Now that your site is ready to go online, the only question remaining is whether you should buy the 35-foot boat or go to the French Riviera when your .com does its IPO and is instantly worth billions. At least that’s what most of the stories say. It’s a simple formula. Set up a Web server, get some products on it, register the site in a few search engines, and watch as the number of hits just grows and grows. Everybody gives you rave reviews, and profitable or not, money comes pouring in.

It is a nice story. Unfortunately, reality is somewhat off that mark.

It’s Just a Web Site, Right?

Running an e-commerce site involves a level of effort similar to running a traditional brick- and-mortar store. Setting up an e-commerce site involves a level of effort similar to setting up a new channel of distribution—which is, after all, what an e-commerce site is. Unfortunately, and all too often, an organization will view an e-commerce site as simply an add-on to its existing business processes, investing in little more than the technical infrastructure necessary to offer products for sale online. The result is either poor sales due to lack of effective marketing or damage to the company’s reputation (and, ultimately, to its sales) due to poor service. The overall experience for both consumer and business is one of frustration and disappointment. And this is the exact scenario that causes traditional management to shy away from doing business on the Internet.

The Internet, however, cannot be ignored. Just ask companies like Barnes and Noble and Toys “R” Us. In both cases, their Internet competitors, Amazon.com and eToys, have a higher market capitalization despite the fact that Barnes and Noble and Toys “R” Us have higher revenues and brand recognition. This higher capitalization has enabled these companies to attract talent on both the IT and the business sides. And in the case of eBay, such capitalization enabled it to buy a brick-and-mortar counterpart outright. No, the Internet is too powerful a channel to be left neglected.

As with establishing any other channel of business, the key to a successful e- commerce site is proper planning. It is a familiar story. Use your market research toestablish reasonable revenue goals. Based on those goals, establish a budget for both start-

up and operations. Plan out your order-fulfillment process. Decide on your level of customer service and based on your plan, staff accordingly.

If You Build It, Will They Come?

An e-commerce site requires a host of marketing activities to attract people to your site—and to keep them coming back. Before building the site, make sure you understand the target demographics. Are they the same ones you are reaching now, or are you trying to extend to new ones? Once you establish those demographics, research their potential in terms of sales. Here are three sites that are particularly useful for their marketing reports on e-commerce:
• Jupiter Communications at www.jup.com
• e-land, inc.’s eStats reports at www.emarketer.com/estats
• Forrester Research, Inc. at www.forrester.com Now, it may be that your target market is not yet viable. Proper market research will help you time the rollout of the site and help you determine your advertising plan.

The important thing is to quantify your goals. The greatest benefit of this channel is the amount of hard data it generates about customer activity. Once you quantify your goals, you know what to measure. As you build the site, make capturing these statistics a priority. Neglecting to do so, again, is a failure point in many organizations. Because these statistics don’t directly affect the bottom line, people tend to push implementation of data gathering to a later date. But if you do that, you will be flying blind.

For example, one e-tailer recently decided to increase sales by marking down prices on key products. These marked-down prices were advertised using expensive banner ads on popular sites. The sales did not increase as expected. On closer inspection, the company found out that site visits did, in fact, increase. And customers actually ordered the marked- down products, but the shopping cart abandonment rate was high. The staff quickly discovered that while the site was charging customers the marked-down price internally, it was still displaying the full price, making these same customers think the original ad was bogus. The staff corrected the problem, and sales moved up as originally planned. Mistakes like this can happen, but the successful organization has measures in place to catch them quickly and respond.

Organizations also tend to miss marketing opportunities, such as cross-selling and up-selling, offered by the e-commerce channel. For example, I recently went to a site that sells cameras. It did a reasonable job of cross-selling by providing links to accessories. Unfortunately, the page was so long that you had to scroll to the bottom to see the accessories. Not everybody scrolls to see the rest of the page; go to Amazon.com and notice how the related books are at the top half of the page. The camera site fared even worse when it came to up-selling. It had a “Related Cameras” button, but when you pressed it, you got a big list of cameras. There was nothing in the list that told me why the cameras were related or why I would want to buy one camera over the other. It was clear that the company’s database didn’t have (or if they did, they weren’t using them) any relationships or fields that would support up-selling activities. As you build your site, make sure your database allows you to define relationships between products that support the kind of cross-selling and up-selling your marketing plans require.

