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E-commerce creates the opportunity to facilitate transactions, improve
operating efficiencies, and significantly affect the supply chain.
For the manufacturer, e-commerce creates multiple opportunities.
Manufacturers can sell directly to the end-user customer, bypassing the
traditional model of selling to wholesalers and distributors who then resell to
mass merchants and other retailers. By selling directly to the end-user
customer, the manufacturer can retain a portion of its product revenue which
otherwise would have been paid to middlemen in the traditional distribution
channel. Direct sales can also provide the manufacturer with valuable end-user
customer information, including buying patterns, feature and function
preferences and customer support requirements. This information can be used by
the manufacturer to design better products, tailor production schedules based on
projected demand, and improve overall customer satisfaction.
Another opportunity is that manufacturers can allow their resellers to tap
into an increased number of products for their end-consumer by providing an
infrastructure that seamlessly links to the manufacturers system and physical
infrastructure, so that the manufacturer can distribute the product in the name
of the reseller. The resellers have the ability to sell the product to the
end-user without ever touching the product in the sales process and then not
have to pay the manufacturer until their normal payment terms, after the product
is actually sold to the end-consumer. This process creates a winning situation
for both the manufacturer and the reseller by increasing cash flow and
decreasing inventory costs to the reseller while increasing the product depth
and breadth sold to the end-consumer from the manufacturer.
For the traditional retailer, e-commerce offers the opportunity to attract
new customers and introduce new merchandise while avoiding substantial
investment in physical retail locations. At the same time, consumer preferences
and customer data can be compiled and analyzed to spot trends and demographic
shifts.
To succeed on-line and in e-commerce, companies need an array of
capabilities to support their e-business. Designing an attractive Web page is
only the beginning. In order to retain and satisfy their on-line customers,
businesses must be able to:
- Accept and process customer orders 24 hours a day, seven days a week;
- Develop an operating and technology infrastructure that can be expanded
as volumes increase;
- Administer, on a secure basis, credit card payments and collections;
- Calculate applicable sales tax for numerous taxing authorities and
various product types;
- Quickly and courteously respond to customer inquiries by e-mail, phone,
Web chat or fax;
- Pick, pack and ship customer orders promptly and accurately;
- Process product returns and customer refunds; and
- Address supply chain management and reconfiguration.
Traditional manufacturers and retailers entering the e-commerce arena must
be able to satisfy the expanding needs of on-line customers, which differ from
their traditional commerce customers. The efficiency and quality of the on-line
shopping experience from accessing product information with real-time product
availability, ordering and paying for the product to receiving the product and,
if necessary, returning the product, are critical elements in successfully
implementing e-commerce initiatives.
These challenges are particularly difficult for the traditional
manufacturer whose distribution infrastructure is designed for large
pallet-sized orders to regional retailer distribution centers, and is not
generally equipped to handle high-volume package distribution to individual
customers. Similarly, retailers must ensure that their electronic shopping
customers are not disappointed by experiencing product distribution problems and
delays. Virtual companies, as well, are dependent upon an efficient order
processing and distribution system to deliver their products to customers.
Today if an end-user or reseller is not pleased with a company's service,
within minutes, if not within seconds, they are able to find another provider
who can meet their needs. The key for these companies is not to
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