Slow and steady wins for many firms

When retailers jumped on the e-commerce bandwagon in the late 1990s, spinning off e-business units and loading up on bleeding-edge technologies, Milwaukee-based Master Lock Co. ignored the hype.

It wasn’t because the 80-year-old company refused to change its Old Economy ways. In fact, e-commerce has been on its master plan since 1999. IT and business leaders were simply determined to do things right the first time. “We made a conscious decision to go slow, so we could use one system, as opposed to building a disparate e-commerce system and then trying to find ways to link it back to our main systems,” says Marti Gahlman, director of e-commerce and customer solutions.

Master Lock had a bigger problem in 1999: an antiquated supply chain strategy. So it began a three-year project to expand its supply chain globally and standardize its front- and back-end systems on Oracle Corp.’s E-Business Suite 11i.

Today, with most of the 11i platform in place, Master Lock will launch its first e-commerce offering to business and commercial clients next month using Oracle’s iStore application. Despite being a latecomer to e-commerce, IT director Jim Johnson says the IT advantages of waiting to launch Master Lock’s offering far outweighed any early-adoption benefits.

The integrated modules “allow us to leverage the data and not have redundancy, which translates to cost savings and accuracy,” Johnson says. Although integrated systems were available years ago, they would have been risky and cost-prohibitive, he adds. Also, IT staffers can easily move among projects because they share the same skill sets.

For companies such as Master Lock that don’t have tech-savvy competitors hot on their heels, a slow and steady e-commerce strategy can mean significant IT cost savings and more reliable technology.

For some industries, “there’s no problem with being late” to e-commerce, says Andrew Bartels, an analyst at Cambridge, Mass.-based Giga Information Group Inc. For established brands, the majority of business will still come through traditional channels, and brand-loyal consumers will wait for e-commerce offerings. In turn, IT departments can take advantage of better technology, lower prices and lessons learned from others’ e-commerce mistakes.

“This is a much better time to buy,” says James Crawford, a retail analyst at Forrester Research Inc. in Cambridge, Mass. “First, a lot of e-commerce vendors that were flying high two to three years ago are in much less of a position to offer premium prices.” Second, budget pressures are forcing vendors to make e-commerce and enterprise resource planning (ERP) systems more compatible. So the cost of implementing e-commerce as a function has dropped. “As a result, you get the same functionality for a lot less,” Crawford says.

Chief Technology Officer Joe Hardiman, who is testing e-commerce on the Web site of Catherine’s Plus Sizes apparel stores, a division of Bensalem, Pa.-based Charming Shoppes Inc., says implementing a 100 percent Microsoft Corp. platform with a Microsoft Great Plains Business Solutions ERP back end is a bargain at less than $5 million. “We wouldn’t have done it a couple years ago because it was impractical and cost-prohibitive,” he says. “On the downside of the bubble was the right time to do it.”

Charming Interactive, which handles Web site IT and business planning for Catherine’s, Fashion Bug and Lane Bryant plus-size women’s apparel stores, is taking a methodical, three-phase approach to launching e-commerce capabilities one site at time.

First, a site offers “content and community” with fashion tips and store locations. Next, window-shopping is added to let customers see the fashions available at the store. Months later, the site launches a pilot e-commerce offering with limited inventory that relies on “walk-in” browser traffic instead of promotions.

Hardiman says he doesn’t feel pressured to get to market quickly because plus-size fashion consumers are still underserved in the online marketplace.

Hardiman and his IT team have learned valuable lessons from the failures of other e-commerce sites. For example, Internet projects are no different from any other IT effort they require diligence and strong project management, he says. They have also learned the importance of using the same IT systems, purchasing and distribution channels for both online and brick-and-mortar stores. “It’s an integrated effort. We’re not duplicating any effort,” says Hardiman.

Despite the benefits of waiting to implement e-commerce, consumer adoption rates in many industries remain disappointingly low. With online spending representing just 2 percent of overall consumer spending last year, companies will have to justify their Web costs in other ways. “The goal of e-commerce is never to make it the dominant channel for sales,” Bartels says. “The goal is to reach customers who you might otherwise not reach, and to get to know more about the customers you do have.”

Collett is a freelance writer in Sterling, Va.