You Need a Hundred of What?

The good news for e-tailers is that this past holiday season, they booked over 3 billion dollars in sales. The bad news is that they booked over 3 billion dollars in sales and many of them did not have an order-fulfillment process in place to handle the volume of orders received. Some frustrated customers had to wait over two weeks for products they were supposed to get in a few days. Worse yet, after waiting two weeks, some were sent an email explaining that the product was out of stock and no alternative products were offered.

Minimize the amount of time it takes to inform customers of the in-stock status of requested items. If your technical infrastructure allows it, inform them as they are ordering the product. Otherwise, build your site in such a way that customers are sent an email on the same day they place an order. To provide instant feedback, you will need to build direct interfaces from your e-commerce site to your order-fulfillment systems. To provide email feedback, you will need to write a system that runs every hour or so, checking new orders against available inventory.

Among the less successful e-tailing sites, distribution is the greatest failure point. If you use centralized distribution, you are in good shape because you can ship to consumers from the site at which the order is processed. If you don’t, however, you will need to negotiate direct shipping from the vendors, set up a central distribution facility, or outsource distribution to a third party. All three options require interfacing to the distribution systems of various parties. Most of this past holiday season’s e-commerce fiascoes had to do with organizations attempting to piggyback off of existing distribution systems that were not centralized.

Centralized distribution is not required for e-commerce, but distribution itself cannot be an afterthought.

Don’t be afraid to get creative with distribution. For example, if you also sell your products through brick-and-mortar stores, you can give the online customer the option of picking up the item at one of the stores. Technically, all you would have to do is tie these online transactions to your special order system (assuming you had one). In addition, you would want to provide an online store locator. One benefit of this approach is that it gets the customer into a store. It also plays to the cross-channel shopping trend that the Internet has sparked. It’s not uncommon for people to go onto the Internet to get a feel for what they want but go to a traditional brick-and-mortar store to purchase or pick up the item.

But That’s Not What I Ordered

Good retailing has always been about customer service, and e-commerce is no exception. One advantage that a brick-and-mortar store has over an e-commerce site is that when customers leave the store, they have the satisfaction of having the product in hand. That is why it is important to build into your e-commerce site the ability to immediately send an order confirmation email. You should also give your customers a way to find the status of their orders or change them by email or through the Web site itself. Two sites that provide particularly good examples outlining how your company can interface to a shipper’s tracking system are those of the United Parcel Service (www.ec.ups.com/ecommerce/cm.cgi/home.html) and Federal Express (www.fedex.com/us/software/automation/ intranetship.html)

While timely confirmation of an order seems like an obvious point, it is one that many e-tailers miss. I recently purchased an item from a major department store’s Web site. I didn’t receive an email until a week later, when the product shipped. The only problem is that I received two emails. Each specified a different order number. Concerned that I was getting double-billed, I sent an email explaining the problem. An additional two weeks later, after I had actually received the order, the department store sent me an email explaining that it had a problem in the system and that I had not, in fact, been double-billed. This experience was not what I expected from a retailer with such strong name recognition. When I send a company with which I’m doing business an email, I expect to hear from that company within 24 hours.

The department store did do one thing correctly, however. It provided a toll-free number on its Web site. Granted, one of the reasons for building an Internet site is to cut down on calls from customers; however, it seems that many organizations are afraid to give out a telephone number. Many sites don’t even provide one. Several others bury it so deeply within the site that it is almost impossible to find. Customers still need to know that human contact is an option, so provide a number and staff a good help desk.

Allow your customers to access the help desk either through direct phone contact or by email. Several options are available to you for providing your customers with readily available contact information. On the low end, build a “Contact Us” page that is easy to get to. This page should have both an email address and a toll-free number. Even something as simple as this will add much to customer confidence in your site. Some sites, such as 1- 800-FLOWERS (www.1800flowers.com/flowers), provide more elaborate services such as a question-and-answer chat room staffed 24 hours a day, seven days a week.

In fact, the 1-800-FLOWERS site is a good model for customer service. First of all, it has a whole section called “Customer Service.” Once there, it is an easy click to enter the chat room, but there is also a link to a FAQ page for answers to commonly asked questions. In addition, the site offers a “Customer Service Inquiry” form that you can fill out if you have a problem or question. Finally, there are links to additional pages that clearly explain the company’s policies on shipping and what its commitment is when things go wrong.

