delivering the goods.
IT'S EVERY ONLINE ENTREPRENEUR'S DREAM TO FIND THEIR business inundated with orders from the get-go. But don't start ringing the dinner bell if you can't deliver the goods. Not only do you stand the chance of disappointing hungry customers and setting a standard for poor customer service, but you're also risking stiff fines and penalties from the Federal Trade Commission. Many e-tailers that failed to ship products on time during this past holiday season opened themselves up to sanctions from the FTC, as well as class-action lawsuits from disgruntled consumers and stockholders. To avoid their fate, it's important to have a plan for managing your inventory, and to be able to back up that plan with good customer service.
Attorney Paul Swanson of Morrison & Foerester, in Los Angeles, says that many e-tail sites may be in violation of the FTC's Mail Order Rule (www.ftc.gov), a 1975 measure that governs how mail-order sales are conducted. Companies that are subject to the rule include those that engage in traditional mail-order sales, as well as companies that receive sales orders via computer, fax machine, or similar device over telephone lines.
"A business that receives orders from consumers for its products through the postal mail or telephone [lines] must comply with the Mail or Telephone Order Merchandise Trade Regulation Rule, also known as the Mail Order Rule, or face civil penalties of up to $10,000 per violation," explains Swanson, a specialist in Internet business relations.
Although the Mail Order Rule's provisions are intricate and should be discussed with an experienced attorney, in general the role requires businesses to deliver the goods when they say they will--usually within 30 days of sale. Noncompliance with the Mail Order Rule is no laughing matter. After the disastrous 1999 online holiday shopping season, which left many consumers waiting for gifts they ordered online, the FTC (which enforces the rule) initiated Project TooLate.com, which resulted in several e-tailers paying a collective $1.5 million in civil penalties.
Before you panic, however, remember that you don't have to go it alone. Depending on how you set up your site initially, inventory-management capabilities might be built into your Web application (see "YourBusiness.com," April 2001, for a comparison of these programs). You also can choose an inventory-management firm to handle your business. Or you can choose a software application to help you manage inventory and billing. Whichever option you pick, however, it's important to consider the customer in every aspect of the process.
Whether the goods you sell are stored in a basement or a climate-controlled warehouse, all e-commerce entrepreneurs face the same challenges: keeping track of inventory and ensuring that products get to customers on time. The key to success is incorporating software solutions, developing strong relationships with delivery services, and providing good customer support throughout the process.
There are many software solutions designed to organize your goods, track inventory, and manage your accounts. Three programs that are generally accepted as good choices are Peachtree Accounting Complete, QuickBooks Pro 2001 (see Techwatch, this issue, for a review), and MYOB Accounting Plus 10. Other options include FAS Asset Inventory and NetLedger 5.1.
Peachtree Complete ($269.95; www.peachtree.com or 770-724-4000). This is a great choice because of its easy setup and navigation and its customizable accounting program. Documentation formats, such as invoices and purchase orders, are thorough and can be customized to fit your particular inventory situation.
Peachtree's Setup Checklist is somewhat unorthodox, but there is nothing difficult about it; the program provides online and written tutorials that familiarize you with the program's tools, features, and most commonly used processes. Links to the program's functions populate the bottom of the page and open tools that let you select a function, such as Inventory Adjustments, that take you directly to the appropriate screen. Peachtree also lets you track inventory as well as produce detailed information about your company's fixed assets, property, and equipment.
But Peachtree has its flaws. For one, you can't modify forms simply by creating or modifying fields (although it does offer an infinite number of fields to hide or show). You must use a WYSIWYG (pronounced wizzy-wig, which stands for what you see is what you get) form designer to alter them, which is not the easiest solution unless you are accustomed to working with such programs. Another drawback is a heavy charge for tech support phone calls--there's a 10-minute minimum charge--and a fee for email questions. And if online banking is important to your business, you'll be out of luck with this program.
MYOB Accounting Plus 10 ($209 for Windows; $249 for Macintosh; www.myob.com or 800-322-6962). MYOB is a choice accounting program for the home-based or small business owner because of its easy-to-use interface; and it is one of the most customizable programs on the market. MYOB offers an enhanced CardFile--a tabbed database that holds inventory information and has flexible and thorough accounts payable and receivable modules.
