It’s not easy connecting all your sales channels. Making sure that brick and mortar stores, the online store, live shopping channels and others are all in sync can become complicated. Retailers need to get all departments, all sales channels, suppliers and fulfilment operations on the same page. That’s why I’ve put together a list of the top software vendors in omnichannel commerce – to help you skip the software sourcing part.
It’s not an easy task to connect an omnichannel software vendor to existing systems. Fortunately, some companies are really good at it. Others – just good at saying they are.
And here come the knights in shiny digital armor to rescue the day. The following 5 vendors have built omnichannel retail capabilities ready to be plugged into existing retail ecosystems. They are now the go-to elite for large retailers in need of upgrading their IT infrastructure.
5. Kibo – unified commerce.
Number 5 on our top software vendors in omnichannel list is Kibo. In 2015 former Shopatron became Kibo. The company now sports an API-first, microservices based platform that enables B2B and B2C ecommerce as well as order management, inventory systems and point of sale solutions.
The company was founded in September 2000 by Ed Stevens and Sean Collier. Since then, it has evolved into an integrated SaaS platform that connects offline and online orders management, making it easier for customers to purchase from retailers.
The company offers specific omnichannel solutions, most important being:
ship from store
Shopatron targets midsize retailers and its main benefit is the advanced order routing. The platform combines online and offline sales and claims inventory visibility across channels.
great fit for midsize companies
developer friendly and easily integrate-able due to its API-first architecture
headless commerce structure – enables building disconnected systems on existing software structure
good fit for larger retailers that look for a quick roll-out for the solutions listed above
can connect multiple sales channels and direct orders to the right fulfilment point
works for both B2B and B2C commerce
reduced costs and quick roll out
implementations can become costly due to development costs
backend can seem outdated or complicated
analytics may not be its strong point
4. NetSuite Suite commerce
NetSuite was already rocking a great SaaS ERP product and a fully flavored ecommerce solution when it acquired OrderMotion in 2013. Now the company can provide inventory management across channels, a single customer view, business intelligence data and omnichannel order management. In the past years the product has made the company one of the top software vendors in omnichannel with its SuiteCommerce collection of products.
NetSuite started as NetLedger, envisioned as an online accounting tool, that later turned to an wider array of company management tools.
Prior to its Oracle acquisition, Netsuite was very active in acquiring companies itself. In 2013 it acquired Retail Anywhere, a POS solutions company that became its POS commerce solution. In 2014 it acquired both Venda, an ecommerce SaaS company, and eBizNet Solutions, a company focused on WMS (warehouse management system) solutions.
Netsuite has decided omnichannel is a perfect mix when it connects companies focused o separate blocks in the retail chain.
Extensive know how of retail operations management
Integrated SaaS solutions
Great record of acquisitions
Single view of customer across channels
Multi-channel channel inventory view and order management
Extensive list of customers, a lot of them enterprise Oracle customers
NetSuite is “broadly focused”: its solutions work with healthcare, finance, manufacturing and many, many others. That leaves little room for actual retail innovation
The solution is targeted at enterprise customers or midsized to large companies, a lot of them Oracle customers
Complicated to operate and train staff on
Complex pricing and licensing structure
3. New in the top software vendors for omnichannel: VTEX
VTEX was nowhere to be seen on this list 5 years ago. The company started in Brasil as an ecommerce company catering to the local market. It’s innovative technology caught the attention of Walmart as it entered the Brasil retail market. They’ve created a solid presence for the company in the country and expanded regionally in LATAM.
Companies such as Sony, Samsung, Adidas and many others has chosen VTEX as their B2C and B2B multi-channel software suppier.
From all the other companies on this list VTEX is the best in many fields, chief of which is its modern infrastructure, matched only by the likes of Shopify, which is more aimed towards ecommerce rather than multi channel sales.
Great user experience
Headless, API-based ecommerce
Apps marketplace and third party developers
Great developer support
Fast time to market implementations
Not much customisation can be done on the core platform. It’s a multi-tennant cloud platform.
The platform can be sometimes slow
2. SAP Commerce
SAP commerce was once a thriving, innovative company called Hybris. Afterwards SAP purchased it and there’s almost no way to find out how you can implement the software. Just trolling. The solution is good and it used to be number one on this list. Not anymore.
This omnichannel solution is scalable and built on a modern and flexible architecture, that allows interaction with all interfaces. Its order management solution, inventory and commerce application are built to work together seamless and easily connect with other systems.
SAP commerce’s solutions work both B2B and B2C and can handle inputs from multiple inventory sources and outputs on multiple sales channels. Moreover, the solution features a central content management system that enables retailers to push content across a multitude of interfaces.
fully integrated solutions
works B2B and B2C
supports multiple interfaces
works online, offline and on multiple other channels
flexible enough to work with open source technologies
training may be expensive
professionals able to implement and train are hard to find, due to an increase of platform demand
customization and setup can be time and resource consuming
it’s part of SAP
1. Shopify Plus
Shopify is an amazing company and its communication, style, products and company culture really stand out. It used to be the small kid on the block but now, in term of product, market reach and its huge growth in 2020 it really shines.
It makes sense that its core enterprise product can work on multiple channels. It’s incredibly stable as an ecommerce platform, migration is extremely fast, works as a point of sale solution and you can integrate all logistics on it. Plus, it comes with the experience of having more stores on its platform than any other company.
Shopify Plus takes the crown on my list of top vendors for omnichannel software, 5 years after it was not even included here. Kudos, Shopify.
So that’s it – these are the best of breed. Of course, there are more out there that deliver great products and I could name Intershop or SalesForce Cloud . They, however are less inclined to omnichannel or have a really new found love for omnichannel retail. The vendors mentioned above are leading the pack in omnichannel retail implementation, especially for large customers.
You are an ecommerce professional, you are receiving orders from customers and you want to understand how to better fulfill orders. This guide is all about ecommerce fulfillment.
Let’s get started:
What is ecommerce fulfillment?
Good question! Although the term fulfillment is used quite a lot, not everyone has a clear grasp on the whole idea. I mean – why fulfillment? Well, it’s actually a pretty simple concept. Order fulfillment for ecommerce is anything that has to do with fulfilling your promise to the customer. That promise is you’re going to ship the products they’ve purchased, those products are going to be in good condition and they will arrive as soon as possible.
