Managing Inventory - Internet/Web/Online Service Information

Home Office Computing, June, 2000 by Joanne Cleaver

What to do when the orders start rolling in

AFTER EQUIPPING YOUR WEB SITE WITH e-commerce functions, it's easy to forget that the real work has just begun. You'll still have to contend with what happens when orders start coming in. Whether you're selling books, customized gift baskets, or model trains, inventory has to be counted, labeled, tracked, and shipped.

"People are so concerned about getting and keeping customers that the actual mechanics seem to be overlooked," says Amina O'Farrell, director of communications for PitneyWorks, postal-meter giant Pitney Bowes's small-business division. "Customers' expectations are very high. Even if you're a home-based business, people expect professional product delivery." She adds that businesses often underestimate the effort it takes to produce and inventory products.

Selling workbooks, for instance, isn't just a matter of printing out a few copies on your laser printer and them at the corners. If you're getting more than a handful of orders a month, you should have a professional printer or high-quality copy center produce dozens at a time. You must also find a clean, dry place to store them in your home office. And as orders come in, you'll need to make sure you process them, generate invoices, and log all order information into your accounting software. This way, you can track how much you've sold, to whom, and at what prices. The final step is shipping, which can prove both time- and labor-intensive as you make frequent runs to the post office and follow up with customers.

In the past, home-based businesses had few alternatives. However, software developers, Web-based services, and shippers are now striving to simplify the fulfillment process. We'll look at how Internet services such as Fulfill.com and CommerceKey. com and software programs like Intuit's QuickBooks and Microsoft Excel can help home businesses manage inventory and track orders effortlessly.

VIRTUALLY HANDS-OFF

Declan Dunn says it's a miracle his marriage survived the shipping hassles of his Internet consultancy, ActiveMarketplace Inc. The company advises Internet start-ups about marketing and Web strategies. Almost as soon as he and partner Patrick Anderson launched the Chico, Calif.-based company in 1996, Dunn realized that eager dot-coms craved far more than the two could deliver in seminars alone.

Challenge The company would have to produce workbooks and manuals, as well as videotapes and audiotapes. These products would then have to be printed (or duplicated), bound (or put in cases), and stored in ready-to-sell condition. Once orders came in, they had to process payment, log the details into the accounting system and customer database, and generate receipts and packing orders.

Fulfilling each order involved pulling the right combination of printed and taped materials, double-checking the contents of the package against the original order, enclosing the correct receipts and packing slips, and creating labels. They then had to haul the packages to the post office. Because Dunn and Anderson were busy generating content for the products, meeting with clients, and pursuing leads, the task fell to Dunn's wife.

"Oh, having my wife package these things, that was a joy," laughs Dunn. "And there's no inventory tracking when it's on the kitchen table. It's, `Woo-hoo, an order?' You print it, paste [an address from] e-mail, and it's done."

Two years later, ActiveMarketplace has relieved Dunn's spouse of the backbreaking work of lugging manuals to the post office. Still, even with a savvy office manager to pull orders from their Web site (she copies them from e-mails into FileMaker Pro), and manage short print runs of their expanding product line, it was obvious that too much energy was being absorbed. The Dunns were also tripping over several hundred dollars' worth of manuals each time a new load arrived from the printer.

Solution ActiveMarketplace now routes its orders 2,000 miles away to iFulfill.com, an inventory, warehousing, shipping, and fulfillment firm in Dundee, Mich. Dunn contracts with a Kinko's in Michigan that prints new materials in short runs and delivers them to the iFulfill.com warehouse nearby. A local tape duplication company does the same. The cost of printing each manual (about $6) and duplicating each audiotape (about 70 cents) hasn't changed.

Dunn receives a daily manifest, or shipping report, from iFulfill.com, which ships about 200 orders of tapes and books monthly. And because of its high volume of orders, ActiveMarketplace has managed to negotiate a lower rate with Kinko's. Ifulfill.com handles all payment transactions, deducts its 7 percent service fee from each order, then forwards the rest to the company. To customers, it appears that ActiveMarketplace is handling everything.

The service fee is more than the 3 percent it once cost ActiveMarketplace to do everything in-house, but Dunn and Anderson no longer have to contend with managing inventory, processing orders, or shipping products. What's more, when inventory is running short, iFulfill.com sends an e-mail notice that there's only three weeks' worth in stock.