Project Management

Merging bricks-and-mortar with online success

In this excerpt from <I>Web Commerce: Building a Digital Business</I>, author Kate Maddox gives advice on how a company's traditional store can work in harmony with its online business.




Communication between Web and physical store staffs
Stores and retail chains that have opened Web sites say there's one good way to make sure your Web store doesn't compete with your physical store, while still having a chance to succeed: Start small.

That's what Macy's did. The company launched its Web site from a single outlet in San Francisco with a few select items. When orders came in, a clerk would physically go into the building, take them off a shelf, and ring them up on a cash register. To utilize this manpower more effectively, the store launched a personal shopper service, offering to check the store for specific types of gifts, in specific price ranges, in response to e-mails. The success of this program enabled the Web store to get the funding necessary to integrate its computer operations with the rest of the store, and slowly expand the line of goods it carried.

Small stores that start their Web business slowly can adapt to the nature of the Web at their own pace. The Saint Louis Dart Shop is a good example. Owner Michael Stafos admits he took a big risk in launching his Web site, spending $5,000 to $8,000 for design, hosting, and credit card processing.

While most of his business had previously been done on a wholesale basis, with catalogs sent to dart clubs and bars, he found most of his Web customers were buying in small quantities. But he did take enough time to adapt to that change, along with the variation in where his customers came from. While his physical store draws customers from the metropolitan area, and his paper catalog draws customers from around the country, he found his Web store drew customers from around the world. (He also found himself ordering goods to stock his shelves more often—-this was an easy change to make.)

In both these cases, the key to making the store work was in letting someone familiar with the physical operation devote their full attention to the Web, the growing the business in response to customer demand. Investing too far ahead of customer demand is a sure way to spur resentment between the staff of your physical store and that of your Web store.
If you would like to learn more about building an online business, read our interview with Web Commerce author Kate Maddox. If you are interested in buying a copy of the book, click here.
Communicating sales offers
Unless your Web store has a separate set of inventory from your physical store—unless you physically separate Web and physical operations—-it's best to let your store's buyers and your business' needs control what goes on sale online.

This is what major publishers of paper catalogs have done. L.L. Bean and Lands' End both centralized control of their Web development within their existing operations. They refused to go online until they could deliver an "experience" that would be familiar to readers of their paper catalogs. L.L. Bean, like Wal-Mart, chose to do this with a major vendor, in this case IBM. What was different? Partly it was the smaller scale of the L.L. Bean catalog, compared to that of Wal-Mart's.

Partly it was the fact that IBM was already L.L. Bean's major computer systems vendor, so there were existing relationships that could be brought to the Web effort. Partly it was because L.L. Bean, with IBM's advice, started its online business modestly, with a selection of items. But within a few months, the cataloguer was able to offer an increasingly large portion of its inventory online—even offer sales items online before they were printed in the catalog. What can we learn from all this? Placing items on sale comes from a careful mix of buying and inventory control. If you have a successful physical store, leave control of sales with the experts. Your Web staff may offer to use the site for selling small quantities of close-outs—bottom-line success will deliver the confidence to go further.



Communication between Web and physical store staffs
Stores and retail chains that have opened Web sites say there's one good way to make sure your Web store doesn't compete with your physical store, while still having a chance to succeed: Start small.

That's what Macy's did. The company launched its Web site from a single outlet in San Francisco with a few select items. When orders came in, a clerk would physically go into the building, take them off a shelf, and ring them up on a cash register. To utilize this manpower more effectively, the store launched a personal shopper service, offering to check the store for specific types of gifts, in specific price ranges, in response to e-mails. The success of this program enabled the Web store to get the funding necessary to integrate its computer operations with the rest of the store, and slowly expand the line of goods it carried.

Small stores that start their Web business slowly can adapt to the nature of the Web at their own pace. The Saint Louis Dart Shop is a good example. Owner Michael Stafos admits he took a big risk in launching his Web site, spending $5,000 to $8,000 for design, hosting, and credit card processing.

While most of his business had previously been done on a wholesale basis, with catalogs sent to dart clubs and bars, he found most of his Web customers were buying in small quantities. But he did take enough time to adapt to that change, along with the variation in where his customers came from. While his physical store draws customers from the metropolitan area, and his paper catalog draws customers from around the country, he found his Web store drew customers from around the world. (He also found himself ordering goods to stock his shelves more often—-this was an easy change to make.)

In both these cases, the key to making the store work was in letting someone familiar with the physical operation devote their full attention to the Web, the growing the business in response to customer demand. Investing too far ahead of customer demand is a sure way to spur resentment between the staff of your physical store and that of your Web store.
If you would like to learn more about building an online business, read our interview with Web Commerce author Kate Maddox. If you are interested in buying a copy of the book, click here.
Communicating sales offers
Unless your Web store has a separate set of inventory from your physical store—unless you physically separate Web and physical operations—-it's best to let your store's buyers and your business' needs control what goes on sale online.

This is what major publishers of paper catalogs have done. L.L. Bean and Lands' End both centralized control of their Web development within their existing operations. They refused to go online until they could deliver an "experience" that would be familiar to readers of their paper catalogs. L.L. Bean, like Wal-Mart, chose to do this with a major vendor, in this case IBM. What was different? Partly it was the smaller scale of the L.L. Bean catalog, compared to that of Wal-Mart's.