Ecommerce fulfillment also covers the reverse process (also called reverse logistics). That means getting merchandise back from the customer. That type of operations happen:
in case of a package return
when the customer refused the package
the shipping company was not able to deliver the goods
So basically when your ecommerce business is fulfilling an order, it is actually making good on its promise to deliver merchandise in the best way possible. Although the concept is not that really hard to grasp, making it happen is a little bit more complicated. No worries, I’ll walk you through the process.
In order to make sure your ecommerce fulfillment operations work perfectly, you’ll have to look for the answer to four very important questions:
am I moving the goods in the most effective way? This is a question you will always have to be answering to. The answer is usually no. If you have answered yes too many times – you are not really trying that hard. The truth is ecommerce fulfillment operations are evolving very, very fast and there is probably always something you can do better.
am I always shipping the right products? You have to understand that sometimes you will not be shipping the right products. Yup – that’s a fact. It may happen when you’re using a drop-shipping service or when your team is overwhelmed with the number of orders (say during the holidays). You have to minimize these type of mistakes and always strive to improve on the way you do business.
is my team working in sync or are there any communication or operational bottlenecks? Your ecommerce business will not always run smooth. The most common reasons are either the team is not communicating properly or the IT systems are not fully connected (say your order management and inventory management tools are not synced). You have to stay alert and solve these type of issues as soon as possible.
is my ecomerrce fulfillment scalable? You won’t need to ask yourself this question in the first days but eventually you will have to check if your operations are ready to scale if you’re successful. To do so – try wondering what will happen if all of a sudden you were to receive each day ten times as much orders as you’re expecting right now. How about if your sales were to increase one hundred or one thousand times? Would you be ready? How would you manage this change?
The 5 steps in ecommerce fulfillment
Fulfillment is probably the most complex and tedious part of ecommerce. It is also the one thing that is the least talked about in terms of ecommerce. It’s not flashy and it’s not cool. It’s complex, involves a lot of tweaking and a lot of work to getting it right. While most ecommerce guides will point out to the importance of picking the right shade of orange for the “Buy now” button, few will speak of how important fulfillment is.
Just to get a glimpse of how important fulfillment is – think of your car. While having the right color and the right type of leather is important, the car won’t start without an engine. Fulfillment is the engine that keeps ecommerce going.
There are just five basic steps in fulfilling ecommerce orders. Four of them are mandatory and one is optional. Hopefully you will cover this last step as few times as possible. These five very important steps are:
Receiving the orders
Receiving the products
Processing the order
Shipping the ordered products
Handling order returns
Overview of the Ecommerce Fulfillment Process (including returns)
1. Ecommerce fulfillment: Receiving the orders
Customers will place the orders through one of your sales channels. It may be your online store, on the phone or through a mobile application or a pop-up store.
There is a great variety of order management software out there. What matters from a ecommerce fulfillment standpoint is what the order info should contain. Here is the minimal information you will be needing:
who is handling this order (who will be managing the order and who will actually be picking and packing the products)
the customer info – usually name, address, whether the customer is a person or a company, whether the customer has already purchased from your store before
special discounts or shipping conditions – this may happen when the customer has used a voucher or a special promotion and is entitled to a smaller shipping fee, a gift or a bonus product.
order info – total cost, estimated shipping cost, whether the order is prepaid or paid on delivery, and where you will be shipping the products from (either internally from your warehouse or from a drop shipper)
Most of the time, you will be receiving more info from your order management tool but these are the essential blocks of information to keep in mind.
2. Ecommerce fulfillment:Receiving the products
Before moving on to the actual order fulfillment bullet points I have to make a point. You don’t HAVE to fulfill the orders yourself. Some companies outsource their fulfillment to other companies. My advice is you should keep most of your fulfillment operations within your company. You won’t be able to ship products across the globe but you can pick, pack and carefully wrap orders for your customers, especially if you are a growing ecommerce business.
When medium and large online stores are fighting each other over consumer mind share, we only see the marketing and superficial aspect of this battles. But the fact is, underneath all this visible struggles, the real battles are won in the warehouse. Your real chance for success stands in picking, packing and shipping the right products, within the timeframe you’ve promised.
It may seem hard to handle ecommerce fulfillment operations and it sure is. But because it is hard, you have to master it before the competition does. Walmart and Amazon, two of the largest retailers in the world, have also two of the best supply chains in the world. It’s not that these companies have developed spectacular fulfillment operations because of their huge sales but the other way around.
Glad we’ve got that out of the way. Now – what’s the best way you can receive products in your inventory?
It all starts with an order to your supplier. It is usually called a “Purchase Order” as you are placing an order to purchase products. We will assume that you have already set up an agreement with your suppliers and they will ship the products. You will probably pay as you place your order, when the order arrives or at a given time after the order has arrived, if you have agreed as such with your supplier.
How to check the products received from my supplier?
Once the products have arrived at your warehouse you will need to:
verify their integrity – check whether the goods are damaged and if so return those that are damaged
count the number of products – check if the supplier has indeed shipped the correct number of products
check if the product cost is the one agreed upon – if you have agreed to either pay on delivery or at a given deadline you will probably receive an invoice with individual costs split. Check to see whether these costs are those you have agreed upon when placing the order
add the product SKU’s to your inventory management – Standard Keeping Unit or simply SKU is what retailers use to define unique types of products that can be sold. They are used to track goods movement through inventory. The SKU is not to be confused with the product model no, although this can be included. The SKU code is formed using product characteristics (such as manufacturer, size, color etc.) and it is usually used as a barcode or QR code so it can be tracked easily using bar code readers.
add bar codes corespondent to the SKU’s you’ve just issued for the products. You can do this using special bar code printers and special stickers that will be attached to the product package.
once the product is received and marked it will be sent to your storage unit (or warehouse) where it will be placed in a way that it can later be easily picked and packed.
( Basic check list when receiving products from the supplier )
Placing the products in the inventory is a very important part in receiving the products. The better you keep track of where the products are, the less time and effort you will need when picking and packing the products.
