The outsourced Web store

If you’re a startup or a small retailer, or if you’re simply a business with a modest IT infrastructure and little interest in changing your model, using a pay-as-you-go system to manage your e-commerce store may be an ideal solution.

But bolting on the technology required to build a successful Web store is not as easy as you might think.

The first thing many small businesses think about when they decide to sell their products on the Web is how cool they want – and will need – their Web store to be. They’re right, the site’s “cool” factor is a consideration, but putting all the text and images, the shopping cart system and the rest of the visual content in place is actually the easy part of the job.

Behind the scenes, the company must be able to handle the purchasing, keep the right amount of inventory on hand, ship and receive products and constantly track all of those shipments for customers.

Sean Rollings, senior director of product marketing, at NetSuite, in a recent Webinar ominously entitled “The Death of the Bolt-On Web Store,” says many firms run into trouble later on when they realize the difficulties involved in integrating their new store with the movement of the inventory.

“In most cases you’re not just selling online, you need to be able to talk to people on the phone, you need to be able to keep up with [inventory in case of] inquiries. Or, in a lot of cases if you do have a retail store you’ve got to find a way to tie into your inventory. And, ultimately, everything you do within the business has to tie back to the accounting system.”

Mary Maesano, who runs Burlington, Ont.-based, is one small business owner who decided to keep things simple when she started out in 2005. Her online retail business offers a large selection of wedding favours, wedding and bridal accessories, special event decorative items and corporate gifts, but the company does not carry any inventory. Instead, products are drop-shipped from two warehouses – one in Canada and one in the US.

Maesano bought NetSuite’s accounting module to keep track of sales and maintain all product records. Purchase orders are sent directly to the customer, and “everything sort of just flows” on its own, she says. Customers aren’t able to tell that the company doesn’t hold its own inventory on site.

Two main reasons drew Maesano to go with software-as-a-service (SaaS): the threat of IT hassles due to a lack of technology savvy, and the ability to grow while retaining the same software.

“It’s a large expense, probably for any startup, but it was an opportunity and we thought, ‘OK, let’s do it right so that six months down the road we’re not looking for another software program that can accommodate us,'” she explains.

But just because NetSuite is an outsourced solution not everything about it was easy, Maesano admits. She says the most challenging moment was receiving the package at the beginning with all its “bells and whistles,” and not knowing where to begin. Another challenge was finding a company that could customize the NetSuite Web site. It’s a limited pool of resources at present, according to Maesano. However, once employees made use of the system, the user-friendly interface made staff quickly see its potential.

Also, a good partner was found. “There are people who specialize in NetSuite and we were looking for that specifically because NetSuite can be optimized for search engine optimization (SEO) as you’re developing it. And if you know NetSuite very well then you can build a very good Web site that at the same time is optimized.”

Retailers can also use NetSuite’s advanced search capabilities and e-mail marketing tools to keep track of, for example, which shoppers abandoned their carts, what items were in their carts at the time and when the items were added. They they can set in motion direct e-mail marketing programs to close those – otherwise missed – sales.

Such analysis is important to the success of any small business, according to Tom Walker, owner of Web design firm TSW Interactive in Victoria, BC, whether they have a hosted or custom-made Web store.

But if you’re a smaller company, don’t spend too much of your budget on analysis. “There’s a lot of value in it but if your market is local you can’t increase the traffic that much. So to spend $10,000 to analyze the statistics of your Web site when you’re very limited in growth … obviously the investment will not always be worth it.”

As with any Web-related investment – including the hosting of a Web store – small businesses must use common sense and budget carefully, making sure they will see good ROI in the end. If IT is not a company’s forte, maybe from a cost and difficulty standpoint SaaS makes sense.

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