One likeable feature of MYOB is its user interface, which lets you keep tight controls without becoming an accounting expert. It gives you instant access to inventory records and offers an endless list of other accounting functions.
FixedAssetSoftware.com's FAS Asset Inventory (call for pricing; www.fixedassetsoftware.com or 800-886-9542). This program specializes in inventory management. It can be operated as a complete, stand-alone asset inventory and reconciliation solution or can seamlessly integrate with FAS Windows 98/Windows NT fixed asset management solutions.
NetLedger 5.1 ($9.95 per month per user; www.netledger.com or 800-netledger). This one is also worth a shot. Although it's not particularly strong on inventory management, it was designed specifically for the Web. You may opt for this solution because of its accessibility and its online banking option. And if your inventory needs are simple, it is worth considering.
DEVELOP BUSINESS RELATIONSHIPS
Once you've taken stock of your inventory, you'll need to find a way to get products to your customers. That's where a relationship with an inventory management or delivery firm such as iFulfill (www.iful fill.com) is important, iFulfill handles inventory, warehousing, shipping, and fulfillment. Based in Dundee, Michigan, the company takes care of all payment transactions, deducts its fulfillment fee (based on volume) and a 7% credit card processing fee, then sends the rest to you. If you sell a large volume of products, iFulfill might be a good fit; it frees you from the hassles of managing inventory, so you can focus on what's important, your customers. Companies such as Accurate ID (www.accurateid.com) and Global Business Center Inc. (www.gbcglobal.com/inventorysoft ware.html) also provide solutions for managing inventory.
But if your e-commerce business has yet to blossom, and you have a small number of orders, you'll likely be better off developing a delivery relationship with the U.S. Postal Service (www.usps.gov), as well as one of the four big shipping companies (FedEx, UPS, DHL, or Airborne Express).
FedEx Ship Manager API (www .fedex.com) is part of FedEx's Ship Manager portfolio. This application allows you to integrate shipping, tracking, rate quotes, and e-mail notification into your site.
UPS OnLine Tools (www.ups .com/tools/tools.html) provides free HTML code that allows you to add its shipment tracking service directly to your Website. After placing an order, customers can simply visit your site to check the shipping status of their order using your reference or order number.
DHL Connect (www.dhl.com) works with your Windows-based address book or other contact manager and is a good choice if you are going to be shipping products overseas. The software can directly email a customer; but it's up to you to cut and paste the air bill code into an e-mail template containing a link to the tracking utility at the DHL Website.
Airborne Express' service (www .airborneexpress.com) works much like DHL's, but it's for U.S. shippers only. Also Windows based, Airborne Express will estimate shipping charges, determine delivery times, and schedule pickups; however, it does not integrate directly with your e-mail application. Again, you must cut and paste your customer's shipment tracking code into an e-mail template that includes a link to Airborne's online tracking utility.
If you don't know which of the big four is right for you, consider an all-in-one solution that helps you find the right fit. Two that fill the bill are TanData (www.tandata.com) and iShip (home.iship.com). TanData's ConnectShip uses Java-based software that simultaneously shops several vendors for the most efficient way to ship a package. Once the order is sent, TanData can automatically e-mail your customer with the shipping vendor's tracking code "and a link to the vendor's online tracking utility, so they can monitor their order's progress.
iShip, now part of Stamps.com, is a Web-based solution for pricing the major carriers simultaneously. And it's easy to use: You don't need to purchase, download, install, or maintain any software, iShip also lets you manage and track your shipping activities.
Before you begin to ship your products, however, take these steps to ensure your business is ready to support e-commerce:
* Configure a shopping cart on your Website.
* Establish a merchant services' account to allow credit card transactions along with procedures for collecting sales tax.
* Establish order processing procedures to help your employees track packages and issue refunds.