How should I store products for ecommerce fulfillment?
When placing the products in storage you need to keep in mind some very important aspects:
not all products are equal: products should be placed according to how popular you expect them to be. Some products will be sold faster and they need to be easier to reach. Either closer to the packing unit or lower on the shelves so they can be easily picked.
however, all products have to have their position in stock clearly assigned and saved. Each SKU should have a clear position in the warehouse. You will probably develop your own warehouse numbering system but you will probably have to add things such as aisles, sections, levels and positions to keep product identification easy and scalable.
Hopefully at this point you have managed to get the products in your inventory, they are correctly marked and stored and you are ready to pick said products for the orders you are going to be shipping.
3. Ecommerce fulfillment: Processing the orders
Once you have the products in the inventory and orders are coming in, it’s time to process these orders.
Order processing is split between four main areas:
movement to appropriate shipping station
What is the best way to pick products from inventory
Picking is probably the most time consuming part of order processing. It also gets a lot more complicated as your business grows and it may be prone to errors. Having more products in your inventory will increase the complexity of picking the right products in the fastest way possible.
If you’ve managed to place the products in the right spots (as stated in the step above – receiving products) your chances of correctly processing orders increase big time. The reason is it will be easier for picking staff to move fast through the aisles and pick the right products.
How does product picking work?
To have a streamlined picking process that works just as well with 10 orders per day or 1000 orders per day you have to decrease the chances for errors. To do so, your picking staff will cycle through these steps:
Receive a pick list – the pick list is a … well … list of items to be picked from the inventory. It may vary depending on how you run your fulfillment operations and what kind of software you are using but it usually contains:
Product location (section A, aisle 3, level 3 etc.)
Product code (usually the SKU)
Quantity to be picked
Product description and image (for quicker identification)
Barcode (usually used to confirm product picking directly into the inventory management system)
Create the optimum route to pick products: usually picking staff will collect more orders to improve efficiency and gather all the products in one trip. This route is usually generated by the inventory management software based upon the warehouse layout.
Pick products and place them either in separate bins based on ordered items or a general items to be sorted later at quality control or packing stations.
Bring products to the Packing Station, where they will be sorted, placed into the right packages, and so on.
( A basic example for a picking list )
How to pack ecommerce orders?
Packing is the next step in the fulfillment operation. Once the products have been picked from the corresponding aisle, shelf or bin, they are sent to the packing station where they will be split into orders and prepared for shipping.
The packing operation is usually split into these further steps:
Choosing the right package – depending on the products shipped, they will be placed into special packages, according to specific needs. For example a wine bottle will be shipped in a different package than say, a dress or a cardigan.
Scanning and marking the package – after the products are placed into the right package, products are usually marked with specific documents, usually used by the shipping company so their transport progres can be tracked. They are also scanned so the inventory management software will register said products as getting ready for shipment.
Adding invoices, product slips or other documents and / or marketing prints – this step includes placing needed orders information or documents (warranty certificate or invoice), as well as marketing materials that should reach the customer (say a discount voucher or a bonus product).
Preparing the package for quality control and shipping
Quality control for ecommerce fulfillment
Once the products are placed in the right package, a quality control station will check for any errors that may happen.
Quality control personnel will usually check for one of the following errors that may appear:
Wrong products: products may sometimes get mixed or the wrong information has been sent somewhere along the order management process. The most important aspect is that quality control will make sure the customer gets what he or she ordered.
Wrong address / customer: sometimes orders get mixed and orders are sent to the wrong customers.
Wrong payment information: there is a multitude of payment options and you do not want to ask your customer to pay something that was already paid for.
Shipping options: maybe the customer opted for a quick delivery option. Quality control needs to make sure the product gets to the customer in the specified time frame. Another shipping mistake happens when online stores work with multiple shipping partners (say one for internal shipping and one for overseas shipping). It is important for the order to be routed to the right shipping partner to avoid delays or extra costs.
Specific order information: quality control also needs to check for specific demands such as gift wrapping or a specific timeframe to be shipped at.
4. Ecommerce fulfillment: Shipping orders
Once the products have been picked, packed and quality control made sure there were no errors in the order management process, the package is ready for shipping.
Online stores usually partner with one or more shipping companies to deliver the goods. The shipping station will check the package weight and direct it to the right shipping partner.
Most shipping companies will provide you with a general framework on how to handle packing and preparing for shipping. Here are the most popular ones:
Oh, returns – can’t live with them, can’t live without them. Just kidding. A clear and friendly return policy is what sets the likes of Zappos.com apart from the competition. They will let you return the products you’ve purchased within 365 days, free of charge and as their return centers will check the products you will be credited within 7 days with the money you’ve spent.
Ecommerce customers love a great return policy and you need to be ready to handle one. The logistics involved in such a return process are usually dubbed reverse logistics. This means you will reverse the steps mentioned above.
Basically you will unship the products, unpack, unpick and un-order everything.
If you offer free shipping, you will have to handle the shipping costs from the customer to your return center (for small and medium companies, the return centers are the same as the fulfillment facilities).
Now, the big problem when getting information on handling returns is that most of the resources out there are either
irrelevant (usually stating how important return policies are or how to market your return policy) or
boring (usually a bunch of text mixed by logistics experts that have no need to explain how reverse logistics work)
What will follow will hopefully be a bit more relevant and a bit less boring. The big idea you have to keep in mind is returns are the reverse process of everything you have read so far.
You will have to tailor the following concepts to your specific company structure, accounting, IT systems and processes.
That being said there are three main areas you need to focus:
1. Getting the products from the customer and into your fulfillment center.
There are usually three main options to do this:
using your shipping partner: most shipping companies offer return services. What they will do is go to the customer, pick up the package and send it back to you. Either you or the customer have to pay for these services. Companies offering free returns also include a special options for customers to use within a certain timeframe, in order to ship products back. This is usually a special voucher the shipping company will then use to charge you instead of the customer.
using your own network of brick and mortar stores: if you also have a network of stores (either classic or pop-up stores) you can direct the customers to these stores to save on shipping costs
2. Getting the products back into inventory
Once the products are back at the fulfillment center you will have to get them back into inventory. The process is similar to what you would do if you were to receive goods from your supplier. The main differences are:
in terms of accounting this operation will be treated differently
products need to be checked for damage or missing items
instead of paying your supplier, you will either credit the customer
3. Returning payments to the customers
Once the products have been checked and returned to the inventory, you will need to issue a refund to the customer and inform said customer of these changes.
