Online resellers that made names for themselves with strong marketing campaigns now are turning their attention to solidifying their back-end systems and their relationships with distributors.
"To satisfy customers, [online resellers] are going to have to be able to deliver on goods," said Gordon Jones, chief information officer at Beyond.com Inc. a Santa Clara, Calif.-based e-commerce service provider. "That puts a lot more pressure on inventory management."
In some cases, as with Computers4sure.com Inc., Norwalk, Conn., online resellers are decreasing their need to rely on a single product supplier by increasing the number of distributors with which they partner.
Computer4Sure.com is working on tighter integration with distributors so that it can better manage realtime inventory information from multiple distributors, said Bruce Martin, the company's chief executive.
"We are taking orders 24 hours a day and we need more frequent feedback," Martin said. "We've done a couple of things. Not only do we source from Ingram Micro [Inc.], Tech Data [Corp.] and two or three other distributors, we also have our own warehouse where we stock products that it looks like distributors won't have enough of," said Martin.
Tighter integration with suppliers, however, requires some work, Martin said. "You can't get each one of these suppliers to fit your systems. We have to tweak their systems to fit our own," he said.
Online reseller Firstsource.com, Santa Ana, Calif., also concluded that multiple relationships with distributors is the way to go, said John Walsh, the company's vice president of merchandising. Firstsource.com initially formed relationships with big-name distributors such as Ingram Micro, Merisel Inc. and Tech Data.
"We've long had these multiple relationships with distributors," Walsh said. "We started with [those three], but added new distributors as they became available."
Now, Firstsource also has distribution relationships with Synnex Information Technologies Inc., Pinacor Inc. and Inacom Corp. in the IT space, and a few others in the office-product space, Walsh said.
Firstsource Chief Executive David Hagan said his company's relationships with suppliers allow it to keep an eye on each distributor's inventory.
"We make sure the product gets fulfilled," said Hagan. "The customer knows when they are going to get it. If for any reason they don't get it, we track back through
our system to find out why [not]."
Firstsource's computer system, called Epic, offers product and pricing updates via electronic data interchange (EDI) links and product availability updates via API for all its major distributors in North America.
"Our experience has been extremely successful," Walsh said. "Our model in terms of multisourcing lends itself well to the new market paradigm, which is direct fulfillment [from the distributor] and virtual inventories. We're better prepared to operate in this environment than most of our competitors."
Firstsource has more than 50,000 active customers, and its Web site gets close to 12 million hits per month, Belzer said.
"The range of products and services that customers are purchasing via the Web is significantly increasing," Belzer said. "That's why we have different storefronts at our Web site. Our focus is on meeting the needs of small and medium businesses that are using the Internet as a strategic tool in their business," he said. "Shopping on the Internet is becoming integral to the procurement process. They want more customization and services than a consumer site can offer."
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