Archive for February, 2007

I saw this ad last night and absolutely loved it - it really struck a cord as to where we are in our process of setting up systems to handle the stuff that’s between “Here” and “Germany”. FedEx is currently setting up shop to take on the domestic market in SA, this after recently buying out local courier service, Supaswift. We are going to give them a try soon…especially because they have nice boxes.

[gv data="MrMURochE6Y"][/gv]

Yesterday I set up a few Google Alerts to monitor anything that was written on the web with phrases like “Live Alchemy”, “Ideate” and “Yuppie Chef”. The buzz at the moment seems to be around a book by Michael Levy called “The Joys of Live Alchemy“. Unfortunately the book is not about how wonderful it is to work here, or to deal with our businesses. The opening sentence is “Everything relates to nothing…” It looks a bit over my head.

We tried our best to come up with name that wouldn’t be confused with other companies, and obviously the .com needed to be available. I didn’t think to search Amazon for book titles. For more tips on naming a company, have a look at this post on Ideate.

Every month, YuppieChef sends out a newsletter called, "Cooking Good with Sophia Lindop" and the service that we use to send it, Campaign Monitor has put us in their Design Gallery section for the second time. We like them.

To see the newsletters that made it onto the Gallery, go here and here.

And, if you haven't signed up to Cooking Good yet, go here. 

Trying to find the right packaging for your products may be harder than you think.

I spent the last two days phoning around and visiting packaging stores, trying (with very little success) to find suitable boxes for our YuppieChef orders. There is no one in SA that specialises in packaging for e-commerce (so there's a great business idea) and if you are a small business requiring a few variations without buying a huge amounts of each size - you will be in for a fight. In the end, we bought a R 12 ($ 1.50) box from PostNet and cut it down to half the size which took about 30 minutes. This is not how we want to be spending our time!

Looking abroad, Uline has a great range of boxes that can be ordered online and delivered. Here is exactly what we are looking for. So now we are investigating importing boxes, seeing as South Africa is barely coming to the party. We'll also be trying Johannesburg as we would like to keep it local.

If you know of anyone in SA who could help us with suitable packaging, please let us know. 

As an example of how great a company can be at customer service, before I finished writing this post, I received a response from Uline.

Dear Shane:

Thank you for contacting Uline Customer Service.

We do not ship internationally.

We would be happy to ship your order to a freight forwarder in the U.S.A so that they may forward your order to you.

Should your billing address be outside the U.S.A., please understand that we do request payment in advance with an electronic funds transfer.  

Please feel free to contact us if we can assist with anything else.

Thank you,

Diane
Uline

Wow!

A big reason that we are pursuing online businesses as opposed to physical stores is the relatively small amount of capital that is needed to set up shop. Our goal is to create the methods, systems, processes and marketing plans to launch a new business and have it supporting the owner within a year. Clearly we're talking a different language to the big boys. Netflorist have published a press release where they boast about their R3 million site redesign and system overhaul, apparently moving to Microsoft Commerce Server technology. I have to admit the site looks pretty good, and there is no doubt they are handling way bigger volumes than we are. But R3 million? If we had that type of cash we could hire 5 decent programmers and designers to work solidly for nearly 3 years. I wonder whether I could keep them busy for more than a few months?

At Live Alchemy we develop most of our website technology in-house (other than a few open source plug-ins or tools like Google Analytics), using PHP and MySQL, and hosting on Linux servers with Hetzner. We have explored various off-the-shelf and free shopping cart systems, but years of working on homegrown systems has given us a level of familiarity that is hard to give up. However, there is a lot to learn from other systems, so we will be reviewing and researching things like MS Commerce Server in months to come.

Napalm is a type of explosive used in various wars (particularly Vietnam) to incinerate large areas, killing the baddies and lots of good stuff at the same time.

Credit Card fraud is undeniably an issue that still needs to be resolved, and is a leading reason that people avoid shopping online. The banks and the credit card companies (eg Mastercard) are working on various strategies to combat this, but so far their only affect is to make it nearly impossible to do anything online any more. If you hold a Standard Bank Mastercard and attempt to make a purchase online, you will probably be taken to a page that asks you to "register" your card by giving it a username and password. Theoretically this means that if someone gets hold of your wallet or card number and tries to use it, they won't know your password details.