And … that’s it.
It may seem complicated right now but keep in mind that thousands of online store owners are doing all these things. Now that you’ve got the basics, you will be able to deal with most of the operation challenges you will face. If there is anything else you need to know – just ask in the comments sections bellow.
You are now ready to start your online store but you’re asking yourself – “How do I register my ecommerce business”? This short guide will show you how to register your business and how to build the operations basics . At the end of this article you’ll find a link to an article that shows how you can find ecommerce dropshipping partners, suppliers and how you can integrate with those suppliers.
How do I register my online store as a business in the US?
Note: This part of the guide is intended to work as a guide mainly for readers that want to register an ecommerce business in the US. That’s why some of the acronyms and type of companies you’ll find in here are going to be aimed at those of you registering your ecommerce business in the US.
That being set, most of the information you’ll be reading here is in essence applicable in other countries or regions. Even though business structures may have different names and have slightly different usage in different parts of the world, their purpose remains pretty much the same, as globalization tends to level the playing field.
First off: why do I want to register my ecommerce store as a business?
Sure, planning and building your business is a great way to spend your time and effort. But you also need to work as a legal entity.
There are basically two ways you can register your business:
as an un-incorporated business (solely owned or owned by a partnership) or …
an incorporated business.
How do I register my ecommerce business as unincorporated?
You can start as a Sole Proprietorship (the most popular type of business for ecommerce entrepreneurs) and move to other forms of businesses as your chances of success increase.
If you are the sole owner of an online business, the Sole Proprietorship (also known as DBA – “Doing Business As“) is the easiest form to register and manage your business. So if you ask yourself – how do i register my ecommerce business if I’ll only work myself on it – this is a good choice. It actually works as an alias for the individual doing the business.
Do note that the owner is personally liable for the company. That means that all debt is imputable to the owner. However, as Sole Proprietorships are usually low-liability businesses, a lot of startups work under this type of legal entity.
The second big option in starting an un-incorporated business is the General Partnership. In Partnerships, more individuals get together to start some kind of business. This is a great answer if you’re asking yourself – how do i register my ecommerce business with someone else. Just like the Sole Proprietorship, Partnerships are easy to set up and manage and because partners share equal control on the company, the liability and profits are also shared.
How do I register my ecommerce business as a corporation?
Like I’ve mentioned above, the second category of companies falls under the “corporate” model. When you’re incorporating your company you don’t become a corporate behomoth and you don’t automatically get billions in revenue, as one might expect. It just means you’re operating under a different set of rules. Plus you get to do a bit more paperwork.
Why should I incorporate my ecommerce business?
Let’s say you might think – how do i register my ecommerce business as a corporation and why?
The most important reasons to incorporate your company as an entrepreneur are liability protection and documenting deals with partners.
By far liability protection is the most important reason to incorporate your company. Under a corporate structure, your business is treated as a separate legal entity. If things go awry in your registered ecommerce business (and sometimes they do) the company is liable for paying all debtors, not you. That, of course, if you have been operating your business in a legal manner.
Basically, registering as a corporation will keep your assets (house, car, golf clubs) protected from any issue that might arise operating the business.
The second important reason to incorporate your company is documenting a business deal with partners. Whether you are raising money from investors or selling shares in your company, you need a corporate structure to do this.
Cons of incorporating my ecommerce business
You may hear other reasons why you should incorporate your company, things such as tax benefits, business credit and transferable ownership. But don’t rush to register your corporation just yet. Most entrepreneurs are doing just great running un-incorporated business in the beginning. Tax benefits are usually tangible when your company is already successful enough. So if you are just a startup, you can probably forget about tax benefits.
Building business credit means companies are evaluated independently from their owners but that doesn’t necessarily have to be a good thing. If you are a startup with no cash in the bank, no sales and no clear plan, that fresh business credit won’t be of help much.
Finally, saying an incorporated ecommerce company is a lot easier to transfer to other individuals or companies leaves out a very important aspect. Before transferring your company (hopefully selling it for lots of cash) you need to build this ecommerce company. So again – this won’t help you that much either.
But the biggest disadvantage small ecommerce businesses that incorporate have to face is paperwork. Lots of paperwork. You will have to fill in state reports, organize annual meeting and deal with involved bureaucracy.
Then there’s the fees. You’ll be paying fees for legal council, tax filling and others. Professional help is not cheap. Plus you get the minimum franchise taxes and others. These amount to thousands of dollars in fees, which is a bit much for small business owners.
So incorporating a company is no easy feat. Or better said – it’s not easy to manage an incorporated company if you are a small ecommerce business owner working alone or with a small team.
But if you do find yourself in need of incorporating the business, here are the most important type of corporations you can choose:
LLC – Limited Liability Company
You have probably heard one thing or two about LLC (Limited Liability Company). It’s the most popular form of business among small and medium businesses, including online store owners. It combines what is called pass-through taxation for its members with the limited liability corporations provide.
Although not technically a corporation, it is a great choice for those that want to join a limited liability partnership. It basically works as partnership or sole proprietorship in terms of taxation. This means the owners (called members) pay taxes on the LLC’s profit directly. The company doesn’t fill taxes separately, which makes things a lot easier to manage.
This types of businesses are actually pretty young as a commercial concept. The LLC structure was first formed in 1977 and now it’s accepted in all US states and a throughout most of the world.
At the heart of LLC stands the “Operating Agreement“, a document signed by all members, setting the rules under which the company will be managed. It covers things such as profits sharing, company management, adding or removing members and more.
The LLC is the most popular choice in the world right now for forming partnership, usually chosen by groups of up to 5 members.
Although starting and managing a LLC is less complicated than a corporation, it is still more complicated than starting and managing a sole proprietorship or a partnership. You will probably have to hire a legal counselor to help you with the set up and operating the company.
