For a Canadian company with 10 employees, selling a range of 750 products to the entire world is no small feat. Guelph, Ont.-based Saffron Rouge, an organic cosmetics retailer, is using the Internet to expand its business in North America and crack new international markets.
For smaller companies, having an online presence may be the only way to compete, says Chris Hazelton, senior research analyst for small and medium business markets with IDC. “For a small company, the Internet really is the most efficient form of commerce,” he says, since companies don’t need the same levels of staff or partners to get their product out.
But how do you, as an SMB, set up an online storefront that makes an impact without breaking the bank? If you can’t afford to bring in a consultant and have no desire to become a systems integrator, there are other options.
For Saffron Rouge, which has an IT staff of one, the answer was a hosted solution. NetSuite Inc., its vendor and integrator, runs its entire IT infrastructure, including backup and security.
NetSuite says it can reduce the cost of business applications by up to 90 per cent because there is no hardware to procure, no upfront licence fees and no resources required to install, maintain or upgrade a system.
With such a hosted solution, Jeff Binder, CEO of Saffron Rouge, can spend his time doing more important things. He can run the company — with his wife, who specializes in medical herbalism — and sell organic cosmetics and aromatherapy products while promoting fair-trade practices, certified organic farming and biodynamic agriculture.
Previously, the company had separate IT systems in Canada and the U.S. Those systems are now merged into one, so customers can pay in Canadian or U.S. funds and receive orders from the nearest warehouse. The company recently expanded its business to take international orders. With NetSuite, it is able to receive real-time inventory information for any number of warehouses, using any number of currencies anywhere in the world.
It also has an online storefront on Amazon.com, where customers can order product directly from the large online retailer. Saffron Rouge’s and Amazon’s infrastructures are integrated, so a change made in Saffron Rouge’s system shows up in Amazon’s.
If your business is simple, you can probably get away with a package like QuickBooks, says Binder. “If your business is more involved, no question, in my mind you should run an integrated system.”
Having these options is becoming increasingly important as we enter the second generation of e-commerce because while many SMBs have developed an online storefront, it tends to stop there, says Sean Rollings, senior director of product marketing with NetSuite in San Mateo, Calif.
The next generation of e-commerce involves real-time integration with applications such as inventory, financials and order management. Another trend is providing customers and suppliers with self-service capabilities. “The golden goose is extending the lifetime value of customers,” says Rollings.
But before you step into the online world, take a good look at your business model, says Binder. Is it going to translate well to the Web? Are your customers going to be interested in buying that way? If not, you might be better off with an information-only site.
For e-commerce, you have to determine your niche or provide an offering that differentiates you from the pack, he says. But if you’re going to battle it out with established competitors, you’ll need deep pockets.
Binder recommends SMBs put analytics in place to understand key metrics (success factors). Understand your business model and what makes you unique. Make sure you have a strong marketing plan. And decide how much money you want to spend. Also, do you want to start small and build incrementally or spend big and be aggressive?
As SMBs’ online storefronts evolve, says IDC’s Hazelton, their business concerns and IT spending priorities are focusing on strengthening customers’ perceptions and maintaining healthy cash flow. Hosted solutions, outsourced functionality, even eBay are options to cut the cost of building an online presence.
But remember that technology is simply the foundation of an overall business plan. “Your business system isn’t going to make your business,” says Binder. “You still need to have good, strong marketing and sales.”
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