) compliant and it is not safe in any way. So get an online merchant account, talk to you ecommerce provider and some recommended payment gateways. Or go and investigate PayPal as an alternative.

Will your online store effect your traditional store?

Short answer is NO. All the experinces we have to date show the opposite. Having products online enhances sales in the bricks & mortar store and can improve your image and reach. By promoting your webstore on search engines and via shopping comparison engines more people will find you and all your stores.

You may find selling online easy and more effective than traditional retail but the final model can be mixed online and "Bricks & Mortar".

Thursday, 5 February 2009

eCommerce & ERP Integration

Is it important to have your eCommerce website talking to your back end financial or ERPsystem? We see lots of companies every week who are looking to start an online store (eCommerce Website). It may be B2B or B2C and there is always a long list of requirements. In fact we probably have seen every requirement ever written for an eCommerce Solution. So when we see a new potential customer for the first time they are sometimes disappointed that we don't find their requirements challenging.

Invariably one of those requirements is about integration by which we mean making software systems talk to each other.

If you have well chosen administrative software systems in place then the issue of integration may not be so complex or difficult. Some of the main requests we see for integration requests are:

  • Enterprise Resource Planning (ERP)
  • Financial Systems
  • Customer Relationship Management (CRM)
  • Warehousing - stock control and shipping
  • Point of Sale (POS)
  • Payment systems
  • Shipping systems

Many of the companies we meet have a view that there must be real time integration between the back end admin systems and the website. However this is often the least likely and least effective solution.

We recently had a discussion with a medium sized business using MYBO and they wanted to get all product and stock data from MYOB in real time (meaning as transactions occurred) and post orders to MYOB and create new customers in real time. Problem was the MYOB system ran on a server in their internal network without Internet access. So sending information back and forth from a website remotely hosted was going to be a challenge. In this case the Financial Controller ran MYOB and did not want it open, the Marketing Manager ran the website and wanted to sell online. The Managing Director wanted the online sales to be delivered in real time to MYOB because the Financial Controller believed that was the only way that the company could control online orders. This is a no-win situation.

So the first issue that you need to address is get everyone on the same page.

The methods of integration vary for different systems but in general they are:

Import / Export Files (CSV, Excel etc)

In this situation information is passed from one system to the other but they are not connected in any way. This method of integration is safe and works in the majority of systems as most have import / export and it all comes down to format and field mapping.

Web services or SOAP

This is a little more complex but is about real time connectivity. In this case there are XML files that are used to map data between the two separate systems. The movement of data can be as required, meaning that it may happen as transactions occur or may happen on a scheduled basis.

Data Base Integration using SQL

Most systems these days have some form of SQL data base behind them. So you can update the data base tables using SQL or you can use one of the data mapping tools available. This method of integration can often be complex and lead to issues unless the referential integrity of the data bases are maintained correctly.

There needs to be a decision made about integration based on the real needs of the business. if you get 2 or 3 orders a day online then manually entering that into you financial system is not an issue. But if you get 600 a day it is a different story. But ask the question about how often the systems need to be in sync.

The other area that is important to integrate is stock levels and availability. If this is not done correctly and maintained then you may end up selling products you don't have. In reality this is far more important that order information but probably less emotional. If you business is solely selling online then the website can manage stock levels and be updated daily or as required. Again the level of effort depends on the number of products. But if you sell from a real bricks and mortar store as well as online you have added a layer of difficulty. If the products that you sell can be easily replenished then running out may not be an issue. So you are left with a decision based on;
  • Number of products
  • Method of sale
  • Time to restock
  • Impact of delay in shipment
This leads on to the integration with Point of Sale or POS systems. This can sometimes be very complex and may cost in real terms. One solution for a small retailer might be to use the online webstore in the shop in real time. This may actually be a unique selling feature and can be promoted in store. All it needs is a web accessible terminal or kiosk.

When you start looking at integration make sure that you clearly define what you want as an outcome. The negative affects maybe cost, online performance and more complex back office systems. The positives are better customer service, more efficient systems and processes, and less human resources.

You might also find that it is simpler and cheaper to replace an aging financial system with one that is more able to handle online sales one such example is SAP Business One which integrates easily into eCommerce. Often we have found that the companies we speak to made a decision on a financial system many years previously and over time the business changes but the system does not. End result is that the back end administrative systems impede the companies progress and growth.

Payment and Shipping systems should always be considered as they improve both usability and security.