The Regular Corporation (C-Corporation)
The Regular Corporation is … well … the corporation. A company organized as a corporation is a separate legal entity from its owners (called shareholders). The company can thus protect owners from liability issues or company debt.
The corporation provides advantages such as:
easier capital inflow (through stock sales),
ownership can easily be transferred through stock transfer
being a separate entity it can and will act independently from its owners. This means it can sue and get sued, it can own property and it will be taxed independently from its owners
tax advantages can be substantial (a lot more business expenses can be deducted)
Once the corporation is set up, it will pay taxes separately from its owners. This can lead to double taxation as companies are taxed on profits and once those profits are distributed, shareholders will also have to pay income taxes. The double taxation problem is solved by incorporating as a S Corporation (see below).
Corporations are not necessarily ran by its owners. The shareholders own company stock. This gives them the ability to elect Directors, organized under a board of directors. Once this board of directors is set up, they appoint Officers (CEO – Chief Executive Office, CFO – Chief Financial Officer etc.), which are the people that actually run the company on a daily baisis. Of course, if you own 100% of stock, you can appoint yourself as the one and only director, be the officer and run the company.
On the other hand, if your company will be owned by more individuals, the Board of Directors and the Officers will run the company. Both the Board of Directors and The Officers have to abide to an internal company document called “Corporate Bylaws“. This document sets the rules on operating the company and can be extended or modified as the company evolves.
The Corporation is a lot more formal than the LLC and of course, the Partnership or the Sole Proprietorship. The records have to be carefully maintained, there is a mandatory yearly Directors and Shareholders meeting and every decision has to be documented and reported.
Although the corporation is harder to form and maintain, it is the oldest and most reputable form of business organization.
Registering as a S-Corporation
When registering as a corporation, you should take into account the S-Corporation. By filling in the appropriate tax election form to the Internal Revenue Service, the company will be taxed as a Sole Proprietorship or a Partnership.
The main advantage for you and your partners is that income and profit is passed through to the shareholders, thus solving the double taxation problem mentioned above.
Even though you’ve solved the double taxation issue – you’re still stuck with the paperwork and specific regulation, which can be a burden for online retail startups.
To wrap things up, here is a rundown of the main types of incorporated business structure you can choose, each with its own pros and cons:
Once you have decided on whether you’re registering your business as a sole proprietorship or incorporating it you can check the specific regulations for your state here and start the registration process.
Why is product distribution so important? Because it’s a big chunk of the cost of shipping a physical product. How so? Well – a very important part of retail is pricing. The most important part of pricing is the cost. To get a complete view of how much a product would cost, retailers think in terms of net landed cost.
Listen to this article below:
What is net landed cost?
The net landed cost is the sum of costs associated with manufacturing and distribution. When thinking in terms of net landed cost you have a better chance of understanding your total cost.
Net landed cost = Costs(Product manufacturing + Product distribution)
A common fallacy is thinking of costs just in terms of manufacturing, either from a purchase only point of view (how much you pay your supplier for a given product) or a more inclusive manufacturing point of view. The manufacturing point of view assumes that even if you are not manufacturing the product yourself, you still have the liberty to choose another supplier or change merchandising altogether.
The most important advancements in retail, in terms of supply and cost effectiveness, have focused largely on manufacturing costs in the past decades. This has lead to increasingly efficient production lines, a more competitive manufacturing market, shifting manufacturing overseas and many others.
This manufacturing improvement trend has had beneficial results on the customers life through more accessible, more diversified merchandise. It also meant companies managed to sell more, to more people. Companies such as Walmart have grown to their existing magnitude thanks to a wide network of suppliers, providing them with products manufactured at the best possible cost.
Product distribution lagged behind for a long time. Explosion of ecommerce is changing this.
Lots of retailers improved their ties to manufacturing but there was one part that has been left mostly untouched. That was the product distribution. Distribution costs have decreased but not dropped.
To get a better view of why, get a glimpse of what are the factors that weigh in the distribution costs basket. Here you have costs associated with getting a product from the manufacturer to the customer. This includes freight, stocking, customs, costs associated with store development and maintenance, marketing costs, customer support and others. This is a very large area and a lot of work to be done. And it happens on a very wide area (globally) and in many un-optimized industries. Freight is still in the 20th century in many parts of the world.
Product distribution and delivery is changed by technology, data and omnichannel retailing
Today, distribution is changing, and it’s changing fast. As a result, the associated costs will follow.
At the forefront of this change we have several factors, one of which is omnichannel retail. Omnichannel means working with product delivery across all channels. The other two key game changers are technology data. This is how they weigh in and these are the areas that will be soon transformed:
Improving merchandise distribution by improving logistics
Logistics have not been fully transformed by technology. For example, freight has been virtually unchanged in the past decades. Think about it this way: cargo ships are still loaded after excel files are checked, faxes are sent and handshakes seal deals. For a large part, the industry is archaic and it’s but a question of time until it will be transformed. There is a lot of room for disruption and companies such as Freightos have challenged the status-quo and promise 10-17x ROI. In weeks.
And it’s not just freight. Fleets of small vans contractors have taken up the Uber model and are now roaming the streets of Hong Kong to deliver goods the likes of DHL and UPS can’t.
Working with shipping hubs + local stores decreases product distribution costs
Working with a combination of warehouses and local distribution centers (such as local stores) makes possible and desirable a few things that previous retail models couldn’t. First of all it allows for a better inventory transparency and improved shipping effectiveness.
In the past customers would otherwise expect orders placed online to be shipped at home with larger costs and delayed shipping. Now they can just pick up orders in store. The 2020 Covid-19 outbreak accelerated this trend.
Even more: they can have the closest store ship their purchases shipped at home, instead of mixing the order in a large, central warehouse.
Omnichannel retail means selling online, in-store and distributing products from multiple hubs in a way that makes it cheaper, faster and more reliable. It also makes possible having just a limited number of products in store and keep the most either in the warehouse to be shipped when convenient or with a supplier. By reducing store footprint companies can reduce fixed costs associated with marketing and distribution of products, thus decreasing costs.
