Small businesses that rely on FedEx Corp. for shipping soon will be able to get their Internet commerce services from the same well-known brand.
Last Monday, the $18 billion logistics and shipping giant announced a partnership with Orbit Commerce Inc. to provide Internet commerce services on a rental basis. The service, called FedEx eCommerce Solutions, targets compa nies with 100 or fewer employees. From the FedEx site, users will be able to design a business site, produce a cata log, settle transactions, initiate shipping and notify buyers when shipment has occurred. The offering is aimed at both business-to-consumer and b-to-b firms.
Yet FedEx and Orbit face several hurdles. For starters, FedEx is late to the party. Web portals such as Yahoo! have for some time offered store-building services, as does nearly every Internet service provider. Closer to home, com petitor United Parcel Service of America has provided e-commerce services on its Web site since 1997, through vendors Harbinger Corp. and IBM Corp.Built-in shipping
Like UPS, FedEx views these e-commerce services as a means to ensure that Web sites have shipping components built in, said Jim Kelleher, senior securities analyst with Argus Research. With these components, a Web site is automatically tied to FedEx scheduling, shipping and payment.
Last year, Kelleher noted, FedEx announced plans to beef up its FedEx Ground service, designed for b-to-b traders. Also last year, it launched FedEx Home service, designed for business-to-consumer companies, to compete directly with UPS and the U.S. Postal Service. By providing Internet e-commerce services, where ground shipping is king, FedEx hopes to support its expansion plan.
"They should stick to their knitting,'' said a skeptical Kelleher. "FedEx has a lot of investment in priority shipping, and they are trying to build a brand for their ground business. They need to execute on that plan before they start competing with Web-hosting companies.''
Chicago-based Orbit, which will handle the site hosting, has created software that allows businesses to quickly create a home page, populate a catalog and transact business. It already has signed similar partnerships with Cincinnati Bell, InfoUSA and ProdigyBiz.
Neither FedEx nor Orbit would comment on the financial terms, but other businesses that license Orbit pay anywhere between $20,000 and $200,000 monthly, depending on the number of subscribers and the level of complexity of fered.
"We need to partner with trusted third parties,'' Orbit CEO Paul Reilly said. "Small businesses want the same fully integrated operations as large businesses. This will be integrated tightly with FedEx.''
Plans are in the works to expand the FedEx platform to include b-to-b customer relationship management and ac counting systems under the site's umbrella of services, which will format data using XML (extensible markup lan guage, a technology that will make it relatively simple for businesses to add on new applications as they become available, Reilly said.
Although late to market, one advantage the FedEx-Orbit alliance has is marketing reach.
The week of June 5, FedEx's salesforce began to promote FedEx eCommerce Solutions services to some of the more than 2.5 million businesses with electronic links to the shipping company. An integrated marketing campaign to support the service, which will include direct mail, Internet and print advertising, is being developed, according to Karen Rogers, managing director of Federal Express.com marketing.
One experienced Orbit customer says the services can have a big impact on b-to-b. John MacDonald, president of Tri-State Chemicals, a manufacturer of semi-truck cleaning products, attributes an e-commerce site serviced by InfoUSA and hosted by Orbit with landing a $1.7 million contract this month.
MacDonald launched the site earlier this year, after noticing that only one of about 100 competitors in his industry had a Web presence. While Tri-State can handle Internet orders, the marketing value of the system is paramount, said MacDonald, who pays InfoUSA a $100 monthly fee for its Orbit-powered site.
"Our typical account is $500,000 annually and comes from people behind locked doors,'' he said. "When they click on our Web site, it means they are actively looking for something. The salesperson isn't bugging them. It basi cally prepares the salesperson for an easier sale.''