So You Want an E-Commerce Site?

While many businesses have found e-commerce to be a key driver for growth, others have struggled to gain a foothold in the vast marketplace the Internet has created.

Mountain Gear Inc., a high-end outdoor gear and clothing retailer here, is an example of a Spokane business that has figured

out how to take advantage of the retail industry's brave new online frontier. The company's mail-order and Internet sales volumes have scaled the kind of heights its customers achieve, growing between 25 percent and 35 percent annually for the past few years, to the point they now make up roughly 80 percent of its overall revenues, says Vice President Dave Noonan.

That's easier said than done. Before launching an e-commerce presents of their own, business owners should know beforehand that sustaining a vibrant Internet business requires continually evaluating and fine-tuning a Web site, Noonan says. It also involves responding quickly to advancements in technology, and meeting consumers' increasingly high expectations for an online shopping experience, he says.

"The advantage of doing Internet business is you have a broader market," Noonan says. "But it isn't like 'Field of Dreams,' because just because you build it doesn't mean they'll come."

Before developing a Web site, business owners should have a clear vision of how they plan to integrate that site into their overall business, rather than view it as a separate entity, he says.

"Some people will get a Web site and then just leave it alone," Noonan says. "You should start out by saying, 'How am I going to use the Web site as a tool to build my overall business?

Business owners also should devise a fulfillment system before launching a Web site. While this step might seem to be a no-brainer, many of the "dot bombs" that fell apart eartier this decade did so because they hadn't mastered directtoconsumer shipping, he asserts.

"I wouldn't start an e-commerce site until I figured out how to ship my product and evaluated the size of my marketplace," he says. "If you can't ship efficiently, then it doesn't matter how great your Web site can take an order."

If a business has been used to shipping large volumes of products to a single customer, such as a distributor or retail outlet, it would have to adjust its packaging, warehouse labor costs, shipping costs, and inventory levels to serve individuals who buy over the Internet, since shipping individual items often requires greater speed and flexibility than shipping larger orders.

When it launched its Web site in 1995, Mountain Gear took advantage of the fulfillment system it had developed earlier for its catalog business, he says.

When a customer orders a product online, the information is transmitted electronically to the company's fulfillment department, where employees package the product, verify the customer's credit card information, then ship the product via FedEx. If a problem arises with a customer's order, the system automatically sends an e-mail to the customer service department. If the system isn't able to send information to the fulfillment department, it sends an e-mail to employees in fulfillment. If the problem isn't fixed, the system calls employees on cell phones and leaves an automated message.

Inventory information on the company's Web site is updated automatically once every 15 minutes. When a customer clicks on a specific product, a drop-down box appears, on which he or she can click to view approximate delivery times for each color and size of the product, based on the inventory information contained in the system and the company's shipping schedules.

When Mountain Gear redesigned its Web site for the first time in 2001, much of the work involved improving the link between the Web site and the company's back-end operations, Noonan says. Making sure its fulfillment system runs smoothly and efficiently is increasingly important as consumers demand faster deliveries, he says.

This trend in demand can be seen most acutely during the holiday season, he says. For the past several years, the company's peak order days during the holidays have edged closer to Christmas Day, because customers expect that retailers can ship their items to them within a day or two. They also want to be able to track the status of their order, a feature that Mountain Gear likely will add in the future.

"We as an industry have built this expectation up for quick delivery, and now we have to meet that expectation:' Noonan says. "You have to be nimble enough to keep up, or you don't measure up."

The design

After devising a fulfillment system, business owners should design a home page for their Web site, he says. The home page should establish a business' credibility and highlight the products or services in which it specializes, to separate it from its competitors.

The Web site's product pages should include pictures of and detailed information about each product, including its availability and approximate delivery time, he says. Mountain Gear is looking at improving its product pages so that customers can rotate pictures of products 360 degrees for enhanced viewing.

"Consumers are looking for new shopping experiences," he says.

Mountain Gear employees who design its catalog also help design its web pages, Noonan says. The company also has hired outside consultants to help with Web-site design. If Mountain Gear didn't have designers already in-house, it likely would have hired out that work, because Website design is crucial to attracting and retaining customers, he says.

The company typically follows the manufacturer's suggested retail price when pricing its online products, he says. Unlike other segments of the retail industry, such as electronics, outdoor gear and clothing isn't as price sensitive, which makes it easier to determine prices, Noonan says.

Before launching a Web site, a business also has to implement online shopping cart and checkout tools, which allow customers to add products to their "cart" and then "check out" of the Web site by paying for the goods they have collected in their cart.

When Mountain Gear's Web site underwent a second redesign, in 2005, it revamped its checkout system after discovering that 48 percent of the visitors to its site left during the checkout process, he says. It changed the way the Web site collected customer's e-mail addresses, added delivery guarantees, and simplified the billing form that customers have to fill out, among other changes. Now, only 20 percent of visitors drop out of the process when checking out, he says.

Many of the changes during that redesign related to the site's presentation, ease of navigation, and search functions, he says. The company added a navigation bar on the home page so that customers can browse by category such as product type or brand. It also added what's called a current-path feature, so that customers can see the progression of the pages they've browsed as they move deeper into the Web site.

"With broadband and the speed at which people can search a site, they don't mind clicking on a number of links as long as they get the sense they're making progress," Noonan says.

Looking ahead, Mountain Gear is considering how to take advantage of the social networking Web sites, such as You Tube and My Space, that have grown wildly in popularity in recent years, he says. Such sites provide prime advertising opportunities for Internet retailers, if they're willing to invest in new marketing channels.

"We're looking at how to get a presence there in a way that's constructive for our business," Noonan says.

Before launching a Web site, business owners also should implement software that tracks consumer behavior on their site, he says. Such programs, referred to as analytics programs, can help a business discover what consumers don't like about the site so the business can improve it.

Mountain Gear pays for its consumer tracking service, called HBX Analytics, he says. The program collects information, such as how many consumers visit each page, at what point during the search process they leave the site, and the percentage of people who visit the site who buy a product during their visit, he says. The program generates weekly reports about consumer activity that the company distributes to its employees.

"Analytics is what drives our efforts" in improving the Web site, he says. "It's really a critical part of the whole process, because before you start spending money to drive people to the site, you first have to collect and analyze data to see if it works."

The company also uses tools such as product reviews, in which customers can post comments about products they've bought, as well as surveys customers can fill out online about their shopping experience.

"Because there is so much information available on the Internet, you learn things about customers that you wouldn't otherwise" Noonan says. "As you gather, understand, and use that information, you become a better businessperson."

Infrastructure

Although e-commerce can boost a business' sales, businesses should be aware that the infrastructure investment required to run a Web site can be hefty, he says. For example, Mountain Gear currently is buying more servers to keep up with demand on its network. It houses those servers in a location in the Seattle area.

"When you're buying servers, it's not like buying PCs," Noonan says. "We're talking tens of thousands of dollars." The software and software licenses required to operate a Web site also represent a significant investment, he says. Although Mountain Gear has bought the necessary software to run its site on its own, businesses also can hire companies to run their Web site for them, he says.

A business also needs to have employees or hire outside consultants to handle information-technology (IT) problems that arise with the site. Mountain Gear has about five IT employees dedicated to its Web site, he says.

"Make sure you're ready to support your site, but also start out with less and let business growth justify added expenses," Noonan says.