CASE STUDIES IN SUCCESS - ONLINE ENTREPRENEURS

Guest Speaker: Tom Graham, founder, AtYourOffice.com
Interviewer: Diane Watlov-Collins, President, MARKETINGWEB.COM
Date: April 14, 1999

Welcome to the MARKETINGWEB.COM Forum! The purpose of this Forum is to provide online discussion concerning the methods of Internet marketing.

**Marketingweb enters.

Marketingweb: Case Studies in Success, April 14, 1999

Marketingweb: Tonight our guest is Tom Graham, founder of AtYourOffice, a Web-based business that specializes in delivering office products to anyone, anywhere in the country overnight.

Marketingweb: AtYour Office is a completely virtual business practicing " just in time" inventory through its channels with forty different office product distributors. Through this system over 27,000 items can be ordered and delivered the next day.

Marketingweb: Launched in August 1998, AtYourOffice expects to generate a gross income of $2.4 million in 1999 and calculates expenses to be only 13% of revenue. The total number of AtYourOffice employees, three.

**TGraham enters.

Marketingweb: Welcome, Tom! Thanks for participating in the Forum.

Marketingweb: What led you to develop an online business?

TGraham: I was working at Unify Corporation, running East Coast commercial sales. As part of my job, I was selling java application development tools and became very interested in the Internet.

TGraham: At the same time, I had really wanted to start my own business. Very quickly, I began to see that I wanted to build my business on the Internet and I began to examine different business concepts.

TGraham: At first I thought about building a site for bicycles, but the revenue model didn't work. Then I started thinking of a site for people like me, who were running small offices and needed help doing it. I thought of designing a site full of content but I couldn't make the numbers work.

TGraham: Then at the urging of an Internet consulting firm I was working with, I started looked at adding commerce and office products. What I found was that office products was a $165 BILLION market and small office/home office was 43% of that market. My business was launched!

Marketingweb: Wow! You had some good advice prior to launch.

Marketingweb: I have found that many small businesses simply take an idea and try to launch without researching the true Internet potential.

Marketingweb: Snickleways designed your site. Why did you choose custom site development versus "template" or "shrink-wrap" e-commerce solutions.

TGraham: I looked at a number of options and decided that I wanted to build a site that could be scaled to large numbers of users and large revenue which was my business model.

TGraham: I knew that I couldn't afford high end tools like Open Market or Broadvision and knew that I didn't want a shrink wrap application development tool that would be a throw-away when volumes increased.

Marketingweb: So you wanted to be sure the solution could grow with you.

Marketingweb: Also, you had a large number of products for sale. Was that an important consideration?

TGraham: Yes, we had a large number of SKUs and had to be sure that we could manage the data. SQL/Server can handle that but a shrink wrap system might not. Since our store is mission critical, we had to be very sure that both the application and database could handle the catalog and transaction data.

Marketingweb: What has been your biggest obstacle to selling online?

TGraham: EYEBALLS, EYEBALLS, EYEBALLS! Since we have a limited budget for marketing, programs like our affiliate program have had a great deal of impact.

TGraham: It is a traditional franchise model where sites like Marketingweb.com advertise your site and share in the revenue generated by the sales.

TGraham: Everyone is a winner - the end-user gets a great deal (low prices, convenience and selection), Marketingweb.com gets additional revenue, and we get visitors who can potentially become customers.

TGraham: Obviously you see the benefit because it looks like you are involved in several affiliate programs.

Marketingweb: Yes, we are. However, affiliate programs can be one-sided.

Marketingweb: If affiliate programs are not well managed, a site can end up sending traffic that is not properly recorded.

Marketingweb: Tracking is everything to the affiliate member.

Marketingweb: We are running a study currently on the effectiveness of these programs.

TGraham: That is right. AtYourOffice.com built in affiliate tracking from the very beginning and actually offers real time reporting for the affiliates, so they always know how they are doing.

Marketingweb: That is very important. Sites that have online tracking have much better credibility.

Marketingweb: Third party tracking is also coming into play.

