delivering the goods - electronic commerce and inventory management

Black Enterprise, June, 2001 by Holly Aguirre

Your Website is up and orders are rolling in. Now comes the hard part: inventory management. Here's how you can keep track of who gets what--and when--while giving customers the service they deserve.

IT'S EVERY ONLINE ENTREPRENEUR'S DREAM TO FIND THEIR business inundated with orders from the get-go. But don't start ringing the dinner bell if you can't deliver the goods. Not only do you stand the chance of disappointing hungry customers and setting a standard for poor customer service, but you're also risking stiff fines and penalties from the Federal Trade Commission. Many e-tailers that failed to ship products on time during this past holiday season opened themselves up to sanctions from the FTC, as well as class-action lawsuits from disgruntled consumers and stockholders. To avoid their fate, it's important to have a plan for managing your inventory, and to be able to back up that plan with good customer service.

Attorney Paul Swanson of Morrison & Foerester, in Los Angeles, says that many e-tail sites may be in violation of the FTC's Mail Order Rule (www.ftc.gov), a 1975 measure that governs how mail-order sales are conducted. Companies that are subject to the rule include those that engage in traditional mail-order sales, as well as companies that receive sales orders via computer, fax machine, or similar device over telephone lines.

"A business that receives orders from consumers for its products through the postal mail or telephone [lines] must comply with the Mail or Telephone Order Merchandise Trade Regulation Rule, also known as the Mail Order Rule, or face civil penalties of up to $10,000 per violation," explains Swanson, a specialist in Internet business relations.

Although the Mail Order Rule's provisions are intricate and should be discussed with an experienced attorney, in general the role requires businesses to deliver the goods when they say they will--usually within 30 days of sale. Noncompliance with the Mail Order Rule is no laughing matter. After the disastrous 1999 online holiday shopping season, which left many consumers waiting for gifts they ordered online, the FTC (which enforces the rule) initiated Project TooLate.com, which resulted in several e-tailers paying a collective $1.5 million in civil penalties.

Before you panic, however, remember that you don't have to go it alone. Depending on how you set up your site initially, inventory-management capabilities might be built into your Web application (see "YourBusiness.com," April 2001, for a comparison of these programs). You also can choose an inventory-management firm to handle your business. Or you can choose a software application to help you manage inventory and billing. Whichever option you pick, however, it's important to consider the customer in every aspect of the process.

Whether the goods you sell are stored in a basement or a climate-controlled warehouse, all e-commerce entrepreneurs face the same challenges: keeping track of inventory and ensuring that products get to customers on time. The key to success is incorporating software solutions, developing strong relationships with delivery services, and providing good customer support throughout the process.

SOFTWARE OPTIONS

There are many software solutions designed to organize your goods, track inventory, and manage your accounts. Three programs that are generally accepted as good choices are Peachtree Accounting Complete, QuickBooks Pro 2001 (see Techwatch, this issue, for a review), and MYOB Accounting Plus 10. Other options include FAS Asset Inventory and NetLedger 5.1.

Peachtree Complete ($269.95; www.peachtree.com or 770-724-4000). This is a great choice because of its easy setup and navigation and its customizable accounting program. Documentation formats, such as invoices and purchase orders, are thorough and can be customized to fit your particular inventory situation.

Peachtree's Setup Checklist is somewhat unorthodox, but there is nothing difficult about it; the program provides online and written tutorials that familiarize you with the program's tools, features, and most commonly used processes. Links to the program's functions populate the bottom of the page and open tools that let you select a function, such as Inventory Adjustments, that take you directly to the appropriate screen. Peachtree also lets you track inventory as well as produce detailed information about your company's fixed assets, property, and equipment.

But Peachtree has its flaws. For one, you can't modify forms simply by creating or modifying fields (although it does offer an infinite number of fields to hide or show). You must use a WYSIWYG (pronounced wizzy-wig, which stands for what you see is what you get) form designer to alter them, which is not the easiest solution unless you are accustomed to working with such programs. Another drawback is a heavy charge for tech support phone calls--there's a 10-minute minimum charge--and a fee for email questions. And if online banking is important to your business, you'll be out of luck with this program.