Internet storefront considerations for manufacturers and distributors

These days, many manufacturers and distributors are looking to the Internet to increase their sales.  An Internet storefront can be a great way to provide your customers, sales teams and business partners with access to your products.  There are some unique challenges for manufacturers and distributors when it comes to selling products online.  How are current distribution channels maintained?  Who will manage the website content?  How will orders flow into the back-office systems?

I have seen businesses struggle with Internet sales projects because of these challenges.  Here are some of the more common challenges that need to be addressed.

The Internet storefront will change your sales channel(s). It will impact someone’s profits.  To open an Internet storefront, the sales channels will need to be addressed.  If you have sales representatives, will they receive the same commission on sales generated  by their customers that order via the website?  Do you have merchants that will see the web store as a direct competitor?  Different pricing structures will be necessary.  Will the shopping-cart software support your pricing methods?

Maintaining product information is difficult and time-consuming. When considering the overall project for opening an online store, do not underestimate the scope of work to set up and maintain the product information.  Most businesses have very basic product descriptions that mean something only to the internal staff.  Adding meaningful product descriptions that promote the value of the product and providing quality images is a lot of work.  With new and changing products, the work is never done.  The person or team that produces this content is adding value to the company that goes beyond the website.  It takes skilled staff with excellent product knowledge to build a successful Internet store.

The store will need to integrate with your back-office system. If you are serious about using the Internet as a sales channel, you will need to integrate the store to your back-office systems.  Will you need to maintain inventory levels on the storefront?  Can the inventory be refreshed daily or will you need real-time inventory levels?  How about product prices?  All good shopping carts support multiple price levels, but do they support your pricing methods?

What about special discounts, promotions and surcharges?  Should customers be able to see orders not placed on the website?  There are many additional integration needs that could come into play.  If the store is set up as an island that doesn’t talk to the back-office systems, it will become burdensome and a customer-support nightmare as sales grow.

Who will have access to the store? Depending on your line of business, sales to the public could be excluded.  Should they be?  The public might need a different pricing model, or the website may need to be configured to require a sign-in to view the store.  Give this considerable thought.    Some of our clients do not sell to the public, but will allow the public to see the products they offer without any prices.  If the person wants to purchase online they need to contact a customer service representative to open an account.

While on the subject of customer accounts, consider business customers that have more than one buyer.  Will your store need to support multiple user accounts per business account?

The bottom line. Although the move to Internet sales has a lot of roadblocks, an increasing number of businesses are using the Internet as a successful tool to increase their sales.  There is a significant shift taking place.  Online sales can reduce your sales overhead and allow you to reach customers you wouldn’t normally have access to.  It is a great tool to drive national and international sales.

Review of Three Leading Shopping Cart Solutions

The shopping cart used for your Internet store is a significant decision for any online business.  Like the purchase of a brick-and-mortar store, the chosen store software must meet the business’ needs for today and the  for the next few years.

I want to provide a comparison of three shopping-cart solutions.  This comparison is not be a tabled list of features and function, but rather a comparison of three different approaches to shopping carts that fulfill different business needs.

OS-Commerce Magento are two open source shopping-cart solutions and because they are both open source solutions (free).  Some may see them as too similar to be used in this comparison.  But they differ significantly in their  feature set and, in my opinion, their target business.

The third shopping-cart solution is a software as a service solution (SaaS).  A SaaS shopping cart is provided by businesses such as Volusion to provide a turnkey shopping-cart solution.  They include the shopping-cart software, web hosting and support for a monthly fee.  The SaaS model is available for a number of software packages.  As an example, Microsoft will host their Exchange software for email and group scheduling  as a SaaS.   Others offer project-management and contact-management solutions.  Constant Contact is an example of SaaS.

OS-Commerce is a no-thrills  open source solution.  The shopping cart has all the basic features you would expect from a shopping cart such as multiple price levels, support for foreign currencies and a good selection of add-in modules to extend the features when you need them.  OSC is written in PHP and uses the MySQL database, which makes it highly customizable.  So if you want to create a custom feature or interface, it is very easy to change with the right technical skills. Although there is a good number of plug-in modules to extend the features of the core software, not all of the modules will work together, or they may need some custom changes to make them work as a seamless solution.  The software does not require a lot of server power and can be an excellent solution for a startup Internet store or a store with a limited number of products.

Magento is one of the premier shopping-cart solutions. It is available as an open source solution (community version), a professional version and an enterprise solution.  The costs vary from free to an annual  price that starts at around $12,000 for the enterprise solution.  Lowe’s, Ford Motor Company and Dockers  use Magento.   Magento was introduced after OS-Commerce and, as a next-generation solution, it provides considerably more features than OS-Commerce.

Like OS-Commerce, Magento is written in PHP and uses the MySQL database.  Magento’s many  features do have a cost. The shopping cart is more complex and the database resource requires a larger web-hosting server.  Magento will not run well on most entry-level hosting solutions.  To be done right it needs to be on a dedicated web server, which drives the cost up.   The software has an excellent developer community with a wide range of add-on modules to extend the product.

Volusion is a popular SaaS shopping cart.  The feature set will meet the requirements of most small to mid-size Internet Merchants.  The shopping-cart fee is based on the number of products in the catalog.  The more products you have, the higher the price.   Pricing varies from $29 to to $179 per month.  The top-level package will support an unlimited number of products and has a few additional features.

