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About 4581 days ago E-Commerce

Sweet Deals

E-Strategies Mrs. Beasley’s delicious business has grown richer, thanks to a new ingredient: a shrewd E-commerce strategy Charles Bronson knew exactly what to give his friends for Christmas one year: picnic baskets filled with cookies, cakes, and breads. And the veteran tough-guy actor knew exactly where to get them: Mrs. Beasley’s, the Los Angeles bakery whose impeccably presented pastries are widely considered just the ticket for Hollywood wrap parties, opening nights, and Oscar galas. At the time, Mrs. Beasley’s didn’t actually carry picnic baskets. But what Bronson wants, Bronson gets. So the company found some suitable straw hampers, filled them with goodies, and sent them off to everybody on Bronson’s gift list. Celebrity customer delighted. Case closed. Almost. The incident got company CEO Ken Harris to thinking. If Charlie Bronson would buy picnic baskets, others might, too. So Harris looked around for high-quality, low-cost picnic baskets. He found them in China for $12 apiece. He bought thousands, stocked them with baked goods, priced them at $100 to $150 each, and watched as they sold briskly in the company’s eight retail stores and on its Web site. “I’ve got Charlie to thank for that,” says Harris. That’s just one example of how the CEO thinks up new ways to sell an old tradition in the form of Mrs. Beasley’s handmade, attractively packaged baked goods. But he and his team go beyond simply satisfying the stars. They’ve created a stellar blueprint for integrating “bricks” and “clicks” businesses through dozens of strategic partnerships, superior logistics, and some surprisingly simple marketing techniques. Over the past 20 years, Mrs. Beasley’s has whipped up a loyal following as rich as the company’s brownie bars. Started as a home business by two sisters in Tarzana, Calif., Mrs. Beasley’s grew from a neighborhood bakeshop into a chain of stores where ordinary folk and such Los Angeles luminaries as Jodie Foster, Cher, and Earvin “Magic” Johnson spend $30 to $200 on gift baskets packed with gourmet goodies. But even as Mrs. Beasley’s expanded into upscale communities like Beverly Hills, its own fortunes remained decidedly modest. In 1990 the original owners sold the unprofitable company to a Los Angeles investment-management company. “When we bought Mrs. Beasley’s, it was a $2.5-million company,” Harris recalls, noting that it had taken the owners 10 years to reach that figure. “We thought we could make it a real business.” Today things are a lot sweeter for Mrs. Beasley’s, which turned profitable in 1997 and reached nearly $11 million in sales in 1999. Harris expects the company to hit $17 million this year (but he’s got his bakers making enough muffins and lemon cakes for $18 million — just in case). The CEO credits much of the company’s growth to its aggressive, and highly successful, expansion into E-commerce. Mrs. Beasley’s Web site, launched just before the 1999 holiday shopping season, hit $2.1 million in sales in its first 60 days — almost 20% of the pastry peddler’s total sales for the year. Harris attributes those tasty results largely to Mrs. Beasley’s vigorous marketing strategy, which relies heavily on innovative affiliations — including promotions on corporate intranets and lucrative revenue-sharing partnerships with brand-name Web sites. Now Mrs. Beasley’s online business is profitable enough that Harris finds himself beginning to wish he could unload the brick-and-mortar bakeshops where the business began. “When we bought Mrs. Beasley’s, it was a $2.5-million company,” CEO Ken Harris recalls, noting that it had taken the original owners 10 years to reach that figure. The company processes all its own orders, rather than adding a third-party fulfillment company to the mix. Its Web site can handle $7 million a month in sales. It also keeps a private online address book for each customer that includes a gift-giving history. (Harris’s own address book includes entries like “Crystal, Billy” and “Ryan, Meg.”) Harris, 57, whose deep, southern California tan contrasts with his tough, native New York accent, is a numbers guy, easily citing gross margin (70%) or the average cost of acquiring a new customer ($28). He readily admits that Mrs. Beasley’s recipe for success hasn’t come without lumps: wasted expenditures, sour deals. Even so, Mrs. Beasley’s offers valuable lessons for any company that’s looking to do business in multiple channels — even those who can’t count Oscar winners among their clientele. Going into the 2000 holiday season, Harris has two wishes. First, he wants to make Mrs. Beasley’s “the leading online retailer for shared gift products.” The operative word: shared. Mrs. Beasley’s banks on the idea that customers — primarily businesspeople — send gifts to their own customers who then share the bounty. “You order a gift basket, it goes around the conference table during a meeting, people try the cookies, and they’re hooked,” says Harris. His other goal: