Here’s some great guidance and tips from Lynnette A McIntire of UPS’ Logistics Group. She’ll give you advice and insight into the logistics part of doing business online. It’s easy to sell software over the ‘net, sell PDF files and other “soft products,” but when you have to deliver boxes, wrap them up (like Amazon.com does), take returns and more it can be a headache. UPS is the standard bearer in logistics and etailing, so I’ll step aside and let you soak up all you can from the pros!
UPS is THE etailer’s best friend and as the Internet expands and more dot.com’s go online – UPS and other couriers will be vital to their success. In fact some etailers are basing their entire business model on being close to couriers such as Federal Express’s Memphis, TN central distribution hub
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I asked Lynnette McIntire, UPS Logistics Group, to share with us her advice on etailing and logistics.
1. In general what outsourced logistics services are available to the small, tangible product based business, that wants to start to sell products via the ‘net?
New web merchants can outsource virtually all back-end logistics functions: order management, warehousing and inventory management, IT systems integration to connect the front and back systems, call center operations, fulfillment, kitting and don’t forget post-sales services like warranty repair, returns management, customer care centers, spare parts fulfillment, and even in-the-field repair (if you are in the telecom or electronics field). UPS Logistics offers all of these services.
2. Do you have any tips or suggested steps one should take BEFORE moving a retail operation online?
Consider how much you will need to change your existing operations to accommodate online customers (and the expense involved). For example, you may see an increase in international orders that will require significant expertise in customs clearance, duties and taxes and international shipping companies and will demand much more handling. You will have to revamp your distribution system to handle more “one-sy” and “two-sy” shipments; you may see more returns which will require more handling and disposition issues such as repairs, refurbishment or reconditioning; your distribution systems may have to become 100% web-enabled; customers will be expecting much more information on the web — landed shipping costs, delivery times, order status, product availability, real time on-line customer service — which may require much more investments in web-based supply chain management technology. In other words, a full-scale web business will significantly change your business model and may require more investment.
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3. Are there any differences, other than cost between Fedex and UPS or any other courier (US Postal Service included) that the small business owner should consider when deciding what carrier(s) to choose for delivering goods?
Considerations should be
- Are they global? Can they handle orders anywhere to virtually any address? Can they help you with customs’ clearance, duties and taxes payment and proof of delivery?
- Do they have online real-time tracking and tracing that can integrate into your website and warehousing systems
- Do they offer turnkey inventory management and fulfillment services that are scalable; in other words, if you are successful and grow 50% a month, can they keep up?
- Can they offer the same connectivity and tracking services if your shipments move outside their network (say on a commercial airline or a train or ocean container? Do they offer complete transportation management services, including palletized inbound shipments as well as small package services?
- Do they have an automated and easy returns services that is consumer friendly?
- Do they offer a full range of in-transit products (same-day, next day, ground, etc.) so that you can offer them to your customers?
- How does the carrier’s reputation affect your image?
- How can they handle orders that come in late at night (since the Internet is a 24-hour marketplace). How late can the orders come in and still get delivered the next day?
4. Should the small business person create a separate, online business or just integrate the online operations with the retail/physical operations?
Initially, when orders are perhaps less than 50 a day, it is probably more economical just to handle fulfillment in-house. But most “bricks and mortar” companies, as they grow their online businesses, determine that they want to separate it out — primarily because their old distribution system is based on pallets or many-item orders that have to be handled differently from small package shipments. Their e-fulfillment also is more likely to require special packaging — such as gift-wrap or marketing literature, or specially branded boxes. This kind of customized handling could slow down the traditional distribution lines.
From an economic standpoint, many bricks and mortar companies also want to keep their e-tail operational costs separate so that they can determine actual costs — especially when early losses might show up on their traditional business unit’s bottom line.
Finally, IT systems integration also can be quite complex…naturally, the e-business unit will want all web-based technology that are more visible to the retail customer. Traditional business units may be relying on EDI or other b2b systems, especially. as it relates to connecting with suppliers.
5. Does a small business person, who may be an expert in retail, with ages of experience and wants to compete online, have a chance against some 20 year old kid, with billions of money and 30 venture capital firms throwing money at him?
Anybody with a good business plan can compete. The key is to really understand the market, the customer and the financial model for making money. The same skills that make successful retailers also make sense in the new web economy.
The channel is different, the IT investment may be higher, but you still have to have good products, good marketing and know your customers.
6. Does UPS offer advisory services for small businesses to go from brick to click?
Yes, we have a whole team dedicated to helping small businesses start up their e-logistics operations. We also have a consulting unit, if you’re not ready to outsource all your inventory management, warehousing, order fulfillment and returns. And of course, the UPS Account Executive is always available to give advice about how to utilize the UPS shipping network.
For more information, get the book How to Sell More Online: 40 Tips for the Small Online Entrepreneur
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