CUSTOMER SERVICE IS KEY
When you do business online, quite often the most important part of the sale isn't offering lower prices or free delivery, it's hands-on customer service. As a small business on the Web (where competition can be fierce), the quality of service you provide can make or break a deal. Donna J. Hall, president of the Bight Answer (www.therightanswer.com), wants to make sure businesses don't forget that.
Hall operates a consulting firm that trains customer-service professionals to deal with daily challenges. Her seminars and workbooks are in great demand, providing both instruction and inspiration to clients. She has been helping businesses learn to satisfy their customers for 20 years.
"E-commerce customers must be treated in the same manner one would treat face-to-face customers," says Hall. "The customer shouldn't notice any difference." She offers these five tips to keep customers happy:
1. Make sure orders arrive on time.
2. Think safety. Let customers know that their credit card purchases are secure, and that you won't sell their information to third parties.
3. Respond promptly to customer inquiries or complaints. "Don't let them hang out there in cyberspace," Hall warns. "If you had a storefront, you wouldn't have customers standing around for days waiting for someone to assist them. Handle your Net business with the same commitment to quality service as you would if it were a walk-in business."
4. Do what you say you will. Don't make promises on your Website that you can't keep. If you run into a shortage of a hot item, make sure you notify customers immediately.
5. Make returns and refunds problem-free. Don't make customers jump through hoops if they aren't satisfied.
According to a recent study on customer service conducted by Jupiter Media Metrix, problems arise when an online business is unable to handle high volumes of site visitors and buyers. While Jupiter estimates that many of the more popular e-commerce sites average 58,000 transactions per day, the sites' behind-the-scenes disorganization puts a strain on customer service.
The problem is simple. The more customers a merchant has, the higher the number of customer complaints, questions, and problems that will need to be addressed. Without a good fulfillment system to handle the high volume of online transactions, customer service will bear the brunt of the customers' dissatisfaction, the study notes.
"So many times, I received e-mails from individuals who are clueless when it comes to finding someone to contact at a company," says Hall. "Some companies, even large ones, that should know better, will have a neat Website with lots of cool graphics, but no information on how to contact them."
Jupiter advocates a "multichannel" automated customer-service strategy, which it says only 37% of Websites currently employ. Possibilities include live chat rooms, tollfree phone lines for customers needing to hear a reassuring voice, and e-mail for simple, easy to answer questions that do not need instant attention. Additionally, a Frequently Asked Questions (FAQs) list should be part of a company's customer-service plan.
"Don't forget the freebies," suggests Hall. "Amazon.com is great about that." Hall says she loves buying books from Amazon because she receives a free bookmark with every order and a coffee mug after a certain number of purchases. "I think of [the company] every time I use the mug."
Hall follows the same practice. She sends each customer a free the Bight Answer ruler with the purchase of her newsletter or workbooks, T-shirts, and mugs. "People love getting something extra," she adds.
What's more, good customer services could keep you from running afoul of the Mail Order Rule. "My best advice to businesses is to spend the time and money necessary to set up mechanisms that ensure compliance," Swanson says. "If you think about it, it makes perfect sense. Compliant businesses will not face monetary penalties, and will have customer order fulfillment mechanisms in place that maximize efficient and timely transactions, thus leading to happy, returning customers." Which is the goal of an e-commerce venture, right?
Meeting Customers' Needs
We've all probably lodged some form of complaint after making a purchase. Therefore, most retailers view customer service as a problem-solving action after the sale takes place. In e-tailing, however, customer service begins the moment a customer logs on to your Website. A Jupiter Media Metrix report identified four moments when your customers need service.
Once the order is placed.
58% checked the status of an order and its progress through shipping.
During the buying process.
21% had questions about billing, receipts, and the checkout process.
19% used customer service to find products and inquire about product attributes.
Once the item was received.
19% of buyers had questions about returns.
Editor's Note: This is the third of a three-part series on doing business online. See the April 2001 issue for Part 1, "YourBusiness.com," which focuses on setting up an e-commerce site, and Part 2, "Spread the Word," May 2001, which discusses marketing and advertising.
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|Title Annotation:||electronic commerce and inventory management|
|Date:||Jun 1, 2001|
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