Making Mrs. Beasley’s a year-round habit. Currently, the company does 65% of its business in October, November, and December. (In fact, Mrs. Beasley’s employees tend to talk about the Christmas season the way other people talk about natural disasters: the Blizzard of ’78, the Quake of ’89.) Obviously, Harris would like to build off-season sales for other holidays: Valentine’s Day, Mother’s Day, even the Fourth of July. But he’s far more interested in training corporate buyers — who at holiday time spend an average of $350 per order, more than four times as much as other customers — to think of Mrs. Beasley’s whenever they need to send a positive message. Want to welcome a new account? Send a Beasley’s basket. Want to acknowledge a big order? Send a Beasley’s fudge cake. According to the company’s research, business gift giving is a $20-billion market, growing 12% annually. And as companies increasingly turn to the Web for shopping, Forrester Research says, the online gift market could grow to $17 billion by 2004 (compared with $1.2 billion in 1998). “We’re amazed at how big that pie is,” Harris says, with a straight face. There is no Mrs. Beasley; like Betty Crocker, she’s a fictional figurehead. But if there were a Mrs. Beasley, she’d be amazed at where her company seems headed, considering its humble — by Hollywood standards — beginnings. The business started as a hobby. For years Nancy Fox and her sister, Lisa Blons, both of Encino, Calif., baked cakes, cookies, and muffins from recipes they had learned from both of their grandmothers. In 1980 the sisters went into business, hoping to make a living from their lifelong passion for baking. They called it Mrs. Beasley’s because they felt the name embodied the perfect, homey, old-fashioned image. And they insisted on using only the highest-quality ingredients, such as Ghirardelli chocolate and Skippy peanut butter. And while banking on those traditional flavors, they also created some slightly exotic products: raspberry bars, pistachio muffins, zucchini bread. At first they worked from Fox’s home, but eventually they opened a tiny shop on Ventura Boulevard in Tarzana. Demand, fueled entirely by word of mouth, was high from the start. “Our very first Christmas was phenomenal,” recalls Fox, a high-energy blonde, now a cookbook author and a consultant to Mrs. Beasley’s. “We had to stop taking orders because every muffin that came out of the oven was already promised. We not only took the phone off the hook — we had to lock the doors of the retail store.” But as Mrs. Beasley’s approached its 10th anniversary, its founders realized it had grown too big to be run as a home-style business. And they found it harder and harder to balance the December demand with the negative cash flow of the other 11 months. Ultimately, they sold the business to Kayne Anderson Investment Management Inc., of Los Angeles. The firm, which has $6 billion under management, hired Harris to run Mrs. Beasley’s. At the time, taking over the tiny company seemed like an abrupt change of course for Harris. A veteran food executive, he had previously run the W.R. Grace restaurant group, which includes the Charlie Brown, El Torito, and Reubens chains, and was chief operating officer of the House of Blues chain. But then, Harris is a study in contrasts. He drives a Jaguar XK8 convertible with a vanity plate (K HARIS), but pumps his own gas. He dines at Wolfgang Puck’s see-and-be-seen restaurant, Spago, where the hostess greets him by name, but prowls corporate auctions to pick up used office furniture. In fact, frugality is an integral part of his strategy. “We treat this business as if we’re spending our own money,” he says. (Actually, he is spending his own money. Harris and two other executives are part owners in Mrs. Beasley’s; Harris declines to reveal percentages.) So he holds overhead to 5% while monitoring the competition. But ingredients are the one thing that Mrs. Beasley’s doesn’t pinch pennies on. Bakers remain faithful to Nancy Fox’s original recipes, using not only her favorite brand-name products but also her labor-intensive methods. Workers hand-squeeze the lemons, for instance, for the company’s Miss Grace Lemon Cakes. (Mrs. Beasley’s acquired its rival, Miss Grace Lemon Cake Co., in 1995.) They hand-place M&Ms on cookies and press them in, hand-roll chocolate chunks in powdered sugar, and hand-pour glaze over brownie bars. “That’s the reason these cost what they cost,” Harris says, pointing to a small basket of treats that sells for $30 plus shipping. As late as mid-1999, Harris was an Internet novice. “My only experience was ordering dog food — and books from Amazon,” he admits. But he quickly realized that Mrs. Beasley’s and E-commerce went together like, well, like sugar and butter. The Web offered an obvious new way to reach consumers. Mrs. Beasley’s was already selling to companies that routinely sent gifts to 20 or 200 or even 2,000 recipients. Harris wanted to build a Web site that would make life easier for the corporate buyer ordering all those