Netship founder and chief executive officer David G. Campbell offers a simple but not easy success formula for anyone contemplating entering the e-commerce arena.
“Anyone who wants to compete must have a value-added product,” Campbell told the E-Commerce Times, in an exclusive interview yesterday.
This is a concept Campbell focused on three years ago when he first decided to create a service for small to medium online merchants that not only would pack and ship their products — but also store their inventories in virtual warehouses.
No stranger to the packing and shipping business, Campbell founded Parcel Plus, Inc. in 1986 and grew the company to 120 franchises with annual revenue of about $25 million (US$).
Campbell, along with other Internet visionaries, realized that while e-commerce would surely experience skyrocketing growth, there was no infrastructure in place to assure e-marketers would be able to deliver their products in a timely fashion all over the world, or have the space to store them.
Underscoring this reality, a recent report by industry analyst Forrester Research Inc. said that the “logistics chaos” of fulfilling online orders remains a serious liability to virtual retailers and the industry as a whole. This is especially true — considering the approaching holiday shopping season.
For the last three years, Campbell has been recruiting members of this chain of virtual warehouses. Beginning with Parcel Plus franchises and branching out, he has put in place an infrastructure of 450 strategically located “Netship centers” throughout the country.
The benefit to e-tailers is that as they expand with the new e-commerce economy, the Annapolis, Maryland-based Netship can take care of their shipping, handling and inventory headaches.
“You don’t have to invest in a building or a lease,” Mr. Campbell explains. “You avoid fixed costs.”
The typical Netship client is a small to medium e-marketer that’s racking up 30 to 40 sales per month, with items valued at $75. In addition, the products can usually fit in a package no larger than 12 inches x 12 inches x 12 inches — weighing 5 U.S. pounds or under.
James O. Rumbaugh, president of Environmental Simulations, Inc., a software company that sells CD-ROMs worldwide, found Netship’s services were the next logical step in growing his company.
As with most software companies, the Pennsylvania-based business ships manuals, floppy diskettes and CD-ROMs in small quantities to many different locations.
“We quickly began to spend an inordinate amount of time packaging software, figuring out what customs forms we needed and taking it to our local shipping center,” Rumbaugh said. “This was obviously not efficient.”
The solution for Environmental Simulations was to hook up with a local Netship center in Blue Bell, Pennsylvania. The center now stores their software products and ships them worldwide via Internet orders.
“It saves us countless of hours and lets us focus on what we do best,” Rumbaugh added.
Import Or Export?
The problems of exporting products outside of the United States has killed many e-commerce ventures before they even start, Campbell said.
This is why Netship worked for more than a year to develop an alliance with Swiss postal service Danzas.
“It does revenues of $9 billion a year and has 29,000 employees,” Campbell explains.
But the bottom-line to Netship clients is that they can ship their products throughout the world — hassle-free.
In addition, through Netship alliance with Danzas, smaller e-tailers can also import products.
This is significant, Campbell said, because through importing e-marketers may be able to find less costly providers of the products they sell — without having to learn the thousands of duties and regulations governing such shipments. “We have definitely put some middlemen out of business,” Campbell said.
Netship’s Web site even has an information library where its clients can learn how to “import intelligently” by simply pointing and clicking their mouses, Campbell added.
Big Happenings In The Works
While Campbell has 450 Netship locations lined up, just seven of them are fully operational, but he expects to have 30 rolled out within 60 days.
“Quality control at the end of the day is going to make the difference,” he said.
Because of this, Netship plans bring each of it center’s operators to one of the 30 up-and-running locations for intense training.
The plan is to make sure that Netship locations become standardized, not unlike McDonalds, Campbell added.
Meanwhile, Netship is in the process of negotiating the infusion of $4 million from an undisclosed venture capital firm by November. In addition, Campbell said Netship is about to close a “monster” deal with a major IT company to provide it with the latest technology and also close a deal with a major transportation company. He declined to identify either company.
“We plan to take Netship public within 18 months,” Campbell said.
Despite all the positive developments, Netship finds itself facing some competition. Shipper.com a company that was created by Pasadena, California-based idealab! launched a similar service this summer. But Campbell said it’s light years behind Netship because it doesn’t have its infrastructure in place. Moreover, there’s another advantage Netship has over its competitors, Campbell said.
“The key is our locations are owner operated,” he explained. “If they suddenly have a surge of business at 7 p.m., they’re not going to go home until it’s taken care of.”