Unfortunately there are 2 problems with this plan:
1) 95% of credit cards have never been used online, and so this registration hasn't happened yet. If your wallet gets stolen and the thief uses it for the first time, they will kindly register your card for you. The only "authentication" that is required to register a card is your ID number, which would be found on your driver's license or other identification. If the banks were serious about this, why don't they make you come in to the branch and register your card? This week a friend needed to change the postal address for his statements, and Standard Bank made him come to the branch to perform that task (and no doubt make the 500th copy of his ID book).

2) The registration process doesn't work. I sat with a client while they tried to buy a Bug Zapper, and after filling in details she was redirected to a page on Standard Bank's server where she was asked to enter a username and password. First the password was to short, then the username was "already taken", then her session had timed out, then the page was just unavailable. By then she was very frustrated with the process, and of course it appeared to her that Bug Zapper was causing the grief. She gave up and did a bank transfer.
Today I tried to renew a software product with my Standard Bank Live Alchemy card, and at the end of the process I was told that my bank wanted me to register my card. In the frame where the Standard Bank page should have loaded, this error appeared:

Certainly not the most friendly of errors. I tried the process twice, and gave up.

So why is this whole thing such a stuff up? My guess is that the banks are under pressure to cut down on credit card fraud, but the online market is not a big enough priority for them to really care about. Yesterday I quoted Arthur Goldstuck predicting that e-commerce in South Africa in 2007 would reach to R1 billion in transactions. That is a drop in the ocean for the banks (Sandton City probably does more turnover than that in a year), so they have assigned a junior IT guy to set up the registration process and look after the server. Clearly he's on sick leave this week.

It's worrying for online stores like ourselves, who depend heavily on consumers being confident (and able) to make purchases with a credit card. Here is some advice for online business owners:
1) Give customers as many different payment options as you can - bank transfers, posted cheques and cash/cheque deposits.
2) Make sure that your order process allows a customer to switch payment option midway. If they are battling with the credit card system, they should see a big link offering that they pay another way.
3) Capture the customer's details before you send them to the credit card stage. If they give up at that point your back-end system should flag the order as "unpaid", and you can phone the customer to walk them through it, or ask them to pay with another method.
4) Test, test, test! Get hold of as many different credit cards as you can (in a legal way, of course) and test your site. Then get someone fairly internet-illiterate to test your site. We only discovered the Standard Bank issue when a customer came in to our offices and made a purchase on one of our computers. That's not the type of testing you want!
5) Make your support channels very clear on the ordering pages. Offer an e-mail address, phone numbers and even live chat.

This isn't an easy time to set up shop online, as we are all pioneering something very new. But who said this business would be easy? 

Mike Stopforth was at an Online Industry Summit recently, and quotes Arthur Goldstuck (the South African internet guru) as saying that online retail in South Africa in 2007 is estimated at being worth R1 billion. We aim to turnover around R1 million this year on the various Live Alchemy sites (otherwise we go hungry), so this means we might represent 0.1% of the South African e-commerce industry. Put another way, that's R1 out of every R1,000 spent online in South Africa will need to be on one of our sites, otherwise it's back to flipping burgers for Shane and I. A fairly bold goal, with fairly ominous consequences for failure.

Part of our goal with Live Alchemy businesses is to create a reason for South africans to buy online. Internationally there is a greater acceptance to shop with a credit card over the internet, and the volumes and efficient and cheap logistics mean that you can even buy things like a packet of cigarettes and have it delivered within an hour (have a look at LicketyShip and eGuo).

In South Africa we are faced with smaller markets (particularly due to credit card shyness and low internet penetration) and higher logistics costs, so we have to create a reason for our customers to buy from us instead of going to a retail store. One strategy is to sell products that aren't easy to find in bricks and mortar shops - would you know where to buy a Canadian flag if you needed one? Another strategy is to harness the interactive and custom nature of the internet to create a product that is much more difficult to reproduce in the real world. For example, Din Tuborg is a Danish brewery that lets you upload a picture to create a personalised label for your order of beer. They print the labels and deliver the beer to your door.

Another example is Nike.com, whose online store allows you to customise the colour of your shoes, and specify a "NikeID" which is a word or phrase that gets stiched into the shoe.

We need to come up with something similar for our sites. Why should someone buy a spatula from YuppieChef and not Boardmans or Mr Price Home? Right now I have no idea, but we're working on it! Perhaps a gift-wrapping and customised card service that allows you to send a spatula to your rusk-baking auntie in the Karoo without leaving your desk to go to the post-office.

Perhaps a spatula is not the best example of a good online product, but this is the challenge/opportunity that we face going forwards.

(Thanks Cherry for the beer link)