baskets. First, Harris struck a deal with Guidance, of Marina del Rey, Calif., which had built the Web sites Footlocker.com and Rightstart.com, among others. Guidance took 12.5% equity in Mrs. Beasley’s for what Guidance CEO Robert Landes unabashedly calls “a world-class Web site.” In exchange for its equity stake, Guidance cut its normal $150-an-hour rate down to $60, says Landes, who, at six feet eight, looks like the Holy Cross basketball player he once was. At full price, Landes estimates, the site would have cost $1.5 million; on account of the equity deal, the price tag for the 90-day job came to $900,000. Harris expects to spend $500,000 to $750,000 annually to maintain and expand the site. Compared with many E-commerce sites, Mrs. Beasley’s is actually quite simple. The site uses just 200 SKUs, or product numbers; there’s no animation; it doesn’t upsell, Ã la Amazon (“Customers who bought the lemon cake also bought these products”), because Harris finds that tactic annoying. But the site is a powerful tool for overburdened buyers. They can include up to 500 recipients in a single order. They can send the same item to many different recipients: a $30 gift basket to 300 customers, for instance. Or they can send different items to different recipients: a $50 gift basket here, a $100 version there. Thanks to the personal address book, they can easily send the same gifts to the same recipients year after year (or avoid doing so). They can establish a corporate account and track orders. And they can start a big order (orders for $2,000 to $5,000 are routine during the holidays), save it online, and finish the transaction later. But there was more to getting Mrs. Beasley’s online than designing the ideal interface. As Harris puts it, “You can’t be at Internet speed when the order’s on its way in and at a snail’s pace on the way out.” And even with the Internet, customers — especially high-spending corporate customers — expect to get somebody on the telephone instantly when they’re having problems. So Harris invested an additional $100,000 in a faster, more powerful order-processing system. He moved customer service in-house, building a 175-station call center at the factory. And he invested $50,000 in software that tracks call volume, hold time, and the number of people who hang up before being served. Then Harris whipped up deals with many well-known Web businesses. Visitors to 1-800-Flowers.com can buy Mrs. Beasley’s products; the floral site gets an undisclosed cut of revenues. A similar arrangement gives Staples a share of the sales that Mrs. Beasley’s makes through Staples.com. Web sites for auto clubs, alumni and trade associations, and other groups steer members to Mrs. Beasley’s. There, the members receive a 15% discount. AOL, Barnes & Noble, and other companies offer Mrs. Beasley’s products to their employees at a 15% discount through corporate intranets (with intranet-management businesses like Abilizer.com taking a 5% share of each sale). Such arrangements account for 22% of the company’s overall sales, almost double the 13% handled directly through its own Web site. (Remaining revenues come from catalog, retail, and wholesale business.) Mrs. Beasley’s stays in touch not just with the people who have bought its gift baskets but also with those who have received them. Thanks largely to those follow-up efforts, such as E-mail marketing campaigns that cost less than $4 per 1,000 messages sent, about 8% of gift recipients later become customers. All the company’s E-commerce strategies paid off in the 1999 holiday season, when the company’s sales reached $7 million, up 25% over 1998 revenues. Thirteen percent of the people who visited Mrsbeasleys.com spent money there. (At many sites, only 2% of visitors actually make a purchase, according to Forrester Research.) And although many online shoppers complained that other gift sites sent the wrong items or missed delivery dates last holiday season, Mrs. Beasley’s claims that it delivered 99.8% of its orders correctly and on time. Despite its astonishing first season online, Mrs. Beasley’s stumbled a few times. Last year the company spent $30,000 for banner ads on the Blue Mountain Arts greeting-card site. “I think we made $923,” Harris says wryly, referring to total sales from that campaign. Lesson learned: Don’t pay for placement. These days Mrs. Beasley’s sticks mostly to revenue-sharing agreements. And then there are the brick-and-mortar shops. “I built four retail stores in ’97 and ’98. Knowing what I know now, I wouldn’t have spent the capital,” Harris says. That’s because the return the company will get from those stores is nowhere near what it will get from the Internet. (Retail-store sales rose 15% this year, while Internet sales rose more than 1,000%.) Meanwhile, out at Mrs. Beasley’s 55,000-square-foot factory and warehouse in Carson, things are gearing up for a holiday season that could make last year’s look like a dress rehearsal. An off-season staff of about 50 will swell to 350, working three shifts to bake, pack, and ship