Finding the Right E-Commerce Business Partner

By Jennifer Schiff | Posted September 09, 2005

Colotraq, a kind of LendingTree.com for hosting and co-location services, knew it needed to automate its back-end systems and processes if it wanted to stay competitive. But the company was concerned about cost. Company President and CEO Dany Bouchedid had looked at off-the-shelf software, but nothing quite fit the bill. "We needed software to be developed for us," he says.

Over the course of three years, Bouchedid hired three different developers to help him with his back-end automation project.

"Every time we would hire a company, spend X dollars, and not get what we wanted," recounts Bouchedid. "They blew it big time. One was offshore. I completely regret that. Between the time difference and availability, we were literally losing days with every phone conversation."

Bouchedid does not go into detail about the other two. Suffice it to say, they didn't have the right stuff.

However, Bouchedid's story has a happy ending. A few months ago, while riding the train, Bouchedid met Aric Rosenbaum, the president of AR Consulting. It turns out the two were neighbors — and had a lot to offer each other. After a careful vetting process, Bouchedid wound up hiring AR Consulting — and he couldn't be happier.

"It's gone very smoothly," says Bouchedid. "I now know in retrospect I made the right decision. They've been absolutely fantastic. We actually ended up having this project be a little more complicated than they initially intended, but they didn't go back and try to nickel and dime us on pricing. I appreciate that kind of relationship pricing. They understand that we're going to now go to them repeatedly as we expand. We're going to make them our go-to software company."

To help ensure your next e-commerce-related project has a happy ending, here's advice from several experts about what to look for in a business partner, and what to avoid. What we learned could mean the difference between success and failure.

Look for a Partner with the Right Experience
"It's very important to understand that in a partnership, the company you are going to work with should have deep subject matter expertise," says Jonathan Ellman, senior vice president of corporate development at CommercialWare, a retail, consulting and direct-to-consumer company that has been in business nearly 30 years. "The Web provides lots of opportunities to do wonderful things with your brand, but it also provides lots of opportunities to jeopardize it if it's not done properly. So you need to find a partner who first and foremost understands the world of Web commerce and understands your business."

Dany Bouchedid of Colotraq couldn't agree more.

"Don't just go with a software company or a partner because they've been around for 17 years if all 17 years they have been doing something completely different," he says. "You want to find a business partner who has actually done exactly what you're trying to do, or at least something very similar where you can see some transferability of skill set."

Put another way, "you're really looking for someone who has been there, done that," says AR Consulting's Aric Rosenbaum.

For example, if you need to upgrade an order or customer relationship management system, find a developer or partner with experience doing just that, and for a business your size or in your product category.

How and Where to Find the Right Business Partner
Even though Bouchedid had a good "gut feel" about Rosenbaum and AR Consulting, they weren't a shoo-in for the job. First, Bouchedid interviewed Rosenbaum and one of his developers at his office. Then he Googled the company and checked out some technology blogs to read what people were saying. Then he called references and carefully reviewed AR Consulting's proposal. Then he did the exact same thing with several other companies before ultimately hiring AR.

However, in case the guy (or gal) sitting next to you on the train or on a plane turns out not to be your next business partner, there are some tried and true ways to find the right match for your business.

"Word of mouth is terrific," says CommercialWare's Ellman. "Business owners are so happy to share their experiences and talk to one another. I think it's always great to ask those who are similarly situated to you — either in size or in product — for people they've worked with who they've had good experiences with, and less than good. And drill pretty deep as to what worked and what didn't, because what someone else sees as positives and negatives may not be positives and negatives for you. I think that's the first step."

"From there, I'd make myself visible at the various trade shows. There are so many trade shows where business partners are demonstrating their wares. You can meet people face to face. You can do comparison shopping on site. There's no better way to understand what your options are than to visit several shows," he adds.

Once you think you've found a good company, "do due diligence," says Ellman. "Do it hard. Don't just talk to people. Don't just go to the shows. But read up. Go to Web sites. Get a sense of the partners on the Web. Go through their client list. Make phone calls. You go to the CommercialWare Web site. All of our clients are there. Pick up the phone and call people. Talk to them. All of us shop on the Web. Some sites we love. Some sites we hate. Call the ones you love and find out who they're using. It's invaluable."

Things to Look For, Questions to Ask
Just because a prospective business partner has the right experience and good references, it doesn't mean that company is the right partner for you.

