Back Office Complexities of Selling on Multiple Channels

Proponents of selling retail products across multiple online channels don’t often discuss the back office reality of managing it all. Merchants who sell on, say, (a) their own ecommerce sites, (b) Amazon, (c) eBay and (d) Facebook must update — on four separate websites — stock quantities, prices, product descriptions, discontinued items, new items and much more. And then they need to fulfill, manage and track the orders from all four channels.

In short, without automation that entire process can be a nightmare. We spoke with Fred Lizza, CEO of Dydacomp — which makes Multichannel Order Manager, an order management software solution — about the realities of selling across multiple channels.

Practical eCommerce: Your company works with merchants who sell products across multiple channels. How is a merchant supposed to know what channels to use?

Fred Lizza: “Well, the merchants always start with their own websites, their own branded environments. Then they should select channels depending on their particular product category and price point. For the merchants where just getting a lot more product out there even — if it’s at lower margins — is a benefit, then the big marketplaces that bring together lots of people are the spot for them, and they don’t mind being price compared against other shops. Other merchants that have a more specialty product, they’re going to look for a niche site.

“Generally speaking, our customers’ first step is they do a profile of who their ideal buyers are, and then their second step is to find where are the most number of people that fit that profile – that’s how they’re making the decision on to where they go, because more is not necessarily better if you’re not getting in front of the right people.”

PEC: Can you think of an example where a merchant would not want to sell on additional channels?

Lizza: “Sure. In many cases, a merchant has a product that’s a higher priced product, a specialty product, or a particular brand that they just don’t want to get commoditized. What a lot of these major markets like Amazon and eBay are doing, they’re doing on the demand side what Walmart did on the supply side of things. So they’re opening that channel up or they’re opening that merchant up to be exposed to lots and lots of different people.

“If I’m selling custom jewelry, for example, that may not be the answer. If I have a high labor content for my products, I want higher price, higher margin, but not necessarily that high a volume on there for example and then there’s other merchants, we see there’s a lot in our customer base where they want to use a specific channel for a specific purpose. So, I have excess inventory or I have an older model product or something that’s becoming more obsolete, I want to move that through an eBay or somewhere where I’m not damaging my brand or impacting my brand by selling that product at a more discounted price than I want to be selling my current product.”

PEC: Do customers ask Dydacomp for multichannel advice?

Lizza: “Yes. A lot of our customers, dating back to the mail order business, started out with that particular type of channel and then have grown into the online channels. So, they do come to us for advice as to what we are seeing from other people in their particular industry niche or their category, how well are they doing on Amazon or on eBay, for example, and get our perspective on what are the ups and downs. They also use Dydacomp as a go-between to introduce them to other customers who use Multichannel Order Manager so that they can build connections, get advice from other merchants in a related space or in their space.”

PEC: Let’s ask your view on a couple of specific channels, from your perspective as CEO of Dydacomp. The first you mentioned a moment ago: Amazon. Amazon is greatly increasing the products it’s offering to ecommerce merchants. What would be your advice — pro and con — to merchants contemplating selling on Amazon?

Lizza: “Well, my first piece of advice for a merchant contemplating selling on Amazon is to talk to someone who’s already doing it, and get the first-hand experience. Our experience has been that it can be a massive opportunity. I mean, just the 130-plus million buyers — and the fact that so much of their business comes from other small businesses marketing through Amazon — is a great opportunity. If you have the type of product where you can source large quantities of it or produce large quantities of it, and you’re willing to compete on price, Amazon is a great opportunity to expand growth, expand sales. Again, as I said earlier, if you’re worried about your product becoming more commoditized, if you have a high labor content or you want to protect high margins on a lower volume of product, then that’s not necessarily the place to go to.”

PEC: One of the arguments against selling on Amazon is that it is Amazon who has the principal contact and the principal relationship with the customer, not the merchant who sells products there. So, while a merchant may be able to gross up sales, it’s Amazon that enjoys the principal contact with the customer. What’s your view on that?

Lizza: “Well, certainly that’s the case and Amazon is pretty militant about enforcing that hold on the customer. So, again, it comes back to the merchant to make a trade-off. Is this a product that’s going to be a repeat purchase where the customer relationship is critical and you want to establish that relationship directly under your own brand, so that you could have a repeat business? If that’s the case, then Amazon is going to be a lot lower on your value proposition. If you’re selling a product where it’s one-time purchase or where there’s so many different alternatives to go to get the same product or the same type of product, then I think Amazon is a good trade-off for that merchant, because the volume considerations, the exposure to that global marketplace, is going to outweigh the fact that they’re not making a direct connection with that customer.”

PEC: What’s your view on Facebook as a selling channel for merchants?

Lizza: “That’s an interesting question. We see very different behavior among our customers when it comes to Facebook or social media versus the marketplaces. We don’t see as many small merchants selling on Facebook as we see on the marketplaces, but what we do see is social media becoming critically important for reputation and awareness purposes for these small merchants. They want to get the word out about their products on Facebook. They want to get referrals. They want to protect against negative stories flying around on Facebook. There’s a little bit of playing offense with Facebook and getting the word out there and spreading awareness, but you’re partially playing defense in keeping track of what things are saying about your service, about your product quality and so on. It’s clearly different from a marketplace. There’s different information flowing back and forth there.”

PEC: Merchants who are reading this are perhaps contemplating expanding their product lines onto Facebook, whether it’s a Facebook-enabled cart where the entire transaction can be completed on Facebook, or it’s more of a referral source. What is your advice to them?

