Revenue increased 11.9% in Q1 of 2015, to $17.26 billion compared with $15.42 billion in the year-ago period.
When scaling up means new technology, smaller online retailers balance strain and gain
When Juergen Link went live with his premium tea site SpecialTeas.com in 1996, a Yahoo search under “tea” brought up only 19 listings. SpecialTeas.com, initially a home-grown effort, didn’t even have a shopping cart or an order management system; most shoppers weren’t yet ready to supply their credit card information to an Internet store, anyway. Customers printed out a form from the site, filled out their order on paper and mailed it in.
An admittedly rudimentary effort, the site was nevertheless on par with much of what was available online at the time. But it wasn’t long before growing demand forced some upgrades. SpecialTeas added a shopping cart the next year, the program written by a local Internet service provider that had some development capabilities. A commercially-written packaged shopping cart applica- tion followed in 1999, and later, additional modular components and eventually a new web site.
But it was the need for full integration of the customer-facing web site with supporting back-end software and functions that prompted a move to the enterprise platform of provider Ecometry last September. “Without that integration, it’s really difficult to process orders,” says Link, founder and president. “Ecometry is our back office software and it drives our site, which means we have real-time ordering, real-time inventory, item management and offer management.”
Web and catalog company SpecialTeas.com has grown to 16 employees in the last nine years. Scaling up has meant decisions on-and investment in-technology, has required significant changes to the original web site and enterprise software system supporting it, and has served up all the strain that can accompany such changes.
Facing technology upgrades is the eventual price of success for every small retailer that thrives and grows. The initial excitement of just making contact with customers and logging in the first Internet sales quickly gives way to the ongoing challenge of trying to figure out how to drive more sales volume most efficiently at the least cost, and when it’s time to bite the bullet and invest in the technology that will better support that effort. The tipping point on when it’s time to move from an initial home-grown solution to packaged or customized applications, or to different service or software providers, varies with each retailer’s vision, resources and game plan.
Link says he hasn’t yet measured the effects of an improved web site design and supporting technology in incremental sales, but he sees clear gains in operational efficiencies through more automation of processes. “Between not having to get in touch with customers on sold-out items, not having to physically review every order, getting orders to the warehouse more quickly and processing them more quickly, I’d say 50% is probably a fair assessment of time savings in turning an order around,” he says.
Like Link, Anne Yates of eLearningToys.com. measures the benefits of boosting the technology that operates and supports her site most directly in terms of labor saved and increased operational efficiency. Behind the e-commerce site that went live in 2003 is a classic Internet entrepreneur story: Yates left a full-time job to be a stay-at-home mom, then launched a store to offer to others the type of educational toys she’d had difficulty finding for her own child.
Like many who launch their own retail operations online, Yates’ first foray into e-commerce had been on eBay, where she eventually attained power-seller status by selling items she sourced at local discount stores. When she decided to open her own online toy store, her previous career as a programmer for Nortel Networks allowed her to get over one of the first technology hurdles: she was able to write the HTML mock-up of the site personally. Since inventory overflowing her home’s living room and closets first forced a move to outside storage space, Yates has moved the fulfillment operation three more times before settling in eLearningToys’ current digs, 4,000 square feet of warehouse space in a former textile mill.
Yates chose a Miva Merchant shopping cart application from Miva Corp., in part because she saw the active user community associated with the tool as an important resource. She’s stayed with it through a switch of hosting companies necessitated by the site’s move to a dedicated server, with the Miva cart a bundled offering available from her current hosting company. Miva’s cart also provides the site with search functionality and the business with an inventory database.
Finding the right shopping cart for the front end still left Yates with difficulties in handling those orders on the back end, however. “To be able to show the product on your site is one thing. To be able to collect money, take the order through the entire process and keep in touch with customers became our biggest obstacle,” she says. Handling orders and customer communication through e-mail as order volume grew became “a complete nightmare,” says Yates.
Through Miva, she eventually was introduced to Stone Edge Technologies, whose business management software includes an order management system that targets online retailers with order volume of 20 to 2,000 per day. “In traditional business school terms, that’s small to minuscule,” says president Barney Stone. “But over the years, our customers have had some incredible growth. When you get to the point of doing about 20 orders per day, there is a pain threshold. You get tired of retyping names and addresses and piling through stacks of paper when someone calls to ask where their order is. That’s where we come in.”
By connecting her shopping cart with Stone Edge’s Order Manager last September, Yates automated most of the site’s former manual requirements for re-entering orders, shipping and communication on order status to customers, reducing workload at her small company by the equivalent of two jobs.
“Picking and packing is the only obstacle we have now,” she says. “Once I make the sale on the site, Stone Edge takes care of it from that point on.” The order management system pulls the order from the web site, checks inventory levels, and contacts customers to let them know their order had been received. Once the order has been packed, the system sends customers notification and a tracking number, decrements inventory, and sends that information to Miva’s software to reconcile inventory data.