Outsourcing: let me count the ways : Page 2

Posted December 22, 1999

David Strom

David Strom

(Page 2 of 4)

Hosted catalogs

The advantage of using your ISP is that you have a single bill and solutions source. ISPs can offer built-in support for your entire storefront catalog and produce a turnkey operation. But these points can be a disadvantage if you don't particularly care for the solutions offered. The shopping cart may not support the number of items in your catalog, or the payment processing may not work with your merchant bank. Under these circumstances, you might want to investigate Evergreen Internet Inc.'s ECential service, designed for serious processing and hosting, along with catalog and inventory management. Often, for six-figure fees, Evergreen supports higher-end storefronts and charges about 10% of your total sales for fees.

Storefront service providers

Setting up an e-commerce site isn't for everyone, as I described in the previous article on payment technologies.. The hardest decision you'll have to face is whether or not to run your Web storefront in or out of house. As I mentioned in the checklist above, the key factor is how much existing Web-oriented scripting and programming talent you have on staff. Any Web storefront will require a great deal of Perl or VB scripting to get the various pieces working together.

If you don't have these skills or if you aren't comfortable with the level of your existing staff, then consider one of the storefront service providers. You also might consider these providers if you have an existing Web site and don't want to add e-commerce to this site but run something separately. There are dozens to choose from, including such reputable vendors as Yahoo! Inc., Amazon.com Inc., and Intel Corp. with its iCat division, along with smaller companies. Typical monthly fees are less than $100 for small catalogs of less than 50 items. These operators will set up and host your store's pages, organize your catalog, and send you e-mail when a customer makes a purchase; but that is about as far as they go. Yahoo! has a very easy-to-use system and also a very simple pricing structure that is based on the size of the catalog, with no extra processing fees. Others, such as Amazon.com's zShops, will include payment processing for an extra charge. But Amazon's fee schedule can add up to almost 10% of the purchase price!

Many of the providers offer 30-day free trials, and the time invested in setting up a simple test storefront can take from a few hours to a day's worth of time. A good place to start evaluating any of these storefront providers is the reports they produce on your visitors. Can you track orders and easily import this information into your existing customer systems? Do the reports show those visitors who didn't make any purchases? Can you produce time-series reports or reports by most popular items ordered?

These providers are good for first-time e-commerce store owners to gain experience setting up their catalogs and understanding the many different pieces needed to operate a storefront. They can also expose the weak areas in your own staffing and skills needs before you get into a larger e-commerce project down the road.

Address verification/fraud prevention

Once you have your storefront operating, the next steps are making sure your orders are from legitimate customers and taking measures to prevent fraud. Credit card issuers classify Internet transactions as "card not present transactions" (like postal mail orders and telephone orders). This means that you, as the merchant, are liable for all fraudulent transactions. A good starting place to understand the implications of fraud can be found on Yahoo's site.

There are several ways to fight fraud. If you make use of the PC-based point-of-sale systems mentioned in the previous article, they already come with some simple address verification systems (AVS) and credit card number-checking routines built in. Some of the service providers mentioned above, such as iCat, also offer AVS/fraud protection if you use their payment provider, ClearCommerce Corp.

But if your store becomes popular and you need more industrial-strength systems, then consider using either ClearCommerce directly for your payment processing or another provider such as CyberSource Corp. or Plug & Pay Technologies Inc. All of these vendors offer a series of services, including fraud screening, tax processing, fulfillment, and credit card payment processing. Their fraud screens use various automated routines to determine in real time whether a pending transaction could be cause for concern. If it is, then it is flagged for a human operator to intervene. Plug & Pay is less expensive than the others, but offers fewer features.

Customer support/relationship management

Putting up a Web site is more than just databases and catalogs. It is understanding what is important to your visitors and providing your existing customers with the right kinds of information when they need it and in a logical place on your site. A number of vendors have produced enhancements that enable better customer support, including automating lists of frequently asked questions (FAQs), personalization and navigation issues, and links to your call centers.

Lists of FAQs are usually static, dreary affairs that don't often receive much attention from Web site managers. But they can be a real asset to a corporation's Web site, by reflecting a dynamic user community with interactive suggestions and responses. One company specializing in this area is RightNow Technologies Inc., which will host your own FAQs and maintain the link. Its service includes a feedback mechanism, whereby each visitor is asked whether or not the question answered his or her query, and then factors this information in the next time a visitor comes with a similar question. To see an example of this kind of service, go to Ben and Jerry's site and ask about your favorite ice cream flavor. RightNow service starts at $20,000 for two years, and includes software updates and the initial upload of questions to populate the site.

TriVida Corp.'s Personalization Service detects and stores visitor behavior patterns and suggests places on your site to predict what that person is looking for. This is useful when you have a complex site with many different navigational branches and need a way to simplify its structure without eliminating much of the site content. Many vendors sell personalization software that you run on your own network. However, these products are complex and require many months of consulting time to set up. TriVida has a better solution and will host the personalization services on its site. All you need to do to add these personalization features is include a series of special HTML tags within your existing Web pages. These tags alert the services back at TriVida's site and set up the appropriate recommended links in real time. The service starts at $2,000 per month. There are additional charges depending on the number of links and visitors to your site, but the first three months of the service are free.

Another example of site enhancements is the ability to connect to a live call-center operator from a Web page. Cisco Systems Inc./WebLine Communications Corp. is one of many companies offering such services, which start at $1,500 per operator and can include integration into your e-mail customer response systems as well. To get an idea of how to use this system, go to LandsEnd's site and ask for help with your shopping needs.

E-mail outsourcing

Another place to consider outsourced services is in enterprise e-mail. E-mail is becoming a more critical resource, and corporations are finding out that maintaining a reliable system can be a challenge and/or expensive. If you are presently using a non-Internet system such as Notes or Exchange and are having problems keeping your servers online or the mail flowing, then you might want to consider using one of these services from companies such as Critical Path Inc. and USA.NET Inc.

This is exactly what United Airlines Inc. and the Los Angeles Times did, scrapping proprietary systems that were troublesome to maintain and going with these vendors to deliver e-mail to a wide portion of their end users. Typically, they charge a monthly fee per mailbox, such as $5, with discounts for hundreds or thousands of users. And if your communications needs go beyond just mailboxes for individuals, to discussion groups and maintaining customer mailing lists, then consider services such as eGroups Inc. You upload your address list and these companies maintain it and keep track of your mailings. They can set up discussion groups that anyone with a Web browser can participate in.

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