NFIB

You Have Online Orders, Now What?
10/ 01/ 2002

Naturally, ecommerce involves far more than simply throwing up a Web site and making sure you can accept credit cards. Once the orders come in, you have to fulfill them, which means having product on hand, packing it and sending it off. Let's cover a few basics here. After all, if you can't deliver on your orders, you won't be engaged in ecommerce for long.

Keeping Inventory on Hand:
First, you should make sure you have sufficient inventory on hand -- and acquiring inventory means an additional cost to you up front. It'll take time for Web surfers around the country to catch on to the fact that your storefront is out there, but once they do, you may be in for a surprise. Jeff Bezos, the CEO of Amazon.com, recalled that when he first started his bookstore, business was fairly slow for a while; then suddenly everything took off, the numbers climbed and he was struggling to restock.

Ideally, you want to lay in a typical couple of weeks' to a month's worth of inventory beyond what you already have. Think of your Web site as a new branch store and keep it stocked accordingly. Once the orders come in and begin to stabilize a bit, you can see what sells and what doesn't and order accordingly from your supplier. Inventory management tools could make life easier when you plug in your ecommerce site.

Of course, if you start out with auctions, you won't have to anticipate inventory needs. Auctions let you control the amount of product you have available and therefore your inventory costs -- another reason to consider eBay before you get into your own ecommerce storefront.

Shipping and Handling:
Next, you'll have to think about shipping. The national players, such as United Parcel Service, Federal Express and the U.S. Postal Service have local business agents with whom you can discuss opening an account for bulk shipping.

Be sure to pass along the cost of shipping to your customers by charging a blanket fee per order or on a sliding scale, depending on the dollar amount or number of items ordered, or by incorporating the cost of shipping into the price of each item on your Web site. To make a separate cost for shipping seem less onerous to the buyer, you can, if you wish, increase the prices of your items slightly and decrease the charges for shipping. Don't forget to factor in the cost of any packing materials that you need; banana boxes from the grocery store probably don't represent the branding you want.

Next, you'll have to find a place within your office, store or building to actually fulfill these orders. When you accumulate a handful of orders, or up to a couple of dozen a day, clear off a table in your storeroom and take the time to box everything up. If you work by yourself, you might set aside time after normal business hours for this task. If you have help, you can delegate the task.

Once you start to get 40, 50 or 60 orders a day, you'll probably need to hire someone specifically to handle fulfillment. You can (1) hire someone to simply fill boxes, get them ready for pickup, and then do other jobs around the store or (2) hire someone to handle the ecommerce operation entirely, including fulfilling and shipping orders, interacting with customers and updating the Web site. Obviously, hiring someone to do more will cost more, but will free up your time considerably.

Michael J. Martinez is an associate editor for Kiplinger's Personal Finance magazine, covering technology issues and reviews. Previously, Martinez was a business and technology writer for The Associated Press and ABCNews.com in Seattle, covering such high-tech luminaries as Microsoft and Amazon.com. His book is available in bookstores for $17.95.