Better product distribution through better data improves marketing and advertising
John Wanamaker was a retail innovator. He is credited with the fixed price and money back guarantee marketing concepts. Wanamaker was one of the pioneers of the department store and loved advertising. He is also credited with the famous saying :
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Good thing that was more than a century ago.
Marketing is now changing rapidly and unfortunately for some advertising agencies, long gone are the days when the Mad Men of advertising charged millions for concepts that could or could not work.
With the rise of digital commerce and omnichannel retail and the smartphone to bridge the gaps, data is all around. Marketing is now data driven and the half of budget Wanamaker complained about can now be easily tracked.
Advertising is data driven and marketing costs are constantly improving.
By improving distribution and decreasing distribution costs we have two very important things happening. The first is that companies engaged in improving this area will be more profitable and more inclined to continue on this path.
The second thing is that lower distribution costs mean better prices for the consumers, therefore an improved appetite for consumption. Improved profitability and decreased prices – these are two very strong forces that will shape tomorrow’s retail. And it’s happening today.
It’s impossible to predict the future and basically that’s what strategy is. Based on historic evidence, data and outside factors, companies try to predict how the market is going to evolve and how they can best benefit from this evolution.
While strategy is rarely un-debatable and never perfectly executed, it is a very important part in evolving companies. Having a vision and the plan to achieve that vision is what makes companies such as Amazon, Walmart or Apple stay ahead of the competition.
But sometimes things go wrong and strategy mistakes happen. Here are three cases:
Listen to this article or read it below:
1. Overstock plans to develop media service, as predicted by The Onion
Overstock is one of the largest online retailers in the US. It is an Utah based retail company that has a 20 years background in commerce.
The company sells more than 1 million items on the Overstock.com web-store. The products used to range from home deco to jewelry to electronics to cars to insurance (both cars and insurance categories are now discontinued). Did I mention they run a pet adoption online service? And a farmer’s market?
You’ve probably guessed where I’m going with this. Focus is really not their strongest asset. The company has basically organised its strategy around the old “let’s just try everything and see what sticks” motto. This is, of course, the winning formula to tackle Amazon. This and of course Bitcoin, a surefire solution by the company’s CEO to fight the upcoming zombie revolution.
No, really, he actually said that:
“Someday, either zombies walk the Earth or something close to that[…]. Bitcoin is the solution.”
Patrick Byrne, Overstock CEO and Bitcoin Messiah. Source: Wired.
The strategy is so hilarious, Onion can predict it
Overstock’s strategy turned “un-focused” to hilarious when it announced its new media service aimed at Amazon’s Prime earlier this year. A bold move one might say, as Overstock is missing a few things called content, digital infrastructure, hardware (think about the Kindle), Amazon’s market share and media know-how. But they did get featured in the Onion a full 2 years before they’ve made the move.
2. Walmart spins off its ecommerce operation, then acquires it, then ignores it, then develops it, then makes it central. Sort of.
Make no mistake. Walmart is huge. Walmart is on top of the retail food chain (excuse the pun). It has more than 11.000 stores, in 27 countries and employs more than 2.2 million people. The company is the biggest retailer in the world with a revenue of $485 billion.
But that doesn’t mean it should be successful online, does it?
Walmart’s digital strategy is a bit … puzzling, if I may. The company’s “ecommerce” store has been online since 1996, about the same time Amazon started to grow. Unlike Amazon, Walmart.com didn’t really matter in the company strategy until 1999. That’s when the company announced the customers that no orders placed after the 14th of December could be fulfilled in due time for the holidays.
Walmart then decided to spin off that pesky thing called the online store in 2000 and transferred the operations in Silicon Valley, under a partnership with Accel Ventures. The reason, as mentioned in a throw-back article from 2002, is that online is “not where their customer base is”.
After an unusually horrible decision to shut down the store for a month in the fall of 2000, for a revamp, the store was just as bad as before. But it did managed to miss the 2000 holidays season due to a late re-start.
The company eventually realised the blunder and in 2001 bought back Accel’s share in the ecommerce company. Good thing they’ve realized just how important ecommerce was. It didn’t even take long to improve and redesign the webstore: just 5 years, until 2006.
Walmart was also quick to realize it can make a connection between the online and offline channels. In 2007, 11 years after it launched its online store, it launched the Site to Store program, allowing customers to order online and pick up in store.
Blunder after blunder, the company eventually realized the importance of stepping into a new era, one where customers are connected to Walmart digitally. The company has since changed its perception on ecommerce, hired talent and started experimenting with upcoming technologies.
Actually, in 2020, Walmart made one of its boldest move to the digital world – acquiring a share in TikTok, the emerging social media outlet. This might seem weird at first but it makes sense when thinking about live stream shopping. Live, rich social media seems to be the most effective way to sell online when it comes to Gen Z’s and millenials.
But if there’s something worse than an un-focused strategy and a rigid strategy, that has to be … no strategy:
3. Fab.com turns from gay social networking site to daily discounter to flash sales retailer to catalogue retailer to custom furniture designer. Within 4 years. Then switches to selling Yoga mats and classes.
Yeah, you couldn’t make this up.
There are very few cases where the lack of strategy and extensive investments are seen so clear within the same company. Fab is one of these rare fails. The company was founded by Jason Goldberg and Bradford Shellhammer and experimented with some pivots. Six that I know of, mentioned above.
It went on to raise a total of $336 million and for a while it could have been the next Amazon, or Ikea, or Apple, or whatever founder Jason Goldberg thought was the fad of the day. Eventually it went on to be a huge whole in the investors’ pockets and was acquired by an undisclosed sum in march 2015.
The whole story is outlined in this cautionary tale. It could be a very funny strategy fail if it weren’t such a sad story for investors, founders, employees and in the end – the whole online retail market. Fab is the story of what could have been, if someone were to lay out a smart strategy. Or some strategy for that matter.
However – one thing is for sure. Jason Goldberg is one hell of a resilient dude. 2021 is the year of Yoga mats and classes for Fab.
Across the globe, retailers have picked up on the omnichannel trend and try to give the customers what they want: the same level of service across all sales channels.
