15 Costly Consequences of 'Low-Cost' Ecommerce Websites

The perception is that you can build a good-looking website for $10-50 per month. The reality is the inexpensive website winds up being very costly.

The Ecommerce Value of Product Information Management (PIM)

A Product Information Manager, or PIM, can greatly reduce the processing time and cost associated with orders.

When a PIM is integrated with ecommerce websites, product information is accurate, centralized and can be automatically published to the websites. This greatly increasies the efficiency and reduces the processing labor associated with ecommerce.

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The perception is that you can build a good-looking $10-50 per month website with a common, popular content management system and then watch hundreds of thousands of dollars of sales roll in.

The reality is there is much more to a successful ecommerce company than just a pretty face. Even if the inexpensive, aesthetically pleasing website were to generate hundreds of thousands of dollars in orders, it would quickly become virtually impossible to manage the manual data re-entry, fulfillment, shipping, billing, and more without integration.

The reality is the inexpensive website winds up being very costly. A cheap website from a populist provider can look good and receive orders. But that’s about it. Once the cart is submitted, the real work begins. And most of it is work – and cost – that would be avoided with an integrated website at a comparatively small extra monthly investment.

15 Costly Consequences of 'Low-Cost' Ecommerce Websites

Once you account for the time and labor of the following, the "inexpensive" website suddenly becomes very expensive:

Order Considerations

1. Communicating orders (and potentially customizations): Without integration, it costs time and labor to re-key orders, and more time and labor if the manual process leads to mistakes. Across millions of dollars of orders, it becomes wildly cost-prohibitive if not outright unfeasible. With integration, however, the cart information can seamlessly flow into the back office as a sales order.

2. Creating the Purchase Orders: Without integration, it costs time and labor to re-key sales order information onto purchase orders and again, in time and labor, very expensive or unfeasible for anyone doing large volumes of business. With integration, however, the cart information that seamlessly became the sales order now can now seamlessly become the purchase order.

3. Communicating Tracking Numbers and Order Status: One thing that customers love from big ecommerce is that they always know where their order stands. From the moment the order is placed, you can see blow by blow as it comes close and closer to delivery. Rest assured, the Amazons and the Wal-Marts of the world are not delivering that information manually. It takes integration to provide tracking and order status information for any significant volume of orders.

4. Processing Credit Cards: Processing payments is necessary for almost any modern ecommerce website. That alone will require integration, at least with a third-party payment card processor, for significant order volumes. The alternative, without integration, would be to collect payment card information either from an online form or by phone, which opens a whole host of security and PCI compliance concerns. Merely receiving payment card data is a liability that heightens your PCI requirements.

5. Tracking and Managing Prepayments: Without integration, tracking and managing pre-payments relies heavily on manual record keeping or, worse, memory alone, inviting errors, inaccurate billing and potential payment disputes. Integration allows prepayments not only to be recorded in Receivables, but to tie that record back to the Sales Order itself, as well as the Customer on the order, or even the individual Contact from the Customer for complete visibility to who paid what and when.

Operations Considerations

1. Managing Inventory levels: Inventory availability is among the information that buyers most often want to know when they’re ready to buy. Without integration, inventory needs to be keyed onto the website manually (and will never be up to date) or exchanged manually via phone calls and emails. With integration, inventory levels can be automatically published to the website in real time.

2. Managing Customer Owned Inventory: The difficulties of managing inventory become even more difficult once introducing third-party inventory like customer-owned inventory or consignment scenarios. Without integration, it’s manual and error prone. With integration, it can be accurately managed through automation.

3. Picking: Without integration, information from the cart or sales order needs to be re-keyed manually, and hopefully accurately, onto a pick list for a warehouse worker to follow. With integration, the pick list can be automatically generated with data from the cart or order.

4. Shipping: Without integration, shipping rates need to be entered manually on the website, taking into account a wide range of factors including weight, dimensions, origin, destination, carrier, shipping rules, and more. For a website doing millions of dollars in sales, which presumably has a wide range of products, there’s virtually no way to manually keep up with all the shipping variables for all of the products. With integration, shipping estimates can be automatically published to the website and communicated to the customer in the checkout sequence.

5. Tracking Promotions Codes and Discounts: It’s one thing to provide a discount code or promotion code that your customer can enter on the website. Now how is it going to be applied, enforced, tracked, and accurately applied to billing and accounting?

Corporate Customer Considerations

1. Supporting multiple addresses and contacts: Manually entering addresses and contacts for each order costs time and labor. Introducing multiple addresses and contacts adds new error opportunities, like shipping to a billing address. With integration, the correct address can be automatically applied.

2. Customer Invoicing Terms: Again, the cheap popular website may be able to recognize the customer by login but it would have no way to know the invoicing rules you set up for the customer in the back office.

3. Providing Customer Reports: Without integration, data needs to be re-entered from one step to the next, from order management to inventory to fulfillment to accounting and beyond, often across multiple systems. When it comes time collect the data into a usable report, the data can be all over the place in different formats, making the report time consuming to produce, if it can even be made accurately. With integration, the data lives in a single integrated system and be queried with ease.

4. Tracking Customer Budgets: In the business-to-business (B2B) space, customers often allot their purchasers budgets to use at your ecommerce website, such as for a company store. The third-party budgets, and how they’re applied for credit and accounting purposes, such as invoicing to customer budgets and cost centers, is tricky to manage without integration that automatically applies the budgets according to pre-defined rules.

5. Enforcing Customer Specific Pricing: Cheap popular websites are almost exclusively one size fits all when it comes to pricing. The website may be able to detect who the customer is via login. But without integration, it would have no way to know and apply the rules you have set up for the customer’s pricing in the back office.

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