The ultimate solution. Where web based information technology (a competitive business in itself) offers logistical software systems to a theoretically dispersed business community. Where all e-commerce functions can be 3rd party businesses including information technology. Where commercial deals are administered for established and or ad hoc merchandise enterprises.
1. Dispersed Functionality is where standard merchant functionality is broken out into separate operating units that can serve the needs of e-commerce as a single proprietary business or as a group of independent special service businesses. Most notably:
a. Deal Making (Contracting)
h. Customer Service
k. Customer Delivery
l. Information Technology
m. Customer Management
B. The first requirement is web connection to a totally restructured supply activity manager.
The e-tailing software we see on the market is, for the most part, designed for on-line order taking. On-line order taking and pick&pack are just two of functions that will be tied into a web based E-com Exchange. Manager.
C. There is no reason to pursue e-commerce unless you can increase sales and reduce operating costs.
Any company down the road 3 years into e-commerce will have to have made real accomplishments in operating efficiency. The magazine “Industry Standard” recently published the following projections.
The point made here is that the entire revenue and operations streams are up for change and that change will have to be well planned and look like a collaborative process. The goal will be to minimize cost and maximize service to the customer, using both house and outsourced services.
Today’s third party warehousing/distribution service providers face heavy pressure from every side. As if the usual business pressures associated with an extremely competitive, cents-on-the-dollar marketplace weren’t challenging enough, their customers are demanding ever more sophisticated value-add and logistics management services. Consequently, moving product through a warehouse is no longer good enough; moving accounting- and logistics-related information is now as critical to customer service as moving goods.
The Competitive Edge (June 17, 1999) – Microsoft Internet Explorer
D. E-Comizing Logistics: All Participants And The Whole Process
The outsourced pick&pack opportunity will be in its ability to perform a series of specialized roles in a highly structured and web connected collaboration of Merchant, Financier, Marketer, Customer, Manufacturer, Warehouser, Distributor, Pick&packer, Customer Servicer, Trucker and Home Deliverer.
Anyone jumping on the opportunity must realize that “productivity and cost reduction” will be the holy grail and that flexibility of response to the individual circumstances of each sale (type) will be a must.
The heart of e-commerce will be well exercised logistics based upon immediate information for and from all parties.
E. No Published Master Plan
The level of research permitted by this short study did not uncover a fully delineated master plan for multi company collaboration under e-com. Models developed prior to this past year saw a linear approach whereby companies were connected via EDI gateways in a linear fashion. The job handoff was seen as electronic, but static in nature.
F. Best Guess: Ultimate E-com Scenario
1. The e-com system talks directly to each function of the business process. Merchant, Financier, Marketer, Customer, Manufacturer, Warehouser, Distributor, Pick&Packer, Customer Servicer, Carrier and Home Deliverer. We can expect to see a few new functions and some renaming of the old.
2. .Theoretically (from the business side), each function in the retail, BtoB and wholesale process can be outsourced.
3. The spoke model returns; not as a model for a single company, but as a logistics model for the entire business community. The software acting as interlocutor for the business functions that initiate and carry out all the necessary operations.
4. One To One marketing pits the e-com system directly against the customers. Their wants and expectations, their approbations and disappointments with our services and products will be captured and become part of the e-com decision making process.
G. The Economies Of E-Com
The economies of e-com stem from everyone’s ability to better plan and respond to opportunities and problems as they occur. The pick&pack function, like all other functions, will be purchased on price and efficiency. This does not mean pricing that makes us slaves to the system. Costs are public knowledge. Profit is mandatory.
The real economies of e-com come from the savings in costly business actions not taken.
The profits of e-com are a function of the efficiency of what is done and the increased throughput of all e-com operations.
II. What Do We Do In The Mean Time?
Take a Vacation in Hawaii?
A. Decide A Course Of Action
1. Wait And See.
2. Be Proactive
B. If We Want to be Proactive
1. Anticipate The Logistics Opportunity
2. Get Into The Business
3. Get out with the movers and shakers
4. Be part of the industry leadership and collaboration that must take place before E-com is a reality.
5. Look For Partners
a. Short Term
Instead of looking for pick&pack clients in the merchant population, teaming up with manufacturers might prove productive.
Consequently many manufacturers have outsourced warehouse and distribution functions altogether, shifting the new retailer requirements for inventory management and order processing over to third-party warehouse/distribution providers who also supply the logistics services as well.
If the manufacture have linked up with independent warehouse/distribution providers, floating pick&pack units would be plausible and more in line with the long term e-com picture.
b. Long Term
Long term partners will be those companies that also see and anticipate the logistical opportunities of e-com. These organizations will not be found on the company web page. They will be found by CEO’s, Board Chairmen, Presidents, and industry leaders working outside the company framework.
1. The term e-tailing applies to the basic merchant ability to present and sell his or her products on the web. It is the precursor to e-commerce but reflects the switch from bricks and mortar selling to electronic selling.
2. Orders are being taken on the web but fulfillment is still functioning under standard old fulfillment models
3. There is a wide variety of e-tail software. None is fully developed. From software vendor to vendor, continuity of function and design is not really apparent except for the concept of “shopping carts” and security of credit card processing..
4. Currently, the big players are making their bets on control of visitor portals to the web and to shopping.
5. Major merchants are spending big bucks being the first ones there.
6. E-tailing is showing some signs of profitability, but the big profits are down the road in full blown e-commerce.
7. The Yahoo Shopping Mall is not typical. Only a few malls take, collect and download the orders to the merchant.
8. Most Web merchants have their own E-Commerce Software and use portals and malls to take orders.
9. Gov’t regulation and taxes on e-commerce is the talk in every state legislature. Government involvement is on the way.
10. There probably is some business opportunity in offering pick&pack services to the current web merchant population, but targeting and finding suitable merchants will not be easy, and, in the long term such activity might be seen as misdirected or wasted energy.
11. E-tailing alone is not now offering a long term opportunity for 3rd party fulfillment.
1. E-commerce is an industry based logistics system
2. E-com will go through at least 3 stages over 2.5 years.
3. E-com is based upon the web’s ability to be truly visitor interactive.
4. Broadband (within 4 years) is the next telecommunications breakthrough that will give the web better and faster multi media effects and make the web truly interactive.
5. Pick&Pack will continue to be an independent business opportunity, however, the context of the opportunity will change dramatically under E-com.
6. The Pick&Pack opportunity will be out there for any company able to perform fulfillment services and attach to the web. This includes traditional catalog pick&pack companies and any distribution company that wants to spin off or simply sell its e-comized pick&pack services.
7. Company differentiation will be based upon the ability to better operate each function by taking advantage of the e-com logistical software.
8. The E-Com field will continue to be entrepreneurial.
9. Ultimate E-com Software is not yet available.
PART B: Definition of The Business & The Plan
Awaiting permission to proceed