Delivering the Goods

Your Web site gets tons of orders, but how do you fill them? Don't go it alone--outsourcing makes fulfillment and distribution simpler and more efficient.
Magazine Contributor
7 min read

This story appears in the March 1999 issue of Business Start-Ups magazine. Subscribe »

A truly effective e-commerce site is more than just a catalog and shopping cart that allow customers to choose products and purchase them using a credit card. Among other features, e-commerce sites should have the ability to seamlessly integrate with an inventory or warehouse system to perform fulfillment functions. These systems allow products to be shipped automatically to customers without a lot of hassle--or even the use of paper.

The best systems also have automated shipping and tracking capabilities so you can let customers know when a product will be delivered to them. Some systems are even capable of automatically sending customers e-mail messages regarding delivery schedules.

According to Access Media International USA, a New York City technology consulting company that tracks technology-adoption trends in small and midsized businesses, an order-fulfillment or distribution system is the key to leveraging technology for a small business. It's important for companies to do marketing over the Web, but the true value of e-commerce lies in the efficiency and automation of the entire process.

Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at

Getting Help

While the prospect of linking a full-service distribution center to your e-commerce site may sound enticing, it takes time, money and a reliable, efficient business partner for it to be successful. Entrepreneurs attempting to automate their back-end operations often make the mistake of going to a computer store in hopes of finding a packaged solution for distribution functions. What they usually find, however, is just a quick way to set up a basic Web page or retail catalog. For the most part, these solutions don't help companies set up inventory, track sales and shipments, or hook their systems up to a warehouse or fulfillment center.

For these functions, it's best to turn to a systems integrator, a consultant who specializes in building retail or business-to-business Web sites. A systems integrator makes sure everything works smoothly between the company's Web server and its legacy system (the inventory information system) or other data not directly connected to the front end of the Web site. These consultants can guide entrepreneurs through the entire process, making the procedure much easier and less threatening.

There are literally thousands of systems integrators to choose from, but experts say the best way to find one that suits your needs is by word-of-mouth. Ask computer-savvy friends, or talk to the employees who manage your Web site--they probably read computer magazines and know the major players.

You can get referrals from the Information Technology Industry Association of America ( or the Council of Regional IT Associations, which is accessible from the same site. You can also try IBM's Net.Commerce site ( or Microsoft's site (

One company that utilized word-of-mouth when choosing a systems integrator was Washington, DC-based Tom Graham, president and founder of the online office products superstore for small business, learned about his e-commerce partner, Snickelways Interactive, through a tip he received from a technology partner who had worked with the company in the past. Snickelways, a leading business-to-business systems integrator and e-commerce solutions provider, set up the back-end and fulfillment parts of Graham's system.

One of the reasons Graham, 43, chose Snickelways was its use of standard software components when setting up systems. Graham says this makes integration and future development easier--an important point to keep in mind, especially if you're planning to expand your business's scope down the road.

For example, the e-commerce system uses runs on a Windows NT platform. Electronic data interface (EDI) software and messaging middleware are integrated into the system and perform such functions as verifying credit cards in real time, checking product availability, tracking shipments and figuring sales tax. paid Snickelways about $200,000 for its site-development services, which is the industry standard. The company has also engaged Snickelways for a significant ongoing development effort. "I recommend outsourcing because it saves time and money," says Graham. "I was convinced buying this technology was a much better investment than trying to build it."

Quick Deliveries

Besides choosing a systems integrator, online companies must also choose a warehouse service or fulfillment company that is e-commerce-enabled to act as a partner. You may already have a small warehouse for your products, but if you plan to make e-commerce a large part of your business, don't ignore this step.

Most small businesses can't afford to hire a huge staff to fill orders. If you outsource this function to a warehouse service company, you can fill orders more quickly--meaning more profits with fewer people.

As with integrators, probably the best way to find a warehouse company is through word-of-mouth or by contacting one of the organizations listed earlier. You can also check with your industry's trade association.

Finding the right distribution partner was essential for Graham, who looked to Inc., the reigning king of online retailers, as a model for his e-commerce system.'s model is simple: It sells products via an Internet site linked to an enormous distribution center so it can offer more selection than a brick-and-mortar store.

Graham believed he could create a successful company that resembled's model by substituting office products for books and working with a distributor that was linked to his company's Web site. Partnering with a distributor would allow him to sell some 27,000 office products, such as copier paper, file folders, writing instruments, calculators and even janitorial supplies. The typical Staples store offers only 8,000 products.

Graham's Web site, , went up last August. Currently, he has only three full-time employees and no inventory. His distributor has 40 distribution centers throughout the United States, all of which are linked to's online ordering system.

Here's how the system works: The customer browses the site and places an order. During checkout, the customer's credit card information is verified in real time and the customer is informed the order has been placed. The system then checks for product availability and instructs the warehouse closest to the customer to ship the product. Graham says most products can be delivered the next business day via UPS; customers also automatically receive an e-mail confirming their order that lists all the products and services in their shipment.

The time and money Graham spent on his company's system has paid off. Currently thousands of people visit the site each day; they generally buy an average of $70 worth of merchandise. Graham says he expects to generate $14 million in sales this year.

Tying Up Loose Ends

E-commerce experts agree: Choosing the right partners is the key to success when putting together a complete fulfillment operation.

"If you're not in the business to provide warehousing, fulfillment or manufacturing, then outsource these functions," says Jay Webster, a partner in audience development at USWeb/CKS, an Internet strategy firm that works with many small businesses. "At the end of the day, you'll save money."

And most experts also agree that e-commerce systems which integrate smoothly with back-end systems offer win-win situations for both customers and companies. "The goal is to provide customers with a compelling reason to use your site," says Webster. "But if it's difficult to interact with you electronically, it's just not going to happen."

Next Step

  • For more information on the best ways to set up the back end of your Web site, visit , a comprehensive guide designed to help merchants, financial institutions, commerce service providers, ISPs and others conduct business electronically.

Contact Sources

Strategic Interactive Group,>,

US Web/CKS, (415) 289-5030,

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