Keys to success
Providing a seamless interface between online and offline inventory management is critical to the success of any online sales venture, agrees Andrew Cooper, CEO of Brisbane-based e-business consultancy HotShed. HotShed has long played in online retailing through its www.topshop.com.au operation, but recently increased its online presence by using the same core technology to breathe new life into floundering e-tailer dStore.
"A lot of companies have gone into this space and failed," Cooper says, "and I believe one of the key reasons for this is that, unlike a lot of businesses, you need a really close marriage between the technology and the e-tailing mindset.
"There's a bit of a disconnect between offline retailing and online consumers, and when retailers get online they don't always understand that. There are also a lot of hidden processes that, on the face looking from outside, people don't know exist."
The hidden process most likely to trip you up is logistics, which has emerged as a central differentiator between online winners and losers. This is because no matter what your line of business, product inventory is expensive to source, stock, manage, and distribute.
And while established real-world retailers have well-developed networks for moving product out of their warehouses and through retail outlets, online retailers may find it very difficult to keep product moving as effectively--particularly if the online division is handled separately from the rest of the business.
If your company already has well-established distribution channels, use them and manage the online presence as simply another warehousing point. This will allow you to minimise the effect of largely unpredictable online purchasing patterns, shifting product to the right place as demand dictates.
You may also find third-party logistics providers can make a valuable contribution in overcoming potential logistics nightmares; just make sure they have the systems to let you deal with them completely electronically.