This last feature is important. Because e-commerce sites are so automated, as an etailer, you will not always know when problems occur, and you have to rely on the customer to contact you. If you do not clearly define your policies and place them so that they are easy to find, those customers who do run into problems will end up turning away from your business. Worse, they are likely to tell and retell the story of their bad experience. Word of mouth is a powerful force on the Internet. Providing a great shopping experience will not only win you the repeat business but also go a long way toward attracting other shoppers. On the other hand, a bad experience will tarnish your reputation.

The Daily Grind

So now that the ins and outs of setting up an e-tailing site have been defined, what is it actually like to operate an e-commerce site? Daily tasks are grouped into the following types of activities:
• Marketing
• Order fulfillment
• Customer service
• Site management It is imperative that you plan what the activities are before you build the site. You will need to ensure that the back-end of the site provides the tools and information necessary to accomplish the daily operational tasks in a cost-effective manner. Can your customer service staff quickly find orders? Can the merchandiser easily measure product turns?

Before you build the site, run through “day-in-the-life” scenarios in which you storyboard what it will be like to run the site. This way, in addition to generating requirements for the site itself, you will also generate the requirements for site administration. This is another important step toward e-commerce success that is typically “left for later,” whereas you should view it as a priority. Not only will good administrative support improve site service, but it will also keep down operational costs. Keep in mind that the labor costs for an e-commerce store tend to be higher than for a brick-and-mortar one, even though traditional stores have more employees.

Like in a brick-and-mortar store, you will probably do little things to update the look of the site. Perhaps you will have a product of the day or a promotion of the week. As stated earlier, you will measure pages viewed and where people clicked from to get to your site. By doing this, you can evaluate the effectiveness of your marketing and advertising. You can use this information to make necessary changes, such as altering a promotion. You should also track what customers do once they reach the site. Don’t be afraid to rearrange the look of your e-commerce “display windows.” A poorly designed site prevents sales, but the opposite is also true. If a promotion isn’t getting the clicks you

want, it may simply be placed on the wrong place on the page. Take the time to redesign your site as needed.

On the order-fulfillment side, you will want exception reports generated when product quantities fall below certain levels or when demand increases sharply. You may also want to work with your shipping providers to provide exception reports based on shipping activity. Finally, you should have a report triggered when an order sits unfulfilled past a specified time limit. You can use this report as a prompt to communicate with the customer and perhaps offer an alternate product.

Provide your customer service people with an easy way to track orders. Consider providing them with shipping terminals as a means to provide quick access to shipping status. Train your customer service staff on products, promotion, and site dynamics. In addition to questions about what you sell, they will also get questions about the Web site itself and even about the Internet in general. Your customer service staff don’t have to be Internet gurus, but you should keep them informed on the commonly asked questions. Also provide them a way to document the questions asked so that you can generate a good FAQ page.

Site management is fairly straightforward. You will want to monitor the number of hits and the time taken to respond to requests. If your site becomes popular, you will want to set up a mirror site before demand gets too high. You will also need to do things such as clean the log files of the Web server, database, and commerce engine. Depending on your commerce engine, you may need to run some daily utilities to clean the database as well. Finally, it is always a good idea to monitor system performance to find opportunities for tuning.

This Was Supposed to Be Easy

Keep in mind that what I have described in this article are the requirements of an e- commerce site at the “end of the day.” You don’t have to build the perfect system from the start. Just make sure that, as you roll out each feature, you provide full support for that feature on both the front- and back-end. Perhaps you want to start by offering only a catalog and a toll-free number for inquiries. Or you may want to start by offering a subset of the products that are the easiest to fulfill. The most important point is that you have a plan from the beginning. Set easy, manageable, and measurable goals. Always track against those goals. If performance does not match the goals you have set, change the implementation until you are satisfied.

Becoming an e-commerce success is not a trivial effort. But building a successful site is doable, as long as you use the same discipline that you have used in other critical areas of your business. And whether you choose to build a site or not, it is a critical area. As I said earlier, the Internet is too powerful a channel to ignore. Easy or not, someone will build a successful site for your market. You might as well make that someone your company.

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