New service companies offer quick access to online sales

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Last year, Ginger Mochetta found a solution to what seemed like an intractable problem.

Philips Mobile Computing, her Campbell, Calif., employer, needed a new sales channel for its Velo and Nino handheld personal computers. Her bosses gave her 30 days to deliver a total e-commerce solution.

So she called David Toub, president of Internet Commerce Solutions Corp., Nashua, N.H., one of a new class of companies known as commerce service providers, or CSPs.

To make a long story short, Mr. Toub got the e-commerce site up and running by the deadline and made Ms. Mochetta a heroine.

"This was rapid development at a very low entry cost," Ms. Mochetta says. "We recouped our investment in the first week."

Providing Web support

Commerce service providers like Internet Commerce Solutions aren't Web hosts, and they don't sell bandwidth; they provide support for Web stores. In addition to transaction processing, they can screen transactions for possible fraud.

In some cases, commerce service providers also offer help in managing supply chains and sales channels, and some can even warehouse products and fill orders.

Plus, they can equip companies with e-commerce sites at a low expense. Internet Commerce Solutions' price to start a new account can run less than $500, Mr. Toub says, and small stores can pay as little as $125 a month for the service.

Internet Commerce Solutions is not the only company taking advantage of this new opportunity. NetSales of Overland Park, Kan., is another. NetSales was founded in 1995 to manage software stores for companies such as CompuServe, now owned by America Online. Initially, it handled transactions and downloaded the products to users from its servers.

Now, says Corrine Smith, VP-marketing for NetSales, the company has expanded into computer hardware sales and is entering general e-commerce.

To handle these new areas, it has built a telephone call center, a support service that customers can private label for their order-fulfillment services.

The company has also unbundled its software offerings, so clients can use it for corporate purchasing or managing sales channels. NetSales can host stores, handle transactions with fraud screens, handle export control regulations and tax computation, or perform fulfillment and customer service functions.

Already, Ms. Smith says, half her company's sales come from computer hardware, not software.

"Now, we want to offer general electronic commerce," with warehousing and fulfillment, she says.

CSPs find niches

Commerce service providers are moving away from offering just a Web site "buy" button to helping companies complete the value chain, says Mr. Toub.

"There's presentation, order management, the payment process, logistics and shipment," all of which must integrate with the Web, he says.

Some providers are working to offer complete solutions, while others are offering "best of breed" services in specific areas such as order management.

"We do order management and linkages to the supply chain, and we're integrating with other players while providing one face to the merchant," he says.

That's important in the business-to-business space, Mr. Toub says, explaining, "Most b-to-b companies have order management systems. The issue is integrating with legacy computers."

Logistics and fulfillment must also be integrated along the way, which is not easy, he says.

"B-to-b guys will take an order, and on the back end they'll parse it out in many directions," he says. "Those who build to order may have to parse that order out to multiple suppliers. Doing that is complex."

Still, Mr. Toub says, that's where service providers can earn their way over the long run.

For example, he says, a maker of eyeglass cases may not want to take an order unless it has stock on hand. Internet Commerce Solutions can move information from the warehouse to the Web site, switching displays on Web pages when stocks fall below a designated level.

A calling to order

A new class of companies is also emerging to help service providers deal with the problems of order management. One of these is OrderTrust L.L.C. of Lowell, Mass.

OrderTrust CEO Jim Daniell began offering his services in March, having built them to help Delta Air Lines' SkyMall deliver orders from multiple catalogs since 1995.

"We're an order processing company," Mr. Daniell says. "A CSP runs your store. For merchants with sophisticated marketing and products coming from multiple locations, we can sync up all that."

The function is important for the merchant and his commerce service provider, he says.

"From the moment you hit enter, the lifetime value of your customer to you is at risk," he says. "You have to make sure that items are in stock and notify both the supply chain and the customer."

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