Marketingweb: BeFree.com and Commission Junction have some pretty good third party programs.

Marketingweb: What other means are you using to market online?

TGraham: We have signed a number of "portal deals" where we pay a slotting fee plus rev share. It is kind of a hybrid but has also worked for us.

Marketingweb: Have you gone to the small business association sites?

TGraham: Yes, one of our first affiliates was the American Association of Home Based Businesses.

Marketingweb: Press releases are good free publicity.

Marketingweb: Creating news can always be fun and it drives traffic too.

TGraham: How do you get out your Press Releases -- do you use a service like PRNEWSWIRE?

Marketingweb: Yes. First we submit to PRweb...it's free. Then we send it on to PRNEWSWIRE.

Marketingweb: There is also InternetWire and the Internet News Bureau.

TGraham: Are they free as well?

Marketingweb: No. But the last two are very reasonable.

Marketingweb: Creating special events online, like this chat, are great publicity items.

Marketingweb: Online sales or auctions can be set up as "events" and built up over a time period that brings traffic in to sign up and attend.

TGraham: I think that is right. I think your model is very good and also very helpful to the small business community. From your end registration is a great vehicle because you get repeat opportunities to email remind people of coming events.

Marketingweb: Exactly. It is opt-in, permission marketing...terrific. Better returns than any banner ad campaign.

TGraham: Bingo. If you get an opt in email address, it is like free advertising - especially for us because we have great weekly specials that we can remind people of.

Marketingweb: You have a newsletter, right?

TGraham: Bi-weekly sales flyers with extra great specials.

Marketingweb: Just in time inventory is a fantastic way to handle the delivery of goods. Can you tell us how you went about developing your supply channels? How is the supply chain integrated with your online orders?

TGraham: As for the inventory/distribution -- we fulfill our orders through a mature distribution company with over 40 distribution centers throughout the US. They receive our orders electronically, pick and pack the items, and then hand them over to UPS for delivery.

TGraham: We do not carry inventory, which limited the up-front investment we had to make. It also reduces our overhead SIGNIFICANTLY over other brick and mortar retailers.

TGraham: Choosing the distribution company and staying on top of the distribution is hard as was the selection of the right distribution model.

TGraham: I worked on this part of the business a great deal trying to calculate the margins, costs and various options available. We just hired someone who now does this full time.

Marketingweb: Yes! I noticed that your expenses were only 13% of gross revenue. Not bad, Tom.

Marketingweb: I think one of the most significant points of this interview has been the emphasis on planning.

Marketingweb: Sometimes people get a great idea and just want to run with it on the Net.

Marketingweb: Later...sometimes too late, they find the product or service didn't lend itself to e-commerce.

TGraham: I think that is right. We put together a very strong plan and are working that plan. Because of the fast pace of the Net, we end up making a lot of changes but the core fundamentals never change.

TGraham: I think that retail is retail - whether it is on the Net or not. Core competency like good pricing, customer service and strong execution are as applicable on the Net as they were 100 or even 1,000 years ago.

Marketingweb: Yes. You have to be able to change directions quickly and use "judo" competition tactics against the big guys.

Marketingweb: Use their weight against them. They can't move as quickly as we. Too many meetings! We make changes on the fly!

TGraham: That's right. There is even a Harvard Business School article on this.

Marketingweb: I haven't seen it yet. What issue?

TGraham: I'm not sure, but the article is extracted from a book called " Competing on Internet Time" by Cusamano and Joffe.

Marketingweb: I'll find it. Thanks! You have given us some valuable information tonight, Tom. We appreciate your participation in the Marketingweb.com Forum.

Marketingweb: How can people contact you?

TGraham: tom@atyouroffice.com

TGraham: This has been fun, I'd love to do it again.

Marketingweb: Me too! You were really fun.

Marketingweb: We have been speaking with Tom Graham, founder of AtYourOffice, a Web-based business that specializes in delivering office products to anyone, anywhere in the country overnight.

Marketingweb: We wish you all a pleasant good night!

** TGraham exits.

**Marketingweb exits.

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