When the term “process automation” is used, the usual benefits that come to mind are around the topic of speed. In our recent post on The Hidden Hard Costs of eCommerce Orders, we talked about how all eCommerce orders go through a series of necessary, time-intensive steps that can cut significantly into a retailer’s margins if not optimized through back-end automation.
Another key benefit to eCommerce automation is the ability to cut error rates in order management & routing to nearly zero. Consider these common, error-rich pitfalls when manually processing orders:
Manual errors are inevitable.
Errors are costly – from mistakes typing addresses or SKUs, to over or under ordering stock, from picking or packing the wrong merchandise, to shipping to the wrong customer. As a company grows in size, revenue or SKU count, its complexity increases, and so do the chances for making mistakes by manually entering this data. If you get bogged down fixing mistakes, you are not fulfilling orders, and you are not selling.
“Typical error rates for manual data entry are about one error for every 300 keystrokes.” – Purchase Order Management Best Practices: Process, Technology, and Change
“For Amazon, the maximum length of the SKU that can be sent is 40 alphanumeric characters.” (That’s a lot of opportunity for data entry errors)
More errors means more returns.
Returns are a fact of life in eCommerce. In fact that is one of the great incentives for customers to shop online. If they don’t like what they received, back it goes. According to investment banking firm Kurt Salmon as much as a third of all Internet sales gets returned.
“Handling each returned item costs online sellers between $6 and $18, and that is before the losses from items that are returned in unsalable condition.” – The EconomistClick to Download Infographic
Order processing is complex enough with one online storefront and one vendor. When you are using multiple marketplaces and multiple distribution vendors, the opportunity for costly human errors in the processing of orders grows exponentially.
Automating your order lifecycle – especially your order routing, inventory management and shipment tracking processes – can significantly reduce your time and costs spent remedying these preventable issues. Plus, the right automation platforms will allow you to scale going forward, simplifying the addition of new storefronts and distribution vendors (drop shippers, 3pls, 4pls, warehouses, etc.) to your supply chain ecosystem, and ensuring your orders are accurately routed to them at near-perfect rates.
Any online retailer accounts for the typical costs of working with drop-shippers or distribution centers – shipping costs, cost of goods, etc. Likewise, every site owner is aware of their marketing expenses to get shoppers to click “purchase” on their carts.
But what about the hidden costs? The ones in between the purchase and the fulfillment of the order?
For most eCommerce sites, there are often overlooked hard costs in managing your order lifecycle – real costs that affect your margins and your ability to scale.
Download The Hidden Costs of Processing an Order Infographic
Every time an order is entered into your shopping cart,you must…
1. Double-check the SKUs inside the inventory file. If it’s out of stock, you have to email the disappointed customer, issue a refund or backorder.
2. Route the order. Choose the appropriate distribution vendor – dropshipper, fulfillment enter, etc. – to fulfill the order. Manually enter info into a spreadsheet or flat file in their preferred format. Then send them an email or FTP.
3. Update Inventory. Later, you receive shipped order(s) information from your vendors. Update the inventory in your shopping cart. Copy and paste the tracking number back into shopping cart, and mark it shipped.
4. Communicate with the customer. Send the customer an email telling him that the product has shipped.
What’s All This Cost?
Let’s assume you pay somebody – or yourself (your time is money, right?) – $19 per hour to handle these functions*. Data from our customers suggest each manually processed order can take about 12-15 minutes to complete.
That’s over $4 per order. Not on marketing expenses or shipping. Just to manage your order lifecycle.
So if you’re doing 1,000 orders a month, that’s up to 250 man hours or $4,000 per month!
The order lifecycle process is complex enough with one online storefront and one vendor. When you are using five marketplaces and multiple distribution vendors, these manual processes don’t scale, but your costs do.
Automating your order lifecycle –inventory management, order routing and shipment tracking processes – can significantly reduce your time and labor costs. Orders are routed and systems updated in near real time (vs. up to 15 minutes), giving you valuable time and money to reinvest in your growth elsewhere. Plus, the right automation platforms will allow you to scale going forward, simplifying the addition of new storefronts and distribution vendors to your supply chain ecosystem.
*based on $50K salary (261 days x 10 working hours per day)
eCommerce automation is the next big revolution in ecommerce.
Over the past several years, ecommerce has grown exponentially. It’s been democratized – by players such as Shopify, Bigcommerce, Magento, etc. – that have made it easier and cheaper than ever to start an online store (Shopify alone has exploded from 20,000 customers to 140,000 in the past couple years!)
