March 8, 1999
Finding fulfillment online isn't as easy as you might think
Few companies can be completely virtual, in the sense that they conduct all of their business on the Net, from marketing to sales to fulfillment. At some point, most transactions inevitably impinge upon the physical world.
You can point out a few notable exceptions, such as eBay, an online auction company that facilitates transactions between independent buyers and sellers, thus eliminating the need for eBay ever to touch the goods. But don't try to give me the example of online software retailers such as Beyond.com and Egghead.com -- they're virtual only to the extent that they are able to get customers to download the software sold on their sites. In reality, most customers at these sites still prefer to have a package physically shipped to them.
Most companies must go "offline" for at least part of every transaction. Where the rubber meets the road is in fulfillment -- getting the product to the customer. Mess this up, and you won't be in business very long.
That's why Internet-commerce pioneers such as Amazon.com learned they must sink money into infrastructure, buying warehouses and distribution centers. And don't forget payroll: Most of the jobs Amazon.com has created have been in these distribution centers, where small armies of employees are paid to "pick, pack, and ship" Amazon.com's warehoused products.
Smaller companies and I-commerce start-ups that can't afford this kind of infrastructure investment need to look elsewhere for fulfillment, however.
United Parcel Service (UPS) is familiar with the most prominent aspect of this problem -- namely, the shipping -- and wants to help your company with it. According to a recent Zona Research report, UPS carried 55 percent of the products ordered online during the recent holiday season. During a typical day, UPS claims it transports more than 6 million packages that have been ordered online. Accordingly, UPS is developing tools to help I-commerce companies manage this important aspect of their businesses.
UPS has developed online shipping and package-tracking applications to make life easier for its wired customers. UPS has also formed partnerships with software vendors, such as logistics software supplier TanData; enterprise resource planning vendor PeopleSoft; and commerce-solutions providers Pandesic and Open Market. Through these partnerships, UPS says it will help integrate shipping and logistics capabilities into I-commerce software, which should make fulfillment easier to find for the next generation of I-commerce companies.
Another possibility is to turn to a distributor for fulfillment. For instance, Ingram Micro, the largest wholesale distributor of technology products, is the fulfillment infrastructure behind such online storefronts as Onsale and Buy.com. At these I-commerce sites, Ingram is the one storing the inventory, packing the goods, and shipping orders.
To capitalize on this experience and to drive further business, Ingram Micro is offering similar services -- along with full-fledged commerce site design and hosting -- to its customers. You need nothing more than a good business idea to get started in I-commerce with this model, in which you outsource everything to Ingram except the marketing and front-end business systems.
Technology retailers may find Ingram Micro's solution attractive, but other industries may also offer similar opportunities for distribution partnerships. How do you find fulfillment? Write to me at dylan@infoworld.com.
Dylan Tweney (dylan@infoworld.com)
has been covering the Internet since 1993. He
edits InfoWorld's intranet and Internet-commerce
product reviews.
Previous
columns by Dylan Tweney
Low-end I-Commerce tools can prove worthy, even for complex uses.
March 1, 1999
FreePC could usher in an era of free stuff and ceaseless advertising
February 22, 1999
Netrepreneur of the Year is a crusader for Web site usability
February 15, 1999
Smart Frog will help get Internet shopping sales really jumping
February 8, 1999
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