Volusion has some noteworthy customers, such as Disney, National Geographic and Motorola.  The primary reason to go with a shopping cart like Volusion is to have a fixed monthly cost for the shopping cart, hosting services and support.  It removes the need to have a technical person to manage and customize the Internet store, because there is very little that can be done outside of the look and feel of the store.   Volusion wants to be the center of your business.  It  wants to manage your inventory and be the sole repository for your product data.  Data can be imported and exported from Volusion, but the ability to automate the transfers is limited.

Which solution is right for your business?

If you are a startup Internet retailer with a limited budget, consider OS-Commerce or Volusion.  OS-Commerce is fully customizable and can be hosted at almost any web-hosting provider, so it is one of the lowest-cost solutions that can be customized.   Select a SaaS solution like Volusion if you want to focus on running your store and not dealing with backups, website viruses and needing a custom solution.

If your store requires a robust feature set to start with and the business budget will support it, Magento could be a good fit.

If you sell products with multiple sizes, flavors, colors or other product attributes, then OS-Commerce is not a good choice.

If your store will have frequent product changes, inventory sourced outside of the store or daily product feeds to other websites, consider an open source solution that will make these custom changes easier to implement.

Business growth is also a consideration.  If you think your online business is going to grow, consider a solution that will be able to grow with you.  Magento would be my first choice for a business that can afford the financial cost and effort required to get the shopping cart up and running.  It is a good solution that has one of the best feature sets and the ability to grow with your business.

Internet storefront startup checklist

Internet storefront startup checklist

Do you have some products that you want to sell on the Internet? This checklist will give you an overview of what you need to start a successful online storefront. Your location and the amount of office space is not relevant to getting started. Having the products that customers want at a good price with good customer service is the recipe for a successful business. If you have that, consider selling your products online. The retail industry is shifting from physical retail space to the Internet. E-commerce sales growth has been growing rapidly, even during the recession.

1. Select a shopping cart solution
Sounds simple enough. There are hundreds, if not thousands, of shopping cart solutions on the market. Pick one.

Selecting the right shopping cart software is critical. The features of the shopping cart need to match your requirements. Some carts are simple. Some offer a wide range of features. Some will handle a large number of products, others may integrate well with a back-office system that you have. You should compile a list of cart features you must have and those that you want. Then prioritize the list and start shopping for a cart.

2. Develop detailed product content
If your products do not have good images and informative product descriptions they will not sell. It is that simple. No one will buy a product from the product description provided by most manufacturers. In order to entice a prospective customer, you will need to provide a good description of the product. The product description should reflect your personal knowledge of the product. You need to speak to the customer through the product description, as if you were having a conversation with the prospective buyer. Why this product? Why is it better than the others? What are its features?

A good shopping cart will support over 100 product attributes per item. Investing your time in product descriptions is necessary for any Internet store to have a chance at being successful.

3. Set up phone and email
Your customers are going to want to communicate with you. Phone and email are a minimum requirement. Instant messaging from the website is a growing trend. Sales volume will dictate the number of phone lines and customer service staff you will need. Plan for growth.

Use email accounts such as; don’t use Don’t use your cell phone as your business line; do setup an 800 number. Get a phone headset for customer service staff. Be responsive to customer service requests. Poor response will generate negative reviews. Positive reviews will help you succeed in this marketplace.

4. Select a payment method
Your retail store should offer multiple payment methods. The cost of merchant gateways varies widely. Some charge by the transaction, others charge a monthly fee and a transaction fee. The fees can vary considerably depending on the products being sold. PayPal is one of the simplest, but it also is a good indication of a low-cost website. Before you sign up for a merchant account, make sure it will work with your cart. Typically, some integration work is needed.

5. Review your shipping options
Your options for retail shipping carriers are limited, so you may think deciding how you ship should not take much time.   Shipping cost is a key factor for an online store. Carriers have standard shipping rates and negotiated shipping rates based on shipping volume and contracts. To provide accurate shipping rates at the time of the sale, you need to know the weights and dimensions of every product. Shipping costs are likely the most overlooked area for new online businesses.

6. Managing product inventory
Should a product be available for sale on the website if you don’t have the inventory? The answer typically is not a simple yes or no. Can you drop-ship the product? Do you have alternate sources for the product? How long is your lead time for delivery? It is not uncommon to use a mix of inventory management methods. Different products, manufacturers and geographical considerations should be considered when planning product inventory methods.

7. Managing orders
Once your Internet store becomes successful, managing orders will become a priority. How you manage orders as your sales volume grows will determine if you continue to grow. If you already have an order fulfillment system, consider how it will provide updates back to the website. Will it send shipment confirmation emails with tracking numbers? How will customer service manage order changes? There are many options and a wide range of software solutions.

8. Don’t do it alone
This list is a basic guide. Don’t underestimate the amount of effort required. It is likely that you have skills and experience with some of the items on this list but not all of them. To be successful you need to have a good team with diverse skills to bring the project together. Inspire Technologies has the business and technical skills to help your online business be successful. Give us a call. Let’s discuss your ideas and determine if it would be mutually beneficial for us to work together.