Partly it was the fact that IBM was already L.L. Bean's major computer systems vendor, so there were existing relationships that could be brought to the Web effort. Partly it was because L.L. Bean, with IBM's advice, started its online business modestly, with a selection of items. But within a few months, the cataloguer was able to offer an increasingly large portion of its inventory online—even offer sales items online before they were printed in the catalog. What can we learn from all this? Placing items on sale comes from a careful mix of buying and inventory control. If you have a successful physical store, leave control of sales with the experts. Your Web staff may offer to use the site for selling small quantities of close-outs—bottom-line success will deliver the confidence to go further.

Competition for resources between physical store efforts and the Web
Should you just chuck your physical store and put all your chips on the Web? Probably not. Does that mean your Web efforts will be constantly competing for assets against your physical efforts? Perhaps.

Communications is the key, according to Chris Sinton, director of the popular Cisco Connection site. "The business management of our site comes from corporate marketing," he says, but "I have standing meetings with the technical people." If you sell your products to other businesses, as Cisco does, and create a partnership between the Web staff, and your other marketing people, then the Web can quickly enhance your bottom line by transferring sales to a lower-cost channel. This has been discovered not only by Cisco, but by other technology manufacturers like Dell Computer and Compaq Computer. Problems are most likely to occur if your business is, in fact, a sales channel.

If you're a store or a distributor, you have many employees whose jobs depend on interaction with people leading to sales. There are two roads to success here. You could commit to the Web from the top of your organization, and separate that development from the rest of the company's business—as in the L.L. Bean and Barnes & Noble examples—or start small, as Macy's did. There is a risk in the first instance, as Wal-Mart found. L.L. Bean is privately held, while Barnes & Noble justified its expense as a defense of its niche against a powerful Web competitor, Amazon.com. The only risk in the latter case is if a direct competitor goes heavily into the Web first, and succeeds.

Integration of back-end processes, inventory, and transaction systems may be the biggest technical headache you'll face in building a Web business. The bigger your business and the more extensive its pre-Web computer operations, the bigger the challenge becomes.

Starting small can ease these problems, giving you time to perform some functions manually as your transaction volume grows.

The cost of integrating your Web store with your back-end systems will depend on many factors, including:
  • The complexity of the back-end systems.
  • The willingness of the vendors of those systems to support TCP/IP and HTML standards.
  • Your desire to integrate Web standards into your operations through the creation of an in-house intranet (local networks based on Internet standards).

You will also need to consider each of the following integration procedures as separate projects:
  • Integration with payment networks and payment processing.
  • Integration with inventory and delivery systems.
  • Integration with accounting systems.
  • Integration with communication systems.

The best solution offered by the Web store manager we interviewed for this book is: You don't have to do it all at once. You don't have to put all of your inventory online with the launch of your Web site. You can enter transactions into computers manually until their volume justifies another approach.
How far out did you plan when you decided to add online retailing to your business? Send us your comments in an e-mail or post a comment below.
The excerpt was reprinted with permission from John Wiley & Sons.

Competition for resources between physical store efforts and the Web
Should you just chuck your physical store and put all your chips on the Web? Probably not. Does that mean your Web efforts will be constantly competing for assets against your physical efforts? Perhaps.

Communications is the key, according to Chris Sinton, director of the popular Cisco Connection site. "The business management of our site comes from corporate marketing," he says, but "I have standing meetings with the technical people." If you sell your products to other businesses, as Cisco does, and create a partnership between the Web staff, and your other marketing people, then the Web can quickly enhance your bottom line by transferring sales to a lower-cost channel. This has been discovered not only by Cisco, but by other technology manufacturers like Dell Computer and Compaq Computer. Problems are most likely to occur if your business is, in fact, a sales channel.

If you're a store or a distributor, you have many employees whose jobs depend on interaction with people leading to sales. There are two roads to success here. You could commit to the Web from the top of your organization, and separate that development from the rest of the company's business—as in the L.L. Bean and Barnes & Noble examples—or start small, as Macy's did. There is a risk in the first instance, as Wal-Mart found. L.L. Bean is privately held, while Barnes & Noble justified its expense as a defense of its niche against a powerful Web competitor, Amazon.com. The only risk in the latter case is if a direct competitor goes heavily into the Web first, and succeeds.

Integration of back-end processes, inventory, and transaction systems may be the biggest technical headache you'll face in building a Web business. The bigger your business and the more extensive its pre-Web computer operations, the bigger the challenge becomes.

Starting small can ease these problems, giving you time to perform some functions manually as your transaction volume grows.

The cost of integrating your Web store with your back-end systems will depend on many factors, including:
  • The complexity of the back-end systems.
  • The willingness of the vendors of those systems to support TCP/IP and HTML standards.
  • Your desire to integrate Web standards into your operations through the creation of an in-house intranet (local networks based on Internet standards).

You will also need to consider each of the following integration procedures as separate projects:
  • Integration with payment networks and payment processing.
  • Integration with inventory and delivery systems.
  • Integration with accounting systems.
  • Integration with communication systems.

The best solution offered by the Web store manager we interviewed for this book is: You don't have to do it all at once. You don't have to put all of your inventory online with the launch of your Web site. You can enter transactions into computers manually until their volume justifies another approach.
How far out did you plan when you decided to add online retailing to your business? Send us your comments in an e-mail or post a comment below.
The excerpt was reprinted with permission from John Wiley & Sons.

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