"The first question you want to ask is, what is your approach to conducting business with me?" says Ellman. "What can I expect in terms of your engagement, the type of people you're going to give me, how we're going to work together? How is my project to be managed, both operationally and financially? And what's expected of me to make this successful?"

Howard Flax, the CEO of Flax Art and Design, "a candy store for the creative" and a satisfied CommercialWare customer, advises fellow small- and mid-sized business owners to look for a good pedigree. "How long have they been around? What is their source of funding? Are they going to be around in five years? Ten years?"

You should also find out, up front, how many projects your prospective partner is currently juggling and what that could mean for your project.

"Most companies forget to ask that," says Bouchedid. "They like the price and they go for it, but what they don't get is the reason the price is so low is because [the developer] is biting off maybe ten other projects at the same exact time. They're going to be stretched really thin. You're not really going to have their undivided attention. And the project is going to take a lot longer than you thought."

So to make sure your project is going to get the attention it needs, establish a timeline and schedule of deliverables with your partner up front, with checkpoints and/or deadlines along the way.

Another factor that may help or hinder your project is where the prospective partner is located. While offshore developers can offer appealing prices, if you need assistance right away, someone in India may not be your best bet.

That was one of the biggest reasons Colotroq wound up going with AR Consulting.

"They're literally two minutes from our office," says Bouchedid. "And I get a sense of comfort knowing that we can just drive over to their office or they can come here, which they often do, and sit face-to-face and work out a kink or a bug in the software."

If you are looking for a long-term relationship, Flax, whose business has been around for 65 years and has worked with many different business partners both online and offline, advises fellow business to ask, "Will they be a partner you can grow with? Is their product scalable?"

Short-Term or Long-Term Relationship?
"If what you're looking for is someone who can help you to grow your business long term, that's something to work for," says Ellman. "CommercialWare believes in the lifetime value of the partnership, that the implementation of the software is merely the first stage of a long-term relationship. This is not true of every partner you will talk to. Some partners don't have that philosophy. It's, 'here's our tool. We'll help you implement it.' They're not necessarily engaged in nurturing the relationship."

Your Responsibilities as a Business Owner
First and foremost says Ellman, "you cannot expect the business partner to make everything happen for you. If you try to put the entire burden on the partner, my experience has been that it can lead to frustrations."

That's why Ellman encourages business owners to have someone on staff, or on contract, to manage the process on the client side — which is exactly what Flax did.

"The partner generally has a very strong project manager," says Flax. "So the client has to have a project manager of the same quality. The temptation is to use people from within. But because we've been down this road a couple times before, we hired someone specific to the task, a contractor, and it worked out beautifully."

It is also up to the small or mid-sized business to understand what is expected of it, in terms of deliverables and responsibilities.

"We have our own set of deliverables on a regular basis that we have to get to AR in order for them to do their job," explains Bouchedid. "I told them that the day we signed the contract, if you guys ask us to get you x, y and z, we will literally drop everything and get you x, y and z.

"With many larger clients it just doesn't work like that. Larger companies that hire guys like AR Consulting are just so busy sometimes that AR might need this and that in order for them to go to the next step in the development process. And it takes two weeks to get that back from the client. So the key is, if you want these projects to run smoothly, you've got to hold yourself accountable in the same respect that you're holding these guys accountable, and drop everything as you would expect them to do, and get that deliverable to them. Otherwise you're just delaying the entire project."

Final Words of Advice
Rosenbaum, who has been in the consulting business for 17 years and has worked with companies large and small, offers these final words of advice:

1. Be realistic about what your goals are. Create a realistic budget (AR has done work for clients for as little as a few thousand dollars and as much as a million dollars — it all depends on the project) and schedule and divide the project into bite-size pieces. And don't go onto phase three until phase two has been completed and thoroughly tested.

2. Plan for cost overruns. It's just the nature of the beast that as the project unfolds, some changes will probably have to be made or the project will take longer than you planned, and that will cost money.

3. Make sure you save some cash to market your new and/or improved Web site. "One of the biggest mistakes a small business owner can make is the mentality of build it and they will come," says Rosenbaum. "They create a store, but no one knows about it. No one is going. They need to spend money marketing to tell customers the e-commerce site is there for them to use. If a customer spends $5,000 to build [or upgrade] their site and nobody visits it, it's wasted money."

Adapted from ECommerce-Guide.com, part of Internet.com's Small Business Channel.

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