It's a scenario that is only possible in the world of e-commerce: Kim O'Neill's online business generates some $3 million in annual revenue, but holds no inventory.
As the proprietor of PCSound, a retailer of computer gear like printers and monitors, he simply takes orders through his site, then routes them to his wholesalers, who drop ship to his customers. So he saves not only the expense of storing his products, but the time -- and hassle -- of having to ship them.
"We don't have to warehouse or pack and ship anything," O'Neill says. "We can spend more time serving our customers."
And the distributors deliver quickly. By his account, 90 percent of his orders are delivered in one to two business days. O'Neill uses three distributors on a daily basis, placing orders with them constantly, with two more wholesalers as back-up suppliers.
But what keeps customers coming to him instead of going to his distributors? The distributors don't sell to the general public.
In fact, says O'Neill, "if you go to Dell.com and buy a Lexmark printer, it will come out of one of the same warehouses that we use." If a customer buys from the Dell site, the box will ship with a Dell logo, he says, "and it's the same with us -- they'll ship it out with our logo on it."
High Technology: The Phone
But of course if PCSound was just an order router -- if it provided its customers with no additional value -- it likely would not have remained in business since 1997. O'Neill works to gain competitive advantage by offering the best in customer service.
This is particularly true of his regular customers, like NASA. "If NASA was to order something this afternoon and they needed it priority overnight, we actually make sure it's delivered," he says. "We don't just place the order, we follow it in FedEx."
For rapid response to any customer problem, PCSound offers a toll-free number on its site. "We'll help them with the return process, get a new one out right away -- we try to bend over backwards for them." A Yahoo! Store, PCSound has earned the highest customer rating of five-stars, O'Neill says.
At one point, PCSound set up a side site without listing a toll-free number. A month later O'Neill decided to add the number. "Our sales increased from about two percent of visitors actually purchasing to three percent making a purchase."
This did not increase phone orders, however. "Just having that toll-free number was somehow comforting to customers."
A (Second) Yahoo! Store
O'Neill has a high regard for the Yahoo! platform, which he says offers great support for e-tailers.
"I would encourage anyone starting off to use Yahoo!," he says. "There's not a whole lot of bells and whistles, but I've never had a customer call me looking for bells and whistles."
As a marketing technique, O'Neill opened a second Yahoo! store, selling products related to his original store. He had heard that some Yahoo! stores owners were making copies of their stores with new names and URLs, then posting both sites. "They found out that they were getting practically double the revenue."
O'Neill's second store, TheSuppliesRoom, sells computer labels -- an item that would easily fit into his first store. However, opening the second store has meant more total shoppers, he says. "It's worked well for us."
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| PCSound.com relies on partners for warehousing and shipping. |
| Vital Statistics |
| Name: |
PCSound.com & TheSuppliesRoom.com |
| Founded: | 1997 |
| Annual sales/revenues: | $3 million |
| Content management/storefront system: | Yahoo! Merchant Solutions |
| Database backend: | Yahoo! Merchant Solutions |
| Hosting Provider: | Astrodawg.com |
| Visitor analytics system: | Yahoo! Merchant Solutions |
| Payment Solutions: | Authorize.net |
| Number of employees: | 4 |
| Number of tech staff: | 0 |
| Key strategies: | • Outsource distribution
• Focus on customer service techniques, like a toll-free number
• For beginning e-commerce entrepreneurs, pick simplicity over features in choosing a storefront system. |
James Maguire is a contributor to eCommerce-Guide.com. His column appears every Friday.
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