Back when I started my first ecommerce business, it was still the wild west (see Kurt Heinrich’s answer to What are some potential low-cost businesses that can be started and operated by a teenager?) Simply having an online retail presence in a niche market was your competitive advantage (okay…maybe it wasn’t quite that easy…but it’s somewhat true.). The barrier to entry was higher because it wasn’t so easy to start up an online store. The solutions at the time were either open source PHP carts, writing your own from scratch, or Yahoo Stores — all of which you probably needed a degree in computer science to use.
So with all this tremendous innovation on the front end of ecommerce (shopping carts, mobile, two-day shipping, same day shipping!), there’s been an area of ecommerce that’s been neglected. That is: what happens to an order after it’s been placed?
Well, we call this the Order Lifecycle – a dark, messy place that no one likes to talk about. It’s everything that takes place between when the checkout button is pressed on the website and when you ultimately get your package 2-days later on your doorstep. For online retailers, it’s manual. It’s painful. We colloquially called it “the muddled middle”. For online retailers it can involve anything from spreadsheets, to phones, faxes, manual order entry, or hope-to-god-not-ugly EDI. You’d be surprised, but most ecommerce retailers today either handle this manually (people literally copying and pasting) or by trying to wire together their own custom scripts to automate things. It’s not a pretty sight, and worse, it’s inefficient.
So what is eCommerce Automation? It’s automation of the Order Lifecycle, from the point of checkout to the point of delivery.
To end with an analogy, the shopping carts have done to ecommerce what Salesforce did to the CRM world. It’s a new era for ecommerce and there’s a need for automation on top of the shopping carts, similar to the way companies like Pardot, Hubspot, Marketo automate on top of Salesforce. That’s called Marketing Automation, but mark my words in a couple years there will be a new category in the software industry: eCommerce Automation.
Founder Kurt Heinrich and Nate Kristy talk the future of e-commerce, technology, and Crayola
Earlier this week, eCommHub was the special Tech Tuesday guest on the Atlanta radio institution “The Dana Barrett Show”. The team talked about the company’s origins and growth, plus shared off-the-cuff opinions on the Crayola Experience and the trend of digital entrepreneurs buying up traditional media properties.
Hear the full interview and show notes here
About the Dana Barrett Show
Dana Barrett is a Business Commentator, Social Critic and Host of The Dana Barrett Show on biz 1190 AM WAFS in Atlanta. Each week, the Dana Barrett Show features the top Atlanta business headlines and introduces you to the industry execs, thought leaders and innovators.. Dana also discusses the hot topics of the day, from healthcare reform, to hiring practices to the latest movies and the best places to go in Atlanta.
How iPods, Technology, and Atlanta have influenced the Company Thus Far
This week, eCommHub Founder and Chief Platform Officer Kurt Heinrich appeared on NBC’s Atlanta Tech Edge to talk about how his experience as a school-aged entrepreneur and online retailer led to the creation of the company. “The part of e-commerce that has been neglected is what happens when the order is placed,” shared Heinrich. “As I developed technology to automate my stores, I started to think ‘if I am having these manual problems with my order order lifecycle, other retailers must be as well'”.
See the full interview with Kurt Heinrich on Atlanta Tech Edge
About Atlanta Tech Edge
Atlanta Tech Edge highlights the latest technology advancements and reveals a behind the scenes look at the people and businesses that make it happen.With Atlanta quickly becoming the Silicon Valley of the South, it’s fitting that this burgeoning industry have it’s own locally produced television program. Atlanta Tech Edge, hosted by Wes Moss, airs Sundays at 1:30am & 11:30am. All the segments can also be seen on the website: www.AtlantaTechEdge.com.
We are pleased to announce that Amazon Webstore users can now get started with HubLogix through the Amazon Webstore App Store. While Amazon users have been able to integrate their stores with HubLogix for some time, being an official solution provider makes it easier than ever for growing sites to start automating their operations.
With HubLogix, Amazon users have the ability to manage their site’s inventory, route orders, and track shipments automatically. Once we connect your storefronts and suppliers (drop shippers, fulfillment vendors, etc.) through our online platform, HubLogix will put your Amazon Webstore on autopilot, letting you spend more time growing your business and less time managing it.
Learn more about our integration with Amazon here and sign up for your 15-day free trial – including assisted implementation – by contacting us here.
