Thinking In The Box
This story appears in the November 1998 issue of Entrepreneur. Subscribe »
At a recent conference on e-commerce held in Monte Carlo, Monaco, IT research firm International Data Corp. (IDC) announced that more than $8 billion was spent on online e-commerce transactions last year. Framingham, Massachusetts-based IDC estimates this number will grow to an astounding $333 billion by 2002, when, it predicts, sales from Web-based transactions will account for nearly 1 percent of the world's economy.
With so much potential revenue waiting to be generated, more small businesses are looking for a quick, easy way to sell their products and services on the Web. This stampede toward e-commerce has spurred some of the larger technology companies, such as IBM and Compaq, to begin offering integrated e-commerce solution packages that consist of nationwide Internet access and e-commerce services (including e-commerce site-building tools) geared to small businesses.
IBM's Startup for e-business is a software kit that includes templates to help users build e-commerce Web sites without any knowledge of HTML programming, as well as a copy of Netscape Navigator and a trial offer of IBM's Internet Connection Services. Compaq, in partnership with Information Exchange Network Inc., NovaStor Corp., e-Parcel LLC and other Internet software vendors, has taken the e-commerce solution concept a step further with its Entrepreneur Services, a range of Internet-based services that address various business needs, such as secure document exchange, electronic postage generation, file transfer between computers and off-site data backup systems. While the online services are hosted at Compaq's worldwide network of "Digital Class A Data Centers," users must first acquire the necessary software, which comes pre-installed on some Compaq PCs and laptops or can be downloaded from Compaq's ClubWeb site (www.clubweb.com).
Fast Track
Name and age: Sean Repko, 40
Company name and description: Disposition Services Group Ltd. (DSG) processes, repairs, recycles, refurbishes and repackages electronic and computer products returned to retailers by consumers. Using Return View, the company's proprietary logistics software, DSG also tracks, audits and generates reports on the flow of returned products from retailers or manufacturers to DSG and back into the marketplace.
Based: San Diego
Founded: 1997
1998 sales projections: $8.5 million
Clients include: Gateway, CompUSA, Packard Bell
Many (un)happy returns: Between 5 and 15 per-cent of all consumer electronics purchases are returned to the retailer, according to the Consumer Electronics Manufacturers Association. Because most of the factories that are equipped to refurbish and repackage these products are located in Asia, returning the product to store shelves often takes so long, the product becomes obsolete and must be sold at a huge loss to the retailer or manufacturer. DSG has streamlined the refurbishing process, reducing turnaround time to 45 days and allowing retailers to improve their capital recovery.
Easy come, easy go: While 90 percent of all products returned require nothing more than repackaging, the number of returned products DSG receives each month varies, making demand for the company's services unpredictable, according to Repko. "While there is certainly no lack of supply, it's hard to pin down exact numbers," he says. "Also, you're dealing with many different makes and models of products, which confuses things even more."
Bigger and better: DSG plans to open two more refurbishing plants in the coming year.
Let me tell you: "You have to know your marketplace before you enter it," says Repko. "To succeed, you must survey the industry and focus on creating a unique niche for yourself. For example, there are many companies that offer disposition services, but we are one of the very few that use information technology to process high volume returns. And that makes us stand out in the marketplace."