Some are doing better than others but everyone’s trying. Especially for multi-channel retailers, the switch is essential in keeping up with an increasing competition from online pure-plays.
The switch is not easy and certain bottlenecks stand out:
1. Multichannel commerce (ecommerce + in-store) is sometimes treated as a marketing or tech buzzword. Hint: it’s not
When you say omnichannel you say “all channels”. When you say multi-channel – pretty much the same thing as most channels are in-store or ecommerce. You have to think of all the sales and distribution channels you manage. Hence the “omni”. That certainly looks like a marketing area and to a certain degree, it is.
But to make omnichannel a reality instead of long consultative talks, you have to go beyond marketing and into the dark woods of technology systems and process management. That’s the hard part. The change comes when companies and especially executives leave aside their differences and interact to connect cross-department processes.
Yes, omnichannel is marketing driven but it needs inventory transparency, it needs technology investment and updating and it needs a change in internal processes and culture.
Yes, culture because…
2. There’s a lot of sales cannibalization between channels
Mid to large retailers that switched from brick and mortar to multi-channel did this by adding silo-ed sales structures one after another. First came the brick and mortar operation, then came the online store, the call-center, the mobile sales and so on.
Each of these channels eventually developed into a full-fledged sub-organization. It is not uncommon to see, for example, ecommerce departments with full operational structures from purchasing, warehouse management, picking and packing, sales, marketing and others.
When such structures emerge, a certain type of independence emerges also and this can lead to channel cannibalisation. Simply put it’s one channel stealing sales from another, instead of working together for the customer and the common (company) good.
That’s why a change in culture is much needed when striving to implement omnichannel retail policies. Any customer should be encouraged to buy from any channel, as long as it stays within the retailer’s domain.
3. BAGA is a lot more complicated than it seems
BAGA stands for “Buy Anywhere, Get Anywhere“. Buy online, pick up in store. Or at home. Buy in the physical store and receive at home. Place an order on the phone and pick up in store.
It’s complicated just working with two or three of these scenarios. When you add general inventory transparency, cross-store orders and supplier availability it gets a lot more complicated.
That’s why a BAGA policy should be built after implementing:
inventory transparency policy and technology. This should spread across the full inventory spectrum including warehouses, stores, in-movement goods and suppliers.
customer master-data management. The customer is the same across all channels and should be recognized and its treatment personalized on demand. Think of this area as a CRM on steroids that spreads across all channels.
product master-data management. Product information should be available on all channels, when needed and in the right format.
cross-channel marketing policies. Think marketing independent of channel and at the same time available on all.
These are just three of the most important factors that slow down omnichannel adoption. The fourth is probably the fact that some companies are just so tired of working their way through ecommerce adoption that they are unwilling to move forward.
It takes willingness to discover the benefits and what omnichannel is. For many, the switch is rather simple in terms of technology. It does bare costs in willingness to learn new concepts and implement these concepts within the company.
4. Coronavirus made all stores go warp-speed on multichannel adoption
In 2020 all businesses had to go all digital and all channels, in order to survive. Most affected were the brick and mortar chains, with 15000 stores closed and roughly 2 million employees laid off.
As the economy shows signs of rebounding, even in the midst of the pandemic, most of the re-growth has been based on the response companies have had into improving their experiences across channels.
The term “robot” essentially means “worker”. It was coined by Czech author Karel Čapek in his science fiction work R.U.R. and since then it has become the standard term to define semi-autonomous machines.
It really is hard to define what we actually think of when we say robot. It may be an anthropomorphic fun figure such as Honda’s Asimo or a somewhat creepier animal version of it, such as Boston Dynamics’ Spot.
But it can also be a simpler and more applied machinery. Robots can be built to handle some of the most menial and repetitive tasks, including those that have to do with ecommerce fulfillment.
In terms of operations, fulfillment means everything that has to do with getting ordered merchandise to the customer. It includes picking and packing and let’s face it – it’s boring and repetitive. The robots below do just these things. Robots, unlike people, require no pay and are available 24/7. Whether using robots is effective or not, moral or not, it’s up to you to decide. But no matter your view on the subject, you have to admit they look awesome.
Fetch and Freight from Fetch Robotics make the company grow from less than 10 to more than 1500 employees in just 5 years
Back in early 2015, Fetch Robotics was startup company. They’ve received $3 million in founding and started working on a mysterious warehouse robotics project.
They’ve unveiled not one, but two robots aimed at helping warehouse staff make it through the long corridors. Their names: Fetch and Freight. Below is Freight, my favorite, a little guy following around picking staff and going back to base when orders are finished picking:
In 2020 they are beyond their Series C, with $94 million raised and over 1500 employees. Seems things are going great.
From 15 000 to 200 000 Kiva Robots in Amazon Warehouses in just 5 years
In 2012 Amazon paid $775 million for Kiva Systems, a Seattle based company manufacturing warehouse robots.
In just two years Amazon integrated the technology and in 2014 there were 15 000 Kiva robots doing the picking and packing job twice as fast as humans could. Inventory was moving twice as fast and products were delivered to packing stations in just under 15 minutes, faster than any human could.
We expect historic changes to be a bit dramatic. We think of “Evrika!” moments when inventors discover new technologies that make our lives better.
The reality, however, seems to sneak up on us. We now know how important the Internet is but few would have guessed it when it was used to exchange short bits of information between academics. Same for Google – it is now easy to see how important having the global stream of information at your fingertips actually is. But it was a lot harder when the concept was still in its infancy.
Not even Steve Jobs could have predicted the impact the iPhone would have on the world. And I believe Elon Musk will look back on these days and be surprised by the changes Tesla brought to the world.
When Elon Musk announced the Powerwall, the world shook a little bit. Its beautiful design and promise of energy independence seemed almost dreamlike. But the Powerwall shows a far larger vision than just making the home energy independent.
It is a promise that we could harness the virtually unlimited energy of the Sun and store it. Storage, you see, is the real problem. The complex systems we use are powered by energy that is consumed almost instantly. Our cars, our electronics, our planes – they feed on streams of energy as it is formed. Even the best energy storage systems fail after a short while.
