June 2, 2005, 12:00 AM

Growing Pains

(Page 2 of 3)

Yates says that the capacity she gets from Miva’s cart and Stone Edge Technologies’ Order Manger keeps eLearningToys, which had sales of nearly $500,000 last year, running smoothly with three employees. Functionalities attached to the two products – for example, the basic inventory database that is part of the shopping cart application – can handle operational demands at the site’s current level of activity.

But as volume grows bigger, sites may find that the capacities bundled into the technology solutions used early on need a boost-and a move to higher-powered, discrete technologies to drive individual functions. “Our experience is that most of the time, all-in-one packages that provide a shopping cart, order management and warehouse capabilities are usually deficient in one or another,” says David Fry, CEO of web design, development and managed e-commerce services provider Fry Inc., whose retailer clients span small, mid-sized and large sites. “When e-commerce sites are just starting out, there is a perception that you just need something that routes orders into the OMS and that’s it. But that’s a decision that may be made by an IT person, not a merchandiser.”

The site operator’s desire for functionality such as merchandising tools or the ability to do targeted promotions as the site evolves often highlights what may be missing in entry-level technology solutions, Fry says. Basic storefront solutions that work for a site’s initial iteration may be outgrown when they’re not up to integrating features from outside providers: for instance, dynamic imaging that’s becoming increasingly important in the online sale of apparel. Search can help drive conversion, but site search that arrives bundled into another function may not equal the more developed offerings of stand-alone site search vendors.

The business reasons

Or take a feature such as gift cards. The online purchase made with a gift card requires authentication at the front end in the interests of fraud reduction, but the order management system the retailer may have in place doesn’t accommodate that if it automates user authentication at the end of the checkout process.

In that case-and in every case-the decision on whether or not to upgrade to a system that can better adapt to the addition of new features depends on how much is to be gained from doing so. Retailers should look for that answer in a well-developed business plan that identifies the best opportunities for return on investment, Fry says. “For example, something like 30% of online consumers buy gift cards. By not having online gift cards, are you leaving 30% of revenue opportunity on the table?” he adds. “It really depends on the nature of your business.”

Beyond the need to sharpen up discrete functions and features on the site, another indicator that it’s time to upgrade technology on the road from small to big can be order volume itself. One Fry Inc. prospect is an online retailer that did $6 million in sales last year, but 15,000 of those orders were shipped in December. “For one month, they are a very big retailer and they need to have a technology solution scaled to handle that: order management, hosting capability, data capability-technology across the board,” says Fry.

Both growth prospects and the desire for more functionality were behind PoolQuest.com’s switch in March from a Yahoo storefront to one from provider LaGarde Systems. PoolQuest.com, an e-commerce venture of an established group of Florida-based pool supply stores, went live in November. Built by IT director Chris Smith on a Yahoo storefront template, the initial site wasn’t delivering the sales and traffic Smith knew were possible.

“We wanted a visual web site, but ours was more text-based. I knew that was one reason we weren’t getting the sales,” Smith says. “I didn’t just want a template. I wanted something more customized.”

A switch to LaGarde’s storefront in March gave the web site a custom design from LaGarde and improved its dynamic ability. PoolQuest enters product information into the LaGarde software using the system’s merchant tools. When a customer pulls up a category page, the software automatically populates the page with everything in that category.

PoolQuest worked with LaGarde on additional customization to integrate the web store with two other pieces of software on the back end needed to complete transactions, Mail Order Manager from Dydacomp and Shopping Cart Assistant, a small-business application from JTA Consulting.

An order through the LaGarde storefront on PoolQuest.com generates an e-mail notification to Shopping Cart Assistant, which exports the order into the Mail Order Management System. The Mail Order Management system then generates an order to the correct vendor or PoolQuest’s own warehouse, and sends the customer a receipt. The M.O.M. system tracks inventory levels and order status.

Basically, LaGarde software handles the front end for PoolQuest.com, including online marketing such as web search, while the two other software systems handle all back-end functions. Smith notes that the LaGarde system is capable of handling many of the same functions now assigned to M.O.M software, but that PoolQuest uses the M.O.M. software on the back end because it does one thing the LaGarde software does not: provide the same order tracking functionality for orders from other sources, such as phone orders.

One more reason PoolQuest chose LaGarde when looking to move beyond its original Yahoo storefront bears consideration both by other retailers thinking about whether to scale up technology and by the technology vendors poised with solutions. “They let me test their program,” says Smith. “They gave us a test program to play around with.” While declining to disclose numbers, Smith notes that since it went up in March the redesigned site, bolstered by more automation on the back end, already is pulling in sales that exceed those of the company’s largest brick and mortar store.

The financial calculation

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