Why build your own e-commerce operation when someone can provide one ready-made? Danny Bradbury shows how to farm out an e-business challenge

If a job's worth doing, do it yourself. Unless, of course, you can't, in which case, get someone else to do it. Unless you know what you're doing, setting up an e-commerce operation isn't easy.

Instead of building your own e-commerce operation, why not outsource it? More organisations are offering services including hosting, logistics fulfilment and Web site design as one-stop-shops for would be traders.

Outsourcing your e-commerce operation could prove useful if you are a small to medium-size enterprise [SME]. As a small business, you will be unlikely to have the in-house skills required to run a business on the Internet. The cost of recruiting specialist programming staff can be prohibitive, especially if you're faced with cash-flow issues. You're unlikely to want to invest thousands of pounds in state-of-the-art servers either.

Sage, which provides SME accounting software, offers companies the chance to build their own Web site and run it on Sage servers for £15 per month. For £35 per month, the company will add in online trading capabilities. Using its WebTrader service, companies can take advantage of online payment facilities from WorldPay, along with features such as an electronic shopping basket and checkout online. The service also includes digital certificates and the ability to set delivery charges, sales tax and payment methods.

Freecom offers a similar service, starting at £125 per month. Using technology from software company Intershop at the back end, Freecom enables you to develop online stores with multiple departments, multi-currency facilities, a catalogue service, credit limit management and stock control facilities.

This is all very well, but the chances are that unless you are a very small operation indeed, you will have an existing order processing system that you will need to feed your orders into. In the past, companies haven't bothered to create links between e-commerce sites and existing order processing applications, meaning that they have had to manually re-key every order. This is a quick fix, but there are three major problems with it: Firstly, it may work for SMEs, but as your site grows it will create an increasing burden on your staff. Secondly, manual data entry is prone to errors, which could result in unsatisfied customers. The final problem concerns timeliness - getting stock information into the outsourced system and customer order information out of it won't happen immediately, but rather will occur when your staff members have the time. Consequently, customers may receive wrong information about product availability, and their orders may take longer to process.

Sage and Freecom have gone some way towards solving this. Sage has an advantage in that it already sells accounting software, making it easier for the firm to integrate that software with its outsourced e-commerce service.

Orders placed on the site generate an invoice straight into the Sage software, which is marked as paid. The accounting software can then update the Web site with new stock details. Freecom also offers integration with some accounting packages.

But hosted services such as these are only half the solution. Many companies forget the processes that happen afterwards. Logistics such as product picking, packing and dispatch, along with customer support and order tracking are a huge part of the e-commerce equation, and many companies fall down because they are unprepared for increased business volumes, or customers from new regions.

You can also tighten up your internal efficiencies with costly ERP programs, or you can go to an external company that will fulfil some of the logistical requirements for you.

Web-Fulfilment provides real-time data capture from your site, payment processing, stock control and reporting, online order tracking and even product pick list management.

The downsides of such sites are in the areas of customisation. Although they enable you to alter the look and feel of your Web site, there is a big difference between cosmetic alteration and underlying structural change.

For businesses just starting out in e-commerce, it is probably best to take it slowly. One of the biggest risks of going into business online is that you try to do too much at once. This can result in a site that is slow, buggy and difficult to navigate.

It also means that you will take longer to get your product to market, which in e-business is never a good thing.

Consequently, you should explore the idea of using outsourced services, but gauge the level of service that you want to use against the complexity of your business model and the need for differentiation.

Questions for a prospective managed service provider

  • What service level agreements [SLAs] is your prospective managed service provider offering?

  • What security measures are they taking protect your data?

  • How customisable is the service that they are offering?

  • To what extent can they integrate with your existing order processing systems?

  • Do you want a one-stop shop service or would you rather handle some of it yourself?

  • Does the company have any reference sites?

  • How far can the site scale? If you are suddenly inundated with orders, could it cope?


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    This was first published in December 2000

     

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