The batteries that can save the world
The promise that one day a company (could it be Tesla?) can find a way to harness and store the sun’s energy (or any type of green energy for that matter) has an impact we can hardly predict.
The implications range from pollution reduction to geopolitics to economics. Especially economics. To understand how much we could save by switching to green energy, have a look at this estimate for an average Tesla car compared to one running on fossil fuel:
Think that’s a lot? That car “only” logs 120 000 miles. Compare that to the 397.8 billion miles logged by all trucks used for business purposes (excluding government and farm). In the US alone.
Now mix the numbers and add the savings Tesla’s technology can bring.
Add something else: sun-powered electricity. Think of trucks and ships that can move goods around without any need for refueling.
Because that’s where the real change comes in. When products are manufactured and shipped at a tiny fraction of what they are today, everything changes.
When we take out the distribution costs, the energy costs and any other costs associated with energy from our current commerce paradigm, everything changes in the world.
The products we buy would have costs that would be driven to the ground. Without costs associated with energy consumption and storage, goods would be manufactured cheaper and faster (instant energy), shipped cheaper and faster and consumed by more. We could have cheaper products, consumed by more and believe it or not, more profitable to sell.
But how could the system change?
There is only one thing stopping this: the current transportation and energy system. Musk’s vision has already stirred things a bit with car dealers. What happens when the company will go against the global leaders in energy and transport companies, the ones still relying on fossil fuels? These companies would have to change or fight the change. The former is what one might expect.
That’s where the Uber concept comes in. Uber connects, as you know, smaller professionals that provide transportation services. Right now this is limited to personal transportation. Uber, today’s Uber, acts as a glorified cab dispatcher.
But tomorrow’s Uber may have bigger ambitions. Somewhere behind the scenes, investors know that there’s more to Uber than meets the eye. The reason the company landed a $41 billion valuation is that it has the potential to change the global transportation system. Not just personal transportation but all kinds of transportation.
That includes making sure goods are quickly moved from manufacturing to storage to the consumer. Don’t take my word for it. Uber has been experimenting time and again with logistics. And if Uber won’t, there are other companies that will.
So you have virtually unlimited power. You have storage. You have the a system that makes sure goods are sent to the right destination by the optimum freight. This means the kind of change we now can’t fully comprehend.
As you know, a disastrous 7.8 magnitude earthquake has hit Nepal. The earthquake claimed the lives of thousands and left many more wounded or without shelter. In an effort to bring relief to the area many nations, individuals and global companies joined hands.
Among these were global logistics companies DHL, FedEx and UPS. Since disaster hit, they have been providing logistics support, know-how and even funds.
Their humanitarian efforts are worth recognition and their philanthropic commitments need to be known:
DHL Group responded in just 48 hours after the tragedy. Their Disaster Response Team was deployed on the scenes to help with incoming international aid and provide logistics support in distributing goods.
FedEx was also among the first to provide support to disaster relief agencies. Their efforts included assessing needs, shipping water treatment systems from Water Missions, water chlorinators and large water tanks, thus providing fresh water for up to 70,000 people per day. FedEx soon followed with logistics support for medical treatment, serving 10 000 people per day.
Last but certainly not least, The UPS Foundation committed to providing both logistics support and $500 000 in funds to aid recovery efforts. The foundation, acting as the philanthropic arm of UPS, provided these funds to “United Nations High Commissioner for Refugees (UNHCR) to secure shelter supplies and solar lanterns as well as to The World Food Programme for emergency food assistance such as high energy biscuits, and to CARE for the purchase of supply kits including tarps, blankets, jerry cans and toiletries.”
These efforts show just how important logistics support can be in helping those in suffering, especially in such times of distress.
Amazon is testing drones and Google is building self-driving cars. At the same time Mercedes and Volvo are each developing its own solution for moving goods by truck in a driver-less manner.
Building driver-less trucks or at least improving the truck’s autonomy in a way to improve the driver’s performance could be huge for logistics.
How big? Well, in 2012, the US logistics industry totaled $1.33 trillion, 8.5% of national GDP. In that year, truckers moved 9.4 billion tones of freight, 68.5% of all freight transported in the US (source). To say that trucking is big is really an understatement. The trucking industry is backbone of global logistics. Without it, there would be no retail as we know it.
But moving billions of tones of freight is no easy task. To do so, truckers need to eat, rest and be alert during the whole trip. The trip itself has to be as fast and as cheap as possible. Otherwise, logistics would become useless or too dangerous to drivers.
Volvo, Mercedes and others are tackling a very difficult task: how could one improve the trucking industry in a way that can replace drivers in the future, but be met with joy by said drivers. Technology may replace truckers one day but today, they are the one in charge so truck makers need to make their job as easy as possible without making it useless.
The road train
Volvo has joined European backed project SARTRE that aims to make highway driving safer with the help of road trains. Simply put, car and truck drivers can join a group lead by a professional driver. While in this highway group they can relax and the cars will do most of the work by just mimicking the leader car.
This will mean fuel efficiency, safer roads and of course longer trips which logistics companies could really use. The video below shows a demonstration on how cars can connect through wireless technology and copy the leader car movements. The technology could hit the roads as soon as 2020, if legislation is in place.
“It never gets tired. It’s always 100 percent and sharp. It’s never angry; it’s never distracted” said Dr. Wolfgang Bernhard, the Daimler board member for trucks and buses.
This year Daimler launched a truck prototype dubbed “The Future Truck 2025”. The truck can accelerate, steer and stop by itself. It can also go up to 85 km/hour (52 miles/hour), it navigates with the help of a built in GPS system and looks a bit like a starship. The driver needs to get the truck on the highway, merge with incoming traffic and hit the “Highway Pilot” setting. From that point on, the truck driver can recline in his comfortable chair and take a break. At any point, the system can be overridden by the driver.
However, The Future Truck 2025 won’t be joining our highways for a few years from now. Legislation for self-driving cars or trucks is not yet in place but Daimler is patient enough to get us and legislators prepared for it.
Once these trucks will hit the market, drivers will be ready to carry more freight, ship orders safer and farther. Logistics companies will improve costs and will be able to increase their reach. In the end – technology will do what it has always done: make everything faster, better and cheaper.