The “boutique” sector of the direct-to-customer marketplace is populated by thousands of modest catalogs, single-product companies that do direct marketing through magazine advertisements, food-product businesses, and replacement-parts operations. Please don’t call them small — taken in the aggregate, these firms are hardly miniscule. They have the same need to track merchandising, marketing, inventory, fulfillment, and customer service histories as the, ahem, larger direct-to-customer firms. But with annual sales typically cresting at $10 million and orders ranging from a few dozen to a few thousand daily, boutique companies generally can’t justify the investment in a fully functional, large-scale, direct-to-customer system.
Sadly, too many boutique companies don’t take advantage of what’s on the market. Instead, thinking they will save up-front costs, they try writing their own systems or opt for generic accounting software packages such as QuickBooks or Peachtree Accounting, which have “general” accounting features and limited order entry and order processing functions — nowhere near what the boutique direct-to-customer business systems can offer. Those that choose the boutique systems soon realize their benefits. Several vendors of these systems report that 60% to 65% of their customers renew their support licenses — a strong endorsement of the dedicated direct-to-customer boutique system.
The company that has done the most to bring PC-based direct-to-customer systems to the boutique sector is Dydacomp. Its M.O.M (Mail Order Manager) system has been installed by some 5,500 businesses to date. With its beginning price tag of $595 per user, that number should be no surprise. Other systems can cost up to $3,000 per user.
On the other end of the scale, some vendors of traditional DTC packages have been scaling down their systems for the boutique market in an attempt to gain brand loyalty from these firms early on. Ecometry has made a major push in this area, but initial results were less than acceptable to its users. The firm has since taken steps to regroup and re-address the boutique market, having purchased the rights to Wizard and Castle software from the former Haven Corporation.
Out of the box
Which boutique system is right for which company? That’s like asking which compact car is better — a Ford Escort or a Toyota Corolla. The answer depends on your budget and your needs.
Boutique systems are typically out-of-box software, especially on the less expensive end of the scale. The user company does the installation and takes the system live, with the help of manuals and telephone support. The user company determines set-up parameters (the ability to switch over from one function to another), works out the conversion from the previous system, and trains its own users.
Many times, these boutique systems are perfectly appropriate as is for their user companies, which tend not to be traditional catalogs. While they do require fulfillment and call center telephone entry and customer service applications, these businesses often don’t have catalog-oriented needs such as square-inch analysis, promotional analysis, percent complete, and forecasting.
In other cases, because the boutique systems are out-of-box software packages, the user company must adapt its business processes to conform to the software — or find work-arounds. It’s important for the user company to understand its own business requirements, and it’s imperative for users to talk to other users and to have the vendor demonstrate the work-arounds before purchase.
As with any software investment, it’s always wise not to trust in luck to avoid costs or enjoy benefits. Calculate the complete cost of installing a boutique system before purchase.
Some systems are ported or converted character-based COBOL systems; others are fully GUI in orientation, run on Windows NT or similar platforms, and are more user-friendly. Vendor demonstrations can help sort out which platform is suitable. And of course, it’s a good idea to talk with other users.
Don’t forget set-up. Some vendors will assist in the set-up of operating software and database systems and sell the equipment. Obviously, their costs are directly identifiable. Set-up can also be outsourced to a third-party company, at a cost that may equal that of the system itself. This is still far cheaper than a fully functional DTC system; the point is to consider all the costs beforehand.
A boutique system is great for growing a DTC business: It’s cost-effective, requiring lower capital investment than the large-scale technologies aimed at the biggest players. With the expansion of IT software and database capabilities, boutique systems are no longer just for smaller companies, either. No matter what their size, prospective users are well advised to do their homework to figure out which systems suit their needs.
Curt Barry is president of F. Curtis Barry & Co. He can be reached at 1897 Billingsgate Circle, Suite 102, Richmond, VA 23233; by phone at (804) 740-8743; or by e-mail at email@example.com (Web site: www.fcbco.com).
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