HubLogix empowers efficient e-commerce for online retailers and their suppliers. Our SaaS-based platform allows effortless integration of supply chain vendors, storefront and marketplace platforms, and back office systems so that mission-critical communications and operations can be easily automated and updated in real time. We enable our customers to put their web stores on autopilot and spend more time growing their business and less time managing it.
Presenting companies highlight strength of Georgia’s technology community and further position the state as a hotbed of entrepreneurial activity and innovation
eCommHub has been selected as a presenter at Venture Atlanta 2014, Georgia’s premier event connecting technology innovation and investment capital, to be held October 21-22 at the Georgia Aquarium. The 34 early and later stage companies chosen to present reflect a wide range of technologies and diverse markets, while highlighting the innovation of Georgia businesses.
“We are thrilled to be invited back to Venture Atlanta this year,” said Kurt Heinrich, eCommHub’s founder and CEO. “This is an outstanding opportunity to present along with other leading Atlanta tech companies and network with top-tier investors from all over the country.”
Presenting companies and conference attendees will have numerous opportunities to network with regional and national venture capitalists and investors during the two-day event. Now entering its 13th year, Venture Atlanta has helped local companies raise more than $1.3 billion – a number that continues to grow. The conference provides an invaluable experience for entrepreneurs, resulting in funding, national investor exposure, unparalleled relationship building, and mentoring by successful technology executives.
“Venture Atlanta continues to draw attention to Georgia’s start-up activity,” said Melanie Leeth, vice president of Imlay Investments and also the event’s chair. “The 34 presenting early and later stage companies highlight the strength of Georgia’s businesses and robust technology community.”
For additional information about Venture Atlanta or to view the conference schedule, please visit www.ventureatlanta.org.
eCommHub is an Atlanta, GA based company that provides back office automation technology to online retailers. Since 2010, eCommHub has enabled retailers to put their web stores on autopilot and spend more time growing their business and less time managing it. For more information on eCommHub (now HubLogix), please call 404-900-6946 or visit hublogix.com.
About Venture Atlanta
Venture Atlanta, Georgia’s technology innovation event, is where the state’s best technology innovators meet the country’s top-tier investors. As the region’s largest investor showcase, Venture Atlanta connects local entrepreneurs with venture capitalists, bankers, angel investors and others who can help them raise the capital they need to grow their businesses. The annual non-profit event is a collaboration of three leading Georgia business organizations: Atlanta CEO Council, Metro Atlanta Chamber and the Technology Association of Georgia (TAG). For more information, visit www.ventureatlanta.org. For updates, join us on LinkedIn, follow us on Twitter, and our blog.
This past spring has been a productive one for us at HubLogix. Here’s a recap of our recent product releases:
1) An upgraded product linking engine to make it easier than ever to add your vendors into HubLogix.
2) More control over product linking to eliminate clutter from old vendor items
3) Expanded retrieval of information fields which will increase reporting accuracy.
A few weeks ago, we were named one of the top venture capital deals of 2013 in Georgia. The article contains a ranked list of companies who had raised the largest investment rounds or had the largest exits in our state. Our $2.7M Series A in September broke on to the list at number 21.
While it’s an honor to be among such esteemed companies, there is something that we are more excited for than the capital we raised last year.
We’re excited about automating the ecommerce backend and forever relieving e-tailers of their spreadsheet wrangling responsibilities. Doing this requires going beyond the “point-solutions” that only deal with the “problem of the day.” Although it may seem that updating inventory, processing and routing orders and sending shipping confirmation emails are individual problems, they are in actuality, intimately related. We see them as pieces of the overall backend process that must be addressed every time a customer submits an order.
Automating the ecommerce backend requires that these individual point-solutions talk to each other. And that’s what we’re creating at HubLogix.
And it’s not just our investors who are excited about this. Since we completed our investment, we’ve had an outpouring of love from our customers about our platform and because we were #21 on the list, below are our 21 of our most recent reviews. We’ve taken them exactly as they are – no cherry-picking, editing or cropping – and we’d like to think they tell the story better than we could have ourselves, enjoy!
It seems to me that the word “entrepreneur” has a strong connotation towards software-entrepreneurship. That’s not a bad thing, but I think it’s worth paying homage to its beginnings.
But long before the buzz of social apps/tools/networks/analytics/doo-dads, entrepreneurs sold things. The mindset wasn’t “build something and they will come” but rather, “take a product to the market and sell it.” The lessons learned from these commerce-entrepreneurs have impacted software-entrepreneurship community in ways we might even realize.