Waterford Wedgwood USA went to Fry in August 2002 to launch its first E-commerce site. The maker of fine crystal and collectibles had previously sold its products only through specialty shops and retail department stores like Macy's and was concerned about the effect that E-commerce would have on its longstanding retail relations. "We fretted about channel conflict," says Jennifer Korch, director of Internet marketing at Waterford.com. "We had sold only to brick-and-mortar establishments, from large retail stores to gift shops. Our customers were concerned about Waterford's E-commerce plans, and we needed to educate them that a Website, even one predicated on direct-to-consumer sales, actually complements their business."
While the company has yet to assuage all traditional outlets, it is making headway, Korch says, particularly when it comes to online programs designed to push consumers to stores. "For example, we use the site to tell consumers about limited-run items that are available only to members of the Waterford Collectors Society, a paid membership organization, at specified stores. These are high-priced, beautiful items, and we rely on human interaction to sell them," she says. "We also promised retailers that we would never sell any product on the Website at a lower cost than it would be in a retail environment."
Fry's software is at the heart of Waterford.com, and Fry works closely with Waterford's IT and marketing departments to ensure that customer order data is transferred back and forth from the Website to Waterford's order and inventory system. "Fry offers the technical knowledge to run an E-commerce business, including Website development and hosting," says Korch. "We do everything else in-house, including customer care and distribution." The latter, she says, was challenging, because the company was used to being a wholesale manufacturer that shipped big palettes to stores, versus being a retailer that ships to customers one at a time. Waterford reengineered its warehouse operations to fulfill individual orders — twice each day, customary warehouse operations halt to give Waterford.com's Internet orders priority.
Given the challenges and risks involved, why bother? "Our reach is just so much larger online," says Korch. "We offer a more comprehensive selection of items online that cannot be matched by any store." Despite that, she says, "we see the site as a branding tool first and a selling tool second."
Analysts caution that the economics and convenience of outsourcing can be at odds with the desire to integrate all sales channels as tightly as possible. It can be done, but it requires careful oversight of your outsourcing providers, making sure that their current and future capabilities are in line with your needs. As Weitz says, "Even if you give away the store, you don't want to give away the store."
A Decade to Remember
In the 10 years since eBay and Amazon.com began to ring up sales, E-commerce has been through a stunning series of ups and downs. Here are some highlights.
1995
Amazon.com sells its first book online; eBay launches; Netscape goes public at $28 a share and ends the year at $139 per share; Netscape and Microsoft add Secure Sockets Layer technology to Web browsers, facilitating safer E-commerce.
1996
Sergey Brin and Larry Page create Google.
1997
EBay sells its millionth item: a Sesame Street Big Bird toy; IBM launches $4 million media campaign to encourage E-commerce.
1998
Congress investigates whether online travel entity Orbitz violates antitrust law; the FTC warns Websites to tighten their data-protection policies; the Internet Tax Freedom Act provides a three-year moratorium on levying sales tax on Internet purchases (extended for five years in 2000).
1999
The business.com domain name sells for $7.5 million; Amazon.com reaches its 10 millionth customer; Wall Street analyst Henry Blodgett says, "The [Internet] plane can still climb, but not too steeply..."
2000
Nasdaq average plunges 63%, and the Dow Jones drops 16%; the Pets.com sock puppet sells for $20K (on eBay); Yahoo and eBay are hit with large-scale denial-of-service attacks, sparking security concerns.
2001
EBay lists its half-billionth item; the number of U.S. Web users surpasses 100 million; a Forrester survey finds that more companies cut E-business budgets than increased them, and many said more cuts were likely.
2002
Netflix goes public; the University of Maryland creates a Website, businessplanarchive.org, to chronicle the dot-com collapse while there's still something to chronicle.
2003
Apple launches iTunes, bringing some order to bear in online music sales; a survey finds the B2B E-commerce market is seven times larger than the B2C market, as brick-and-mortar companies tap the power of the Web.
2004
Toys "R" Us sues Amazon.com over an exclusivity agreement; Google goes public at $84 a share; online holiday shopping tops $23 billion, a 25% rise from 2003.
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