WebStack's Blog focuses on the use of syndicated e-commerce networks as sales channels: Vertical networks (manufacturers, distributors, and dealers) and horizontal networks (malls, service plazas, and subcontractor teams). We will discuss the why's, how's and when's.
If you have decided that building a syndicated e-commerce service in-house is not a good use of your corporate IT department, you will need a good partner with which to work on an outsourcing basis. There are some firms that can offer this capability. Here are some keys for finding a good one.
The firm's core competency should be e-commerce. Good web design skills are essential but insufficient. Ask to see their e-commerce portfolio and find out if they have ever syndicated any of their design work. Many designers and developers will feel unfulfilled creatively if they are asked to work from templates.
A good syndication partner will bring along a great hosting company with excellent credentials for reliability an security.
The partner should have good "processes" for duplicating multiple websites in short periods of time. After all, if a manufacturer has 1000 dealers, no one wants to be number 954 if the production rate is 5 stores per month. The metaphor for producing syndicated e-commerce is more "assembly line" than "hand made". The partner should be capable of assembling an on-line group of workers that include web designers, programmers, system administrators, network administrators, database administrators, security specialists and data entry technicians. These resources may be disbursed, but brought together and managed over the Internet.
The prospective partner must have someone with experience in applying business models to e-commerce technology. You may have such a person in your company. If so, he/she may be the perfect project manager.
It will take some searching to find the right partner, but in the end remember that you are entrusting your channel partner relationships and online business success to a third party. They must be worthy!
The next blog: Off the shelf software or new development?
If you are thinking that syndicated e-commerce might be the thing for your company, one of the decisions that you will face will be to whether to attempt to do this yourself, or to outsource it to a specialty firm. Here are the factors to consider:
1.Do you have the in-house expertise necessary to build and support a large number (>100) of e-commerce sites and their owners? The support is going to have to be consistent with the relationships that you have with your best affiliates. The idea is to improve the relationships, not destroy them.
2. Do you have the necessary IT infrastructure to maintain and administer 100 (or a thousand) e-commerce websites. Is it secure enough for PCI transactions? Can your bandwidth carry the traffic?
3. Do you have the type of corporate culture that will support daily interactions with affiliates who are less technically knowledgeable than your IT staff? Or will they grow weary of the constant need to update catalogs and promotions, or the "impatient" questions regarding traffic generation and page ranking.
4. Do you want to include a "fulfillment" capability direct-to-end users that will enable drop-ship from your facility.
5. Do you have creative design people in-house that can keep the websites fresh and up to date with the evolving Internet media like Facebook, Twitter and blogs.?
6. Will the potential revenue stream be large enough to justify acquiring these capabilities?
I have a sneaking suspicion that the honest answer for most companies will be a resounding, "We don't want to redirect our resources to this type of enterprise. This is not who we are." Of course not. But, nevertheless, your sales channel members are being seriously hampered by not being able to do-it-themselves. The good news is, "There are good companies that are willing and able to take on this challenge as your partner."
The next blog: How to pick a partner.
So, I've started this blog and now it seems I need to find things to say. Ok, how about, "who are the businesses that would make good candidates for such a model?" It turns out that there are those that sponsor a syndicated network an those that subscribe to such a network.
The service sponsors are those that have a business affiliation with a significant number of other businesses, usually smaller than the sponsors. These smaller businesses are typically distributors, dealers, or agents that belong to the sales channel of the sponsor (you might imagine a lawnmower manufacturer (1) with regional distributors (10) and local dealers (3000) in most cities and towns across America).
In the typical situation, the manufacturer has a marketing department and an information technology department. And, the manufacturer has a nice, fancy website that is maintained by an internal web team or their advertising agency of record. There is strong temptation/incentives to enable the manufacturer's website to sell their lawnmowers online. And by cutting out the middle man, the lawnmowers can be sold more competitively. Good for them - right? Not so much!
Then, at the end of the sales channel, there are the dealers. These dealers are typically small businesses with no, or small, marketing staffs. They have no information technology in-house - maybe a part-time consultant that keeps their computers running. So they resort to Internet website solutions that are designed and administered locally without the content expertise (lawnmowers) and digital assets (marketing copy and images) of the manufacturer. In fact, the dealers' lack of Internet marketing skills is one of the manufacturer's primary concern with the dealers' online presence.
Here is the problem:
1. The dealers' independently created websites put the manufacturer's brand at risk if the lawnmower images are distorted or out of date or the copy makes extravagant claims about cost, performance or warranty. There is no continuity to the marketing message.
2. On the other hand, the dealers resent the manufacturer going after their customers online with lower prices than they can sell the lawnmowers in their local retail shop. They are, after all, the business with the customers and they like to sell lawnmowers as well as service them.
And, here is the solution:
As in most industries, the sales channel members depend upon the manufacturer to set the marketing message and enable the advertising through photography and other media. Then they co-op the cost with the distributors and the dealers - think "billboards". It turns out that the same model holds together very well with the Internet by using syndicated e-commerce.
With a syndicated e-commerce network, the manufacturer provides their expertise in online marketing, information technology and product content to build a conceptual website model for their sales channel partners. From this model, custom stores can be co-branded for every distributor and dealer in the channel. The manufacturer's catalog can be centrally maintained. The cost can be shared through the manufacturer's co-op program and the overall cost greatly reduced while the manufacturer's products online presence is spread across the nation through 3000 localized web sites.
The manufacturers keep their dealers happy, and the dealers keep their customers happy!
The next blog: in-house or outsource
There is special form of e-commerce networks that I classify as syndicated e-commerce. Actually, it as more of a model for deploying e-commerce than an actual network itself, as you will see.
First of all, a syndicated e-commerce network requires a sponsoring agency. This agency can be a manufacturer, a distributor, a professional asociation, or any group of affiliates that share a common commercial purpose. And, the sponsoring agency must have a significant number of affiliates (members, sales partners, agents, etc.) who share a common set of e-commerce objectives.
A sponsor takes the lead in providing the online marketing expertise and developing the requirements for the e-commerce enterprise. The purpose of the syndicated approach to e-commerce is to share the reduced cost benefits with the affiliates, such as:
The fundamental idea behind syndicated e-commerce is that a sponsor can work with a web developer to enable its partner/members enjoy a professional online presence and its commercial benefits for greatly reduced costs without having to hire and manage the expertise themselves.
I have been working with this type of online syndication for a number of years and have been lucky to have worked with excellent sponsors. I will try to share what I have learned about syndicated e-commerce as I see what level of interest and questions the subject generates.
Please feel free to jump in with your comments an ideas. You can reach me at email@example.com