During the recent holiday season, Internet businesses hoped to avoid the ghost of Christmas past–the 1998 horror show in which E-tailers ran out of some products, couldn’t ship others in time, and offered ghastly customer service overall. Many online companies have since spent large sums toward improving order management and fulfillment, but the task of integrating Web and legacy systems has proved to be, well, gruesome.
“A lot of companies still don’t have their Web sites connected to their back offices,” says Hollis Bischoff, senior program director for electronic business strategies for Meta Group Inc., an IT advisory firm. When a customer places an order at one of those sites, she says, a piece of paper is spit out that has to be reentered manually at the back end of the system. “What you have are two order- management systems,” says Bischoff.
That can create a painful situation for customers, as during the 1998 holiday season. “A customer would place an order at a Web site, only to find out five days later the online store was sold out,” recalls J.T. Kreager, president of SubmitOrder.com, in Columbus, Ohio. “That’s because the front-end Web site with all the nice pictures wasn’t linked to the nuts-and-bolts operation at the back end.”
Kreager’s company specializes in integrating both ends of an E-commerce operation. SubmitOrder.com provides not only integration between Web-site front end and fulfillment back end, but also phone support, payment verification, and pick, pack, and ship services (through its warehouse facilities in the Midwest).
A typical Submit-Order installation can take anywhere from 60 to 120 days to set up. The cost of an installation varies, Kreager says, but for a business doing $5 million in sales on the Web, annual costs would be about $1 million.
Indulge.com, an online fashion-accessories and cosmetics merchant, hired Kreager’s firm to create its Internet presence. “Not only did they have expertise in logistics and fulfillment, but they had a very Web-savvy technical team, which is unique among third- party providers out there,” says Gerry Brunk, vice president of operations.
Two other companies that provide a range of order-management and fulfillment solutions for Web merchants are Minnetonka, Minn.-based Fingerhut and Hanover Direct, in Weehawken, N.J.
Another company, OpenOrders, of Newton, Mass., sells Web-enabled catalog, order management, and fulfillment software suited for business- to-business as well as business-to-consumer transactions. Its software can do allocation of inventory as an order is being taken online, or inform a customer an item must be back-ordered and give the customer an estimated shipping date for the back-order. It will confirm by E-mail that an order has been taken and that an order has been shipped.
“We sell our software as a canned package so everyone doesn’t have to re-invent the wheel and spend the millions of dollars Amazon.com spent to develop its system,” says OpenOrders president and chief executive officer David Levitt. He says the software’s open architecture allows it to be quickly integrated with enterprise systems such as SAP and Oracle.
OpenOrders’s 20-plus customers include SkyMall Inc., a catalog merchandiser, and several online companies that take orders for Web merchants. Levitt estimates the average installation time for the OpenOrders suite is six to eight weeks. Installation costs run from $10,000 to $15,000. Licensing fees are transaction-based and fall as volume rises; for 500,000 annual transactions, the fee would be $75,000. Annual support and maintenance fees, which include future upgrades, run about 18 percent of licensing fees.
Other vendors that offer integrated order- management and fulfillment software for E- commerce include CommercialWare Inc., in Natick, Mass.; Delray Beach, Fla.-based Smith- Gardner & Associates Inc.; and Pandesic LLC, in Sunnyvale, Calif.