Minimize risk, expand capacity and reduce operational costs through advance planning

Often when we think about E-Commerce, we think about selling, advertising, marketing and design. While these are all critical to your E-Commerce success, equally important is getting your operations structure ready during your shopping cart development. Before you start your shopping cart project, consider the operational impact.  Plan your Web store in a way that will fit within your business objectives and operational capacity.

Many times, the marketing team develops the Web store with no consideration for the business process.  It is, after all, marketing and sales, isn’t it?  We frequently get a call after the Web store is developed. The caller (either the Web developer or the person in charge of the Web store) wants to integrate the orders into NAV.  Typically, the Web developer has told them how easy it is to integrate shopping carts into an ERP system.

Generally, “Easy” is easy to say, but can be difficult to do. Integration is easy if everyone is on the same page, but “the devil is in the details.” Web sites and stores tend to be tinker toys with any outcome possible, given enough time, money and talent. ERP systems are written and used by tens of thousands of businesses and have strict reporting guidelines. The meshing of the two can be challenging, but not as challenging as mixing your Web orders into your traditional orders. The new operational mix can be seriously challenging.

Customer Expectations Change
Many times E-Commerce success results in unintended consequences.  For example, if you are an industrial products supplier, you may be familiar with the pallet or case level requirements of your customers. You have prearranged terms, freight, delivery schedules and order processing. Your typical sale may be multiple pallets of cases with a week lead-time for delivery with a price of multiple thousands of dollars. With a successful web store, your typical sale may be for one or two eaches of several products with a sale price of less than $100.00. Sure, your margin percentage is much higher, but so are your costs. Consider that it will take the same or more time to pick eaches of two products than to pick one pallet of two products. Your material handling equipment is different.  Your shipping will be parcel rather than LTL or delivery. The customer’s expectations are different too.  Web customers expect quick turn-around, perhaps next day or two-day delivery and are expecting the picking to occur today, not on your normal order turn around.

Warehouse Requirements
Do you have enough warehouse space to deal with the changes in order fulfillment? Perhaps you only sell Case lots to your regular customers. If your Web store sells eaches, you will have to have product in two different type pick faces. You will have to institute a break-bulk, replenishment system for the eaches. Do you have the warehouse staff and equipment to handle higher transaction volume and still maintain the customer service level your traditional customers require? Can they handle the higher expectations of the Web customer?

Accounts Receivable
You are used to customers paying invoices within terms by ACH, check or credit card. Now, you will be accepting credit cards for much smaller transactions. Depending on your credit card setup (remember PCI compliance), you may have an issue when a Web customer returns product and you have to issue a credit for the return. How will you issue the credit if the credit card information is separate from your NAV system?

Customer Service
You are used to working with customers who know your products and will have technical questions related to commercial or industrial use. Are you prepared to answer phone, email or chat questions from hobbyists and do-it-yourself homeowners? Do you have the necessary staff? Does your staff have the technical skill, time, patience and attention to deal with chat and email responses?  Web buyers tend to be impatient and have no loyalty to keep them waiting for answers. Are you prepared for the legal liability or reputation damage from improper use of your product? There are a myriad of technical and budgetary issues.

Integration & Control
Okay, you have thought about all the operation issues. What about integrating your Web store into NAV (remember, it’s Easy?). Most Web developers consider their Web store to be the business driver.  What they haven’t discussed in the sales process is which product is the master and which is the subsidiary.  Of course, their thought is that the Web store is the master. I am certain your CFO, warehouse staff and others will have a different opinion. This is the start of some difficult issues and questions that you should answer before you negotiate the Web store contract. Here is a partial list.

  • Sales Tax
    • How will you handle differences in tax calculation?
    • Who will handle sales tax reporting?
    • Which system will control tax jurisdictions?
  • Credit card processing
    • When will the card be charged?
    • Who will charge the card?
    • How will your Web store handle variable freight and credit card pre-authorization?
    • Will your Web store apply the credit card payment to the invoice?
  • Customer records
    • Which system is the master and controls customer numbers?
    • Where are changes made?
    • Will you store all customer records in NAV or use a Web Customer to process all transactions?
    • Which system will manage Ship-to Addresses?
    • Which system will manage credit terms and authorized purchasers?
  • Is the Web store geared toward retail customers (BtoC), commercial customers (BtoB) or both?
    • Will you display available inventory?
    • What is available inventory?  (Net of sales orders, include inbound purchase orders?)
    • Will you display all inventory or only selected inventory?
    • Will all customers get the same price?
    • Where will you maintain inventory pricing?
    • Will you segregate inventory for your Web store?
  • Will ERP feed shipping data back to the Web store for updates or will the ERP notify the customer?
  • Do you have restrictions in your vendor agreements or government regulations that will prevent you from selling in certain areas or to certain types of customers? These generally don’t matter in your traditional business because your Customer Service Reps know the rules – how will you enforce the rules in a wide-open market?

There are integrated shopping carts already working with NAV that can minimize the questions and issues you have to resolve. Some work with popular shopping carts like Magento or Big Commerce, others have proprietary shopping carts. Some offer ties to Amazon and EBay. These range in price from relatively inexpensive to pricy – but of course pricy is a relative term.

Look at the pre-integrated Web stores available for NAV to minimize risk, expand capacity and reduce operational costs. Finally, I hope that your success doesn’t out-pace your capacity. Best of Luck in your Web business.

By Ron Ketterling

President and Founder,
Business Automation Specialists
of Minnesota, Inc.

Written for Microsoft’s
NAV User Group Magazine