Making an E-Commerce Commitment

Where has the day gone? It's just a few minutes after noon, and you're ready for lunch. You get up from the desk, stretch, tighten the belt on your bathrobe and make your way into the kitchen for something to eat. Ahhthe joys of being a dotcom millionaire and working from home. Who would have guessed there could be so much money to be made from designing kitchens online?

More and more often, when I'm out speaking to the kitchen and bath industry about the Internet, I am asked about e-commerce. In fact, there is so much interest in this topic, the National Kitchen and Bath Association has asked me to develop a new class to address all of your questions and concerns (E-Kitchens will debut at K/BIS 2001).'

Many kitchen designers ask about the possibility of setting up a Web site for consumers to send in their measurements and, in turn, have a kitchen designed for them. Others from the industry ask me about selling cabinets or appliances online. Should you be considering e-commerce at your company?

Dollars and cents
Let's begin by defining e-commerce. E-commerce is the buying or selling of products or services via the Internet. Pretty simple, huh?

Well, that's where the simplicity begins and ends. E-commerce can actually be very involved. Much to the chagrin of many, it is not as easy as putting pictures of the items for sale on a Web site and then raking in the money. E-commerce takes a fair amount of money upfront to'
get started.'

Actually, there are many types of e-commerce sites. Some are massive and require millions of dollars to set up, while others are small and initially require just a few thousand dollars. Choosing the right system just depends upon your needs. The more creative you get with your "store," the more money you'll have to pay.'

Smaller, very basic sites, with one to 100 items, can usually get by at under $10,000 to have a site designed and set up to take credit cards. Larger sites, or sites with more specialized needs, usually have more requirements, and could create the need to develop your own in-house server system that might require multiple servers, expensive Internet connections, expensive software and other products (firewalls, security scanning software, security auditing and SSL encryption) to keep your users' credit card numbers secure.

Do you buy items online? When you do, who do you buy from? Most likely you buy from companies that you're familiar with, such as Amazon.com, or brick and mortar companies you patronized even before the Internet was around.'

This is where the true cost of e-commerce comes into play the big bucks to make your company a household name. After all, you need to get a return on your technology investment. Would you put your credit card number into the Web site of a company you've never heard of? I'd venture a guess that most of us wouldn't. But, if you remember back about four years ago, when you heard the word "Amazon" then, I bet you thought of a river and the rainforest, not books and CDs. Amazon.com has literally spent millions of dollars to get you to conjure up a mental image of a book rather than a rainforest when you hear the word "Amazon."

Making it work
The issue of e-commerce for the kitchen and bath industry gets even more complicated by its very nature. Take, for instance, selling appliances online. Besides the shipping issue, there's an even larger problem to overcome. Most appliance manufacturers won't allow their distributors and dealers to sell the items over the Internet. In fact, let's say you post a picture of a range on your Web site. While the manufacturer is happy to see its product pictured on your site, it wouldn't be too happy to see you selling its appliance outside of your region. In fact, it normally isn't allowed.

One kitchen dealer who is both a Wood-Mode rep and an appliance distributor with three showrooms has a section in its Web site from which it sells appliances. In a sale-type format, the firm sells ranges and cooktops via the Web site that it hadn't been able to move off of the showroom floor. The section has been working well for them for a few years, for several reasons:

  • The company doesn't do the actual money exchange via the Web; it is done via mail, phone or in person. Hence, the company avoids the expense of an e-commerce system.
  • On a sale item, it is noted as to whether the company will sell only in its delivery area, or if it will ship the item, as it does with cooktops.
  • The Web site gets a lot of area-based visitors.

How can the dealer "get away" with selling appliances via the Web site, when most manufacturers don't allow these Web-based transactions? Simple. The dealer is selling items that are no longer produced or don't compete with what is currently being sold by the manufacturer.

So, if this firm can be successful with its Web site, why have so many big dotcoms, such as living.com, furniture.com and drinks.com, gone under? It seems that when you base your dotcom on e-commerce, you are in for an uphill battle.

The Internet is driven mainly by the desire for information. How can Web sites make money?

Think about magazines or newspapers. They make their money, not from readership, but from advertisements within the publication. It's basically the same for Web sites. For example, the Web site for Kitchen and Bath Design News (KBDN.net) doesn't sell anything. The site has been built as an information source for readers. The way the magazine offsets the cost of gathering and organizing that information on its site is to sell banner ads an advertisement usually found at the top of individual Web pages. Many times, these ads link to the Web site of the company whose item is being promoted.

Is there a future for e-commerce for you as an individual kitchen and bath dealership, cabinet shop, fabricator or appliance distributor? There can be, but only if you have a very thorough understanding of the Internet, and you don't bet the farm on the venture from the onset. Get your feet wet with a Web site to market your company and become familiar with the Web first.

Oh geezwould you look at the hour. My job here is done. It's almost time for dinner and I haven't even changed out of my pj's yet. I'll tell ya, the rigors of being a columnist working from home. It's just too bad this job doesn't pay the "dotcom millions!"

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