eLeaders Profiting from the Web

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Companies profit, But e-commerce is still a pioneering effort.

By Robert W. Scott

You might say that Woodland Scenics lets train enthusiasts build new worlds. It markets products that include the trees, buildings, and landscapes that enable model railroad buffs to construct towns, villages, and countries of their choosing.

It had a Web page for some time before it began using the e.Net technology in the Syspro software system. That was not a pretty story, says Timothy Harryman, director of information systems.

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“We had a static HTML site,” recalls Harryman. “It stored the orders. We had to go into a page, print off the order, hand enter the customers into Impact [the name of the older Syspro product] and get the information over to shipping. It was a nightmare.”

So when Syspro came out with its e.Net architecture, Woodland was ready to be a guinea pig. The new architecture utilizes the Component Object Model to turn the static site into a dynamic Web store that changed a nightmare into a highly profitable tool.

CBIZ Technologies performed the original Syspro installation. But Woodland Scenics performed much of the work with e.Net with the assistance of Syspro as part of an early adopter program.

The company kicked off the new system in August 2000 with twelve concurrent users. And things changed, although not as much as you might expect given the apparent success of the Web store. The company still derives 95 percent of its sales from its traditional wholesale and dealer channel. Only 5 percent of its orders come through the Web.

“But our profit margin just rocks on the Web,” says Harryman. “Our margin on the Web is roughly four times what we get through the traditional channel.”

When someone places an order, the credit card purchase is verified and approved. E.Net Object enters the customer name and then the order into Syspro. The order is printed in both accounting and shipping and “it’s ready to go pick and ship,” says Harryman.

Before Harryman arrived, Woodland had a $4 flat-fee shipping rate for ground shipments and $15 for three-day shipments. Now, when the order is placed, the Syspro system calculates the weight and when the customer checks out, that information goes electronically to both UPS and the United States Postal Service, which provide a quote.

Customers “can choose any of our supported shippings,” says Harryman. The new Web capabilities also allowed the company to expand worldwide, with orders coming in from at least 50 countries.

The higher profit margin on Web orders stem from the efficiency in handling orders. Harryman says, “It has made it so the labor factor processing a Web order is reduced to zero and the profit margin is quintupled.” Customer records and orders are automatically created in Syspro. “All of our Syspro stuff is pretty much behind the scenes,” says Harryman.

Woodland Scenics followed a familiar standard process in providing photographs of its pictures on the Web site. But it has gone beyond simple static photos and started using object movies about three months ago.

“If you have the QuickTime plug in, you can turn the picture 360 degrees, so that customers can get a complete view, instead of just getting a front view,” he says.

The company started by providing all-around pictures of its Pinewood Derby products, sold by its PineCar operation, which also uses the Syspro system.

All that work is invisible to the end user.

“All of the Syspro stuff is pretty much behind the scenes,’ says Harryman.

WebStores
Despite the experiences of companies like Woodland Scenics, eCommerce installations at least those sold by resellers and consulting firms are still not as common as might be expected, despite the development of the Internet over the last few years. It’s even more surprising given how strong the distribution market is for many resellers.

Customers aren’t necessarily even asking for those capabilities. “It’s come up once in three years,” says Reagan Stanley, a partner with Stanley Stuart Yoffee & Hendrix, a Maitland, Fla.-based Solomon reseller. But nothing was purchased, says Stanley. “It was just chit-chat.”

Even online vendor NetSuite has not actively promoted the ability to use its Web-based applications for Web stores.

“We have more than 1,000 companies using the product out of the box to run their Web store. They figured out how to do it on their own,” says NetSuite president Zach Nelson.

The company plans to market Web stores more aggressively with its NetMall, which was scheduled to launch last month. It’s clear that even if after all these years, it’s still early. Many resellers are just now starting to get up to speed and beginning to make installations at clients that are willing to talk about their experiences.

This year’s eLeaders provides its annual look at companies that are ahead of the pack in using the Internet to automate their business.

Benshaw
E-commerce has done more than just make Benshaw’s order processing more efficient. It has changed the company’s product mix and its ability to compete in markets in which it formerly was not very active.

Founded in 1983, Benhaw produces solid-state reduced voltage electronic motor controls, which it sells under its own name and also through OEMs who incorporate the company’s product.

With a staff of 250 and annual sales of $40 million, the company sells products through a field sales force that services 20 territories, calling upon a variety of distributors and resellers.

Benshaw began working with Accpac about four years ago and its eTransact two years later, launching its online store in September 22. “It gives us a lot visibility,” says Dave Richey, Benshaw’s information systems manager.

Benshaw encourages use of the Web store, giving customers discounts to order on line because of the savings that the company realizes in processing those order.

“The sales department doesn’t touch the orders,” notes Richey. Orders are sent directly to the warehouse where “we have a pretty lean staff,” he continues. Accpac’s eTransact can automatically assign the order to a particular location. Customers can also define which shipping carriers they wish to use.

The installation took about three and a half months. The need for new systems was minimal: The company purchased a new server and required some changes to the operating system. It also bought consulting services from Accpac.

Richey says the cost was about $50,000 to $55,000 for the Accpac eTransact system and the installation services, $10,000 for the server and another $10,000 for SQL server. Another $8,000 to $10,000 was spent on a variety of other applications. It took Richey’s services and the part-time work by another of his IT people. Besides offering its dealers the ability to order via the Web, Benshaw also has OEM-specific Web stores for the manufacturers that use its parts.

Applied Data Solutions, an Accpac reseller based in Exton, Pa., installed Accpac’s eTransact, and the MiSys Manufacturing system.

“The Web store alone added about 10 percent to his business and has given him a competitive advantage,” says ADS president Jim Campbell. Campbell says that while Benshaw still takes orders through the sales force, the Web gave the company the ability to sell parts.

The site changed Benshaw’s operations beyond simply being able to process orders electronically. The Web store has changed the way the company sells replacement components.

Before the Web, “Most everything was fairly customized, built to order,” says Richey. Since the store went online, “We have developed standard packages.” That means the company can be more competitive on pricing and is able to offer its resellers greater discounts.

“It tends to drive a customer towards a standard package,” says Richey.

The company, which had a record month in April, has also been able to give much more visibility to its spare parts and component lines.

Dale Carnegie Training
Casual observers might not think of Dale Carnegie Training, which provides courses through 150 franchisees in 70 countries, as an operation that has an inventory management problem. But it has a major issue in managing classroom supplies used to deliver those courses.

“We needed to modernize the ordering process we had. It was by phone and fax, with our franchisees sending in supply orders,” says Ken Bonneau, DCT’s distribution manager. “It became horribly cumbersome.”

Items ordered by franchisees include manuals, books, awards, posters, and plaques — “anything that you would use in a classroom to support our product,” he says.

The company also needed to turn around orders quickly, since franchisees often order products at the last minute, and sometimes request the wrong products. Before the Web store, that meant getting incorrect merchandise sent back and struggling to get the correct material in their hands. Now, DCT does not have to perform the time-consuming process of manually reconciling orders, especially when returns have been made.

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