In its second-largest acquisition, Amazon buys the company for $970 million.
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The challenge Coleman faced in doing that was in matching some of the technical functionality of bigger companies without having a big-company budget. Prior to moving to the platform of San Mateo, Calif.-based technology provider NetSuite Inc., he used one company`s software to run the front end of the business plus a second software product to connect to UPS. In addition, he also used Microsoft Outlook to handle e-mail, an open-source customer invoice system and Intuit Inc.`s QuickBooks software for accounting. "We had five separate systems to run the company," he says. "When a customer called with a question, I started using two computer screens, with maybe three to four windows open at a time, to answer it. It was a nightmare."
What finally drove him to find a new solution was when the vendor whose software ran the web site and processed orders shifted its focus to enterprise systems and stopped supporting smaller customers. Coleman either had to hire someone to connect his site`s disparate systems or find a new system that would do it all in one interface. Choosing the second option, he initially found back-end systems that connected to front-end templates that would have created pages he couldn`t customize, or highly customizable products that would achieve the look he wanted but would require him to hire a database expert to connect the front end to back-end systems. Price put those solutions out of the running in any event, he adds, with the least expensive starting at about $50,000 plus ongoing support, and the most expensive running up to about $150,000.
"If you are grossing $500,000 to $1 million a year, you`re doing well, but you don`t have $150,000 around in cash," he says. NetSuite`s version 9.0, with a basis in accounting software, added enough flexibility in customizing its front-end, customer-facing templates to get Coleman to sign on as a beta user and then a regular customer. "Finally I had a system that integrated everything from customer service, ERP, UPS tracking, accounting, ordering, front end and everything else, that gave me about 90% of the design functionality I wanted," he says. "That infinitely improved customer service." Coleman has an annual contract for the hosted service, saying that volume-dependent pricing arrangements he investigated with other vendors might have had the effect of penalizing the site for succeeding.
Implementing an integrated system lightened the workload on Coleman`s five-employee company and made it possible to avoid spending $50,000 to hire technology and accounting staff to pick up the slack from the five disparate systems. Coleman put that extra staff time and the NetSuite platform to work launching a second online business, a child safety gear retail site, SafetyDepot.com, this year. "Otherwise, we would never have been able to launch SafetyDepot," he says. "With the same amount of staff that we had to run the business using the five separate systems, we were able to launch an entirely new company."
Trophies2go.com: Easing growing pains
Jeff Anderson owned the retail Issaquah Trophy & Award for seven years before he launched the e-commerce site Trophies2-Go.com in 2000. In short order, he added six more related niche web sites, and also one for the store, IssaquahTrophy.com.
Like many e-retail entrepreneurs, Anderson was initially drawn by the fascination of the web itself. "In the beginning, it was the appeal of the Internet in general. There was a big demand from people wanting to purchase online," he says. "That changed with a lot more competition on the Internet. Now, you have to set yourself apart with new products, customer service and building customer relationships."
That meant the e-commerce platform on which he`d started with the first web site was no longer up to the job. As the Issaquah, Wash.-based company grew, adding features to the existing platform was proving to be a problem. Functionality such as UPS tracking and the ability to handle promotions and coupon codes, and merchandising capacity such as cross-selling and upselling became time-consuming and expensive to integrate. His former e-commerce software provider developed the new functions and tried to integrate them with its existing clients. "But each became a $10,000 to $15,000 investment, just to add these modules to the back end," Anderson says.
With a seasonally-variable 10 to 15 employees, Anderson`s two businesses, Trophies2Go.com and Issaquah Trophy & Awards, represent eight web sites with total revenue in the range of $1 million per year. The mounting tab of trying to integrate new features with the old platform was becoming cost-prohibitive, and not having the capacity he needed stood to hinder online growth.
Anderson wanted a software solution that rolled updates into regular new releases instead of requiring a major capital outlay to add on. "I had to go out and find someone who could provide what I wanted, which was to be able to grow with me. I wanted decent customer support, and to have upgrades be more of a new software version release than something I had to pay for and go through development on," he adds. He also wanted to bring the retail store and the web sites onto one interface and knew that running them off a single database was going to be the best way to do it.
Anderson says his budget ruled out the more expensive options from providers such as IBM and Oracle right off the top. "Looking at the bottom end, some of the cheap modular options available didn`t fit either. What we wanted was somewhere in between."
Last October, he went live with CoreSense Integrated Enterprise, which runs the e-commerce operations on the sites` front end, connecting them with the back-end functions that support them. Though the implementation put all sites on the same platform and database, Saratoga Springs, N.Y.-based CoreSense can provide separate reporting for the operations of the retail store and the Trophies2Go sites, which are two separate corporations. Anderson pays a set cost per license to give a designated number of users access to the back-office system. Hosting, license fees and some custom configuration bring his costs to about $2,000 per month. Other solutions he investigated would have cost about six to eight times that amount, he estimates.