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E-Tailer's Digest                                                                                          October 1998

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George Matyjewicz

E-Tailer’s Digest is a free moderated discussion list on the Internet, where retailers in 40 countries worldwide discuss issues like...

  • Interaction with customers
  • Psychographics
  • Point of sale software solutions
  • Point of purchase displays
  • Security issues
  • Effective merchandising and open-to-buy
  • Mail order issues
  • Shipping and tax issues
  • Accounting and legal issues
  • Public relations
  • Promotions and advertising
  • On-line marketing
  • Differentiation
  • Doing business internationally
  • Effective web site design

We also include tips and pointers to articles and information of interest to retailers.

No-Show Software Vendor

You've just paid a fortune for software, there's a bug in the system, and when you go back to the vendor for help, you find he's gone out of business.   That's one of the issues raised in this month's digest, along with a shoplifting dilemma and the difficulties in selling wholesale and retail at the same time.

Caveat Emptor

Question:  "What do you do when   your software vendor goes out of business?"

Response from: Shawn Berry sherry(at)gers.com: Once the software vendor goes under, you can't really do much. You will have to use the software you purchased, without any new versions, fixes, bug patches for a period of time until the payback (ROI) has been met. This is usually 18 months minimum.

To avoid this mess in the first place, retailers must ask the right questions! Check the financials of your software provider -- revenue growth, profitability, longevity of profits, R & D spent for the last five years, financial backing, etc.. This can be  tough, as many software vendors are private companies, foreign based, or are just very tight lipped about their financials. What I do at my company is make everyone sign a non-disclosure statement and then open the books. My potential customer has the right to know my financial situation.

Also, I would check the schedule of the company's software releases. This is usually a function of R & D dollars spent and existing customers needs for modifications to the software. And be sure to read  your contracts carefully.   What is the language in regard to termination, assumptions, and future upgrades of the product?   What are the explicit guarantees offered by the software vendor? Can you get your money back or a portion of it?   Ask your lawyer to do a "what if our software provider goes under" review.

One last note, it seems that on the POS software side, the market is much more fragmented- with lots of tiny players out in the field. If POS software is their only offering, the risk factor is much greater.

Matyjewicz's input. If you can't see and understand financials of a software vendor, go someplace else. Too many software vendors are paying for their last install with your deposit. Contracts don’t necessarily help.  The best protection is self-sufficiency and a payment schedule that correlates with the implementation. Be certain you have the source code of the software, and that you are always ahead with payments, so that you could obtain somebody else’s help to complete the implementation.

 Forgive and Forget?

Question:  "A child of one of your best customers just shoplifted in your store. Your policy is to be hard on shoplifters, so what do you do?"

Response from Joe Dweck joedweck(at)aol.com: The best things to do is to retain the customer. Getting the customer to come in to your store was a very costly and difficult thing. Use this opportunity to reinforce his or her trust in you, not a reason to cause embarrassment or impart lessons. As long as the shoplifter is not a professional, he or she can turnaround their behavior and become a good customer. How would you like to be treated in the same position ?

Serving Two Masters

Question from: George george(at)litecosmetics.com: We sell to both wholesale and retail as developers and manufacturers of a small,  five product skin care line for extra sensitive skin. We sell retail on the internet  and by direct mail and we sell wholesale to worldwide distributors.  We are finding that we must provide more service and go to extra efforts to satisfy the wholesale customer. This is just the opposite of what we expected. If the wholesale customers ordered in large lots, it would be worth it, but we are experiencing wholesale orders closer to our minimums. As a relatively new company --- four years old--- we are considering some drastic changes. First increasing our wholesale minimums. Second, eliminating overseas orders to certain countries (from which we've had excessive claims of product not arriving) and expensive shipping costs.

Our wholesale costs were based on our retail costs (keystone). We are reevaluating this also. Our tests show that our retail prices are competitive and result in maximized sales.  So, needless to say, we treat our retail customers with respect and cater to them. Retail orders have priority for shipping with us; customers receive  their orders in less than five days after ordering. All customer e-mail is answered within 24 hours. (we get lots of skin problem questions).  How do we balance between retail and wholesale?

Matyjewicz’s input: This is always an issue with a company who caters to both the wholesale and retail markets. How do you protect your wholesale customers from consumers who are buying directly from you? Are wholesale customers buying minimums as a first order? Perhaps a solution would be to sell "wholesale" to retail, i.e., customers must by a minimum of three items at lower costs (less than retail, but more than wholesale).

 Bar Code Ins and Outs

Some of our members have requested information on how to register a company for bar coding -- not the software, but the procedure and organization. The Uniform Code Council (UCC) is the keeper of those numbers -- just like the telephone company if of your telephone numbers. You have to apply to the council for a number, then you can use UPC or EAN bar code labels if you are in general merchandise or fashion (different labels for groceries).  Bar coding is mandatory with most business-to-business (B2B) transactions, especially if you are using EDI. Then you also need a UCC128 label on the outside of the box for advanced shipping notices (ASN's).

T learn  more about bar coding and EDI, see the white paper entitled"All you ever wanted to know about EDI, but were afraid to ask" http://www.gapent.com/gap/white_papers/what_is_EDI.htm

The UCC also has home page http://www.uc-council.org:80/ucchp.htm


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GEORGE MATYJEWICZ is Chief Marketing Officer and a Partner at GAP Enterprises, Ltd. a management and marketing Solutioning ™ firm that assists retailers. He is a veteran of the Internet and the computer field, as well as a former retailer and the moderator of E-Tailer's Digest.  Matyjewicz can be reached at (201) 939-8533 Ext 821 or e-mail to georgem(at)gapent.com or write to him c/o G&DA, 51 Madison Ave,. New York, NY 10010

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