Smaller businesses are often criticised for being slow to react to change and reap the benefits of new technology. However, as with most generalisations, there are some notable exceptions and a good example is specialist cheese retailer, The Teddington Cheese. Although it was not set up until 1995 the company was quick to realise the benefits of exploiting new sales channels, setting up a mail order operation that would later form the basis of a successful e-business operation.
"We opened in 1995 and after a few months we realised the cheese business was very much a Friday/Saturday business," says co-founder Tony Parkes. "We invested a couple of thousand pounds in it, expecting to get very little back, but the result was quite the opposite."
Encouraged by this initial success, the company considered setting up a Web site to sell cheese and related products, such as pickles and port. "We knew what we wanted and we knew what the sites could do. We didn't want it to be gimmicky. We wanted it to be attractive but quick," he says.
Parkes did the research for the Web site with co-founder Doug Thring and another colleague, while a Web designer worked on the look and feel of it. "It wasn't difficult," says Parkes. "The person designing the Web site was very good and knew his business so it was quite smooth."
The site was finished in about a month and went live in 1997. It was rather basic, however. There was no shopping basket and it was not as informative as the company wanted. "We knew we could do more if we had lots of money," says Parkes. "It was quite frustrating."
Customers would come into the shop saying "Amazon is doing this" and "so-and-so is doing that" and Parkes would have to politely remind them the business was a single shop operation. But the reaction wasn't all bad. "We were pleased in as much as we could see we were getting somewhere," says Parkes. "The response was reassuring and we felt it would work. We were quite optimistic."
The next big step in The Teddington Cheese's e-business transformation came in 1999 when it won the DTI Interforum e-commerce award and a prize of £5,000. The company ploughed the money back into the site, introducing a shopping basket function and credit card encryption. It received a lot of good publicity, and the orders increased again says Parkes. However, the sticking point was that the Web site was hosted by a third party and when the company needed to make changes it had to pay. "It wasn't developing how we wanted and we felt it was stagnating," he says. "We wanted to be more dynamic but the charges were getting too much."
The company wanted more control over the site and more freedom to build a brand and this year it began looking at bringing control of the Web site in-house - a significant step by any company's standards. The search for a suitable package led the company to e-commerce software firm Actinic. Parkes says he and his colleagues saw a demo of Actinic's desktop-based Catalog product, liked it and took it from there. However, it took "eight long months of hard graft" to get the Web site up and running. This was not down to teething problems or technical considerations but the sheer amount of opportunities the new model threw up.
"There was so much it would do," says Parkes. "We really wanted to make good use of it." Other new additions to the site include the company's Cheese Club - an informal society for enthusiasts - and an online encyclopedia covering such FAQs as, "How do I choose a good milking goat?"
Doing all the research and taking the pictures took Parkes and his two colleagues the best part of six months. The Teddington Cheese has also adopted online marketing, which Parkes describes as "keeping in touch with customers without the outlay". Customer details are held in an online address book and they receive regular newsletters.
As a small business with just two shops - a second outlet was opened in Kew, London in 1999 - and no IT department, any changes have to be made by Parkes and his colleagues. To support the new site, Parkes and Thring learned HTML and Thring and another colleague attended Actinic training courses. Parkes also developed graphical skills, learning Dreamweaver and Corel Draw, while Thring focused on the technical side.
The adoption of e-business has not been without its problems, however, and one of the biggest has been e-fulfilment. The company tried six different delivery firms before it found one it could work with. The problem became so acute at one point that they were having second thoughts about the whole idea, says Parkes.
Delivery costs were a headache too. The Teddington Cheese charges its customers £5.95 for postage and packaging but the real cost is about £3 more. The upshot is that the company can end up losing money on smaller orders. Parkes says this is less of a problem now as customers have more choice - there are now more than 100 different wines to choose from on the site, for example - and orders tend to be higher.
Parkes says the company has just about reached the limit of what, as a small business, it can achieve with the site. The Web site is attracting more than 100,000 visitors a month and it has helped the company to attract some big orders it would not otherwise have won. It now accounts for a third of the turnover but Parkes says it is still early days and he expects e-business to become the dominant source of turnover in the future. "It's been a lot of hard work but because we were there in the early days we got a lot of good PR," he says. "It would be more difficult now without spending loads on advertising. We've got a little bit of real estate in the online cheese world."
The Teddington Cheese facts
1. Origins: first shop opened in 1995, with a second added in 1999
2. Web site launched 1997 and overhauled in 2001
3. Business model: one-third of turnover comes from the Web site and one-third each from the two London shops
4. Web site visitors number more than 100,000 a month
5. Staff: four full-time and about eight part-time
6. Cost to develop Web site and bring it in-house: "a few thousand pounds and a lot of man hours"
7. URL: www.teddingtoncheese.co.uk/