Lizza: “I think for product that sells by referral, Facebook is a great platform. Products where buyer behavior is really driven by comparative shopping — I want to look at these two or three different choices, I want to compare the technical specs, I want to compare the price, that kind of thing — I think the marketplaces are a better choice for that merchant.”

PEC: Dydacomp is a pioneer in the ecommerce business. It produces Multichannel Order Manager, an order-management software solution, and SiteLINK Ecommerce, a shopping cart platform. Tell us about those two products, and about Dydacomp in general.

Lizza: “Multichannel Order Manager, originally ‘Mail Order Manager,’ is the heart of our business. That is really the back office for the small merchant here. After you get to the point where you’re getting more than 5, 10, 15 orders a day, once you can no longer manually enter those orders into UPS or FedEx or manually build and manually track that process, that’s where you need that back office operation and that’s what Multichannel Order Manager does for you. It’s going to take your order from the shopping stage through to the shipping stage and automate all of those business processes in between for you.

“SiteLINK is a companion product, an ecommerce shopping cart that’s pre-integrated with Multichannel Order Manager, or M.O.M., as we call it. SiteLINK contains product descriptions and prices and in many cases inventory, quantities, working with your back office system, your order management system, your accounting systems. How do you keep those different pieces of information or those duplicate pieces of information in sync? That’s a huge challenge for the small merchant. SiteLINK and M.O.M. are pre-integrated so that we manage that process for the merchant. They don’t have to worry about the product descriptions on their website or the web store being different than the product description or product number or SKU number that their back office systems are using. We manage all of that process for them so there’s a benefit in having the two.

“There have been a lot of changes in this marketplace since these products first emerged. Back in the mail order days, the Mail Order Manager product was in most cases the first piece of software that a merchant would bring in and implement, because that’s how they got their orders. Their orders would be entered right into that system as they’re taking phone calls from people that are reading from a catalog, for example. Now, so much of that early business formation is new merchants and so the first thing they’re doing is getting that web store up and running; then as they get to a certain volume, they’re coming to Dydacomp to look for solutions. That’s caused us to now undertake a major philosophical, cultural and technical change with our products. Before, we could be our own little world, the Multichannel Order Manager product and the SiteLINK product working together, and you’ve got the majority of your business operations.

“Now, there’s customers coming to us who are already using XYZ as their web store or shopping cart software, who may already have a relationship with a particular marketplace or comparative engine shopping, who want us to be the back office for them. So, we’ve now opened up the system. We’ve created a generalized interface to work with third party software and just the whole concept of openness, flexibility, giving the customer the power to modify change, customize the workflows, the reports, those elements are what Dydacomp today is now all about.”

PEC: Is M.O.M. licensed or hosted?

Lizza: “M.O.M. is a licensed solution. SiteLINK is a hosted solution. Depending on the different natures of the product, you have different delivery platforms there.”

PEC: What does M.O.M. cost?

Lizza: “M.O.M.’s price can range anywhere from $2,000 to $3,000 on the low end for a smaller customer, on up to $5,000, $10,000, $20,000 for larger customers. There are multiple modules that you can add on to extend the functionality of M.O.M., say, for warehousing, or different types of interfacing, to shipping systems or accounting system and so on. So it can vary depending on a particular customer’s configuration.”

PEC: We’ve discussed Amazon here as a dominant marketplace. Is M.O.M. pre-synced with the major marketplaces?

Lizza: “It is. We just recently launched version 8 of M.O.M., and because of the needs of the market and the needs of small merchants today, we created our first programming interface, the first API to M.O.M. The published API is now available on version 8. So, that will work with virtually any ecommerce shopping cart or web store software that a customer is using. We’ve also pre-built interfaces to Amazon, to eBay, to some of the leading platforms, and those are now bundled into M.O.M. as part of version 8. There is no extra price for those modules. As our customers have evolved more and more towards the online portion of their business, we’ve evolved M.O.M.”

PEC: You’re a veteran technology executive. Tell us about your own background.

Lizza: “My background is over 25 years in the software space. Dydacomp is the fifth company that I’ve been CEO of, and I’m really focused on smaller to midsized businesses like Dydacomp, and how do we turn those into world-class leaders within their market segment. That’s pretty much what my vision for Dydacomp is. I believe the small businesses are underserved. I think a lot of the larger software vendors are focused on the larger companies where they can get a much higher price for their solutions, and I think that’s left the door open for a company like Dydacomp to provide the order management, and shopping cart platforms for a lot of these small merchants. Their goal is to not get caught up in lots of infrastructure, technology, and cost. Their goal is run and grow their business, and the more we can enable them to do that without requiring big investments, big overhead, big time, and capital investments, then that’s what is going to enable them to focus on what they do best.”

PEC: When did you join Dydacomp?

Lizza: “I joined at the very beginning of 2011. I have been here about nine months.”

PEC: Anything else on your mind for our readers?.

Lizza: “I have one other point that I’d like to make, and that is a follow up of what I was just saying about merchants being distracted by significant IT investments or technology investments. One of the challenges small merchants have right now is that there are so many different systems to connect to out there, just to get an order from the customer through to the fulfillment and billing stage. You have the ecommerce systems, you’ve got payment or credit card processing systems, you’ve got all the different third party shippers in place, you’ve got accounting systems.

“We view Dydacomp and the M.O.M. product in particular as the integrator. It’s the glue in between all of those pieces. So, we’re going to take that order information, whether it starts from a customer putting an order in online, or a call center getting a call from customer who’s reading from a catalog, or even a point of purchase transaction. We’re going to take that order and we’re going to put it through the same workflow. We view that as our responsibility.”

PEC Staff
PEC Staff
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