Many ecommerce merchants sell products from large manufacturers and suppliers. Increasingly, those manufacturers and suppliers also sell — on a retail basis — the same products. Shopatron is a company in San Luis Obispo, Calif. that refers sales from manufacturers’ ecommerce sites to retailers, to fulfill the orders to customers and to profit from the sale. We spoke about the service with the CEO and founder of Shopatron, Ed Stevens.
Practical eCommerce: Tell us a little bit about Shopatron.
Ed Stevens: “I started the company in September 2000. We launched in August 2001. It was a bootstrapped business then and we’ve been operating now for about ten years. I’m the largest owner, but there are a group of owners. We had brought in some outside capital in 2004 and 2007.”
PEC: Describe the niche your ecommerce solutions serve.
Stevens: “Well, I noticed ten years ago that a lot of manufacturers had a significant amount of traffic, and the traffic that goes through manufacturers’ websites is serious about shopping. And the best way to convert them into a sale is to put up a shopping cart and offer the product right where the customer is. It’s more efficient from a number-of-clicks standpoint and also customers are very familiar with the manufacturer’s brand, so they are comfortable in purchasing.
“But the problem is that a lot of manufacturers sell just a few percent through their websites (or that might be the potential of it) and the rest they sell through distributors and dealers. And when a manufacturer goes into ecommerce and selling at its website, then in a very real way, it’s competing with its own retailers. So, I felt like there was an opportunity to give manufacturers a shopping cart at their websites, but then engage the retailers as ecommerce and order fulfillment partners.
“So an order that’s taken through the manufacturer’s shopping cart is directed through Shopatron’s Confident Order Exchange, to a nearby retailer or a stocking retailer who can facilitate the order to the customer, and that alleviates the channel conflict. It partners rather than competes with retailers.”
PEC: Does the manufacturer have to use the Shopatron cart to sell those products?
Stevens: “No, they don’t have to use our cart. We do have clients who have plug-ins to their cart. We can plug-in and run the checkout only to a custom-coded front-end. We interface with MarketLive, Magento, osCommerce and custom carts. They don’t have to run our shopping cart per se, but they would definitely use our order management system, which is the piece after the order is taken. The Confident Order Exchange piece that manages the fulfillment is core to all of our clients.”
PEC: Name a major brand that uses your system, and explain how the process works.
Stevens: “Suzuki Motorcycles. Say a customer is looking for a handlebar replacement or a new headlight or some kind of accessory for a motorcycle. They go to the site, they see that part and they can buy it right at the Suzuki website.”
PEC: How does Suzuki know whether to send that order to a physical retailer or a pure-play ecommerce company?
Stevens: “At the time the order is placed by the consumer, Shopatron and Suzuki don’t actually know which retailer is going to fulfill it yet. We just take the order knowing that there is a lot of Suzuki retailers out there and a lot of inventory. We post the order in the exchange right on the web page, and then all of the Suzuki retailers have a fair opportunity to go to Shopatron’s order exchange and tell us whether or not they can fulfill that particular order. Once per day, we pick the retailer who is best suited to fulfill it, usually the closest, but it also could be the one carrying the correct inventory and a few other things. We charge the card and then we tell the retailer to ship it, or we arrange for in-store pickup and then we settle with the retailer later. If no Suzuki retailer can fulfill the order, then it may fall back to a designated warehouse — a back-up fulfiller — and that’s often manufacturers themselves or a big distributor of theirs.”
PEC: Can the customer designate at the site whether they want physical pickup or whether they prefer the product shipped to their home?
PEC: Does the retailer make normal margins off those particular sales?
Stevens: “They typically make bigger margins because the manufacturer’s website can demand the highest price of any website. Typically, the pricing coming through a manufacturer’s website will be higher because the convenience the consumer is experiencing does command a higher price. The retailer is making a sale at that price minus Shopatron’s process costs.”
PEC: How would a smaller ecommerce merchant who uses an ecommerce platform other than Shopatron make use of your solution?
Stevens: “They would go to Shopatron.com and get an account. It is free, and there’s no sign up cost or any kind of monthly costs. It usually takes about a week or two to get approved because we do have to make sure that everyone there is a valid retailer and that requires some verification.
“Once they have an account, they are able to go look into the order exchange for their industry and see what orders are available. It can be done through a web interface or through an automated API. Merchants tell us which orders they want to fulfill and we’ll resolve them to that retailer in addition to the rest of them.
“I call it multi-homing, where merchants are probably selling stuff on eBay and on Buy.com, and they can also sell stuff on Shopatron. The only difference is on those other channels the retailers have to go through a listing process. Whereas, with Shopatron, they never have to list anything because the manufacturers are listing the products on their own websites and the orders just flow through into the order exchange. The retailers merely say whether or not they want the order. It’s simpler.”
PEC: Approximately how often would a retailer check for orders?
Stevens: “They usually check about once a day. We also have email alerts so they don’t have to check every single order in the whole country.”
PEC: Are there other reasons for merchants to participate in your program?
Stevens: “Yes, because besides fulfilling orders, you also get to see what’s selling. By going into the order exchange and reviewing the orders you know what is moving on that manufacturer’s website. You are able to log in and literally in one place see what’s happening in that market because of the flow of the orders.
“So, if you’re watching in October what’s starting to move, you could still get your orders placed before the shipments close out before the holidays. That just allows you to sell more on your own business because a lot of things that retailers need to know is what’s moving out there, not just fulfilling orders. And if retailers don’t feel like doing a Shopatron website, they should at least get a free account and go look and see what’s selling.”
PEC: Explain the process of choosing which retailer either fulfills an order or provides the physical pick-up facilities for an order.
Stevens: “It depends on the type of the order. An order that is shipped to the customer’s home can come from anywhere as long as it gets there fast and in good condition. In those cases, we post that order into the order exchange. Retailers all have a fair opportunity to put their flag on it and tell us whether or not they want it and then we will resolve that order to the closest retailer to the customer so that the shipment time is the fastest.
“If they have more than one location or warehouse, then we take that into account as well. There can be some other adjustments for customer service performance. If there’s an issue where the retailer has been a little bit slow in fulfillment for us, we might take that into account as well, but by and large, it’s just if you’re the closest.”
PEC: Can a mom and pop retailer compete with mammoth retailers in your system?
Stevens: “Yes, because the only thing they have to have is the product. If they’re closer and they’ve got the product in stock, they’re going to get it.”
PEC: Anything else on your mind for our readers today?
Stevens: “For any of your audience who operates brick-and-mortar stores, Shopatron does offer ecommerce. We also offer a private order exchange for retailers’ own websites, which we call Coex Private. It’s an order management and order exchange system for just that retailer’s own stores. It’s a $1,990 set-up fee and $99 a month and that includes the shopping cart. It’s a very attractively priced product for small retailers who want to manage fulfillment for multiple stores.
“Coex Private is a sophisticated order management system for dealing with in-store pickup, dealing with shipping from stores to customers’ homes and all the logistics around that. It is the same kind of capability that makes it possible for Suzuki to connect with a thousand locations, and it’s very cost effective and simple for a retailer to use order management fulfillment from their own brick-and-mortar stores. It wouldn’t really be applicable to pure play online retailers, but it would be applicable to anyone who has probably 3 to 50 brick-and-mortar stores.”