an almost unimaginable number of muffins, cookies, and brownies. During the slow summer months the company might make 100 lemon cakes daily. In November they increase output dramatically, “kicking out 3,000 cakes a day,” says bakery director Jeff Beasley, who will hold the factory team to a rigid production schedule. “We plan the living hell out of it,” Harris says. “In the month of December, it all pays off.” Anne Stuart is a senior writer at Inc. Technology. Mrs. B’s Secret Recipe For a company with less than $20 million in revenues, Mrs. Beasley’s has paired up with some pretty major partners. Here’s a sampling of Mrs. B’s deals: Revenue sharing with 1-800-Flowers.com. The online florist promotes Mrs. Beasley’s products in exchange for an undisclosed percentage of sales made through its site. Average monthly sales January through September: $81,000; average monthly holiday sales: $250,000. Revenue sharing with Staples.com. In exchange for an undisclosed percentage of sales, the office-supply company will promote Mrs. Beasley’s sweets through E-mail to one million of its customers and will offer Mrs. B’s pastries on its site. CEO Ken Harris expects sales from the deal (which at press time was planned to begin this month) to exceed those from the 1-800-Flowers.com promotion. Discounts for AAA members. Mrs. Beasley’s offers members of regional AAA clubs a 15% discount for purchases made in stores, by phone, or online. What does AAA get out of the deal? “Zilch,” says Ken Harris. “At least financially. It’s another benefit for them to offer members.” Average monthly sales January through September: $9,300; average monthly holiday sales: $40,000. Gift for Canon/Best Buy customers. During a holiday promotion, Best Buy customers who bought Canon printers and $50 in supplies got certificates for a free Mrs. Beasley’s basket. Mrs. Beasley’s, which charged Canon and Best Buy wholesale rates, fulfilled the orders. Overall sales: $533,000. Discounts on corporate intranets. Mrs. Beasley’s partners with companies that run employee-benefits intranets at AOL, McDonald’s, Raytheon, and many other large companies. Employees receive a 15% discount on Mrs. Beasley’s products that they order from the intranets, while the intranet developers take 5% of sales made through their sites. Average monthly sales: $10,000. Please e-mail your comments to editors@inc.com.

About 4581 days ago Printers, Copiers, and Peripherals

Local Color

Shop Talk: CEOs search for the right technology Digital color copiers enable you to produce everything from coupons and posters to brochures in-house For fans of the Utah Grizzlies, most of the action takes place on the ice. For the managers of the minor-league hockey team, however, it’s the scores outside the rink that really get the blood pumping. Those scores could make a quantum leap during the next 15 years because the Grizzlies’ arena, the E Center, in West Valley City, Utah, has been selected as the site of the 2002 Winter Olympics men’s ice-hockey event. How the $10-million company chooses to exploit that coup — through sponsorships and especially through selling the naming rights for the arena — could boost revenues by as much as 7%. Faced with the arena’s impending celebrity status, Grizzlies president Tim Mouser knew one thing for certain: the company’s marketing materials — including coupons that are distributed at games, statistics sheets for autograph signings, and presentations for sponsors — needed to be produced both more efficiently and more economically. It was time to move from outsourcing color jobs to producing them in-house with a digital color copier. Although color copiers that use top-quality laser imaging start at about $14,000 (compared with the less sophisticated ink-jet copiers that cost less than $1,000), more and more small businesses are buying the digital copiers in lieu of relying on outside print shops to do their color work. The machines can produce everything from small coupons and letter-size flyers to full-color double-sided brochures and full-bleed 11-by-17-inch posters. And when the copiers are loaded with any number of optional features, they can double as either a printer or a scanner. For example, with the addition of a print controller — which turns a color copier into a color printer — the machine can produce everything from color proofs of an original design to endless copies of the final product. Once you’ve launched a program like Adobe Photoshop on your PC, the print controller also lets you use the copier as a scanner. Add a color editor into the mix, and you gain desktop control of tones while the image is sitting on the platen glass. For many businesses, those applications make a color copier worth its hefty price. The six-year-old Grizzlies team got its first splash of in-house color with a Xerox DocuColor 5750, a $19,995 machine that an office-equipment dealer had dropped off in September 1999 for a two-month free test-drive. Up to that point, the company’s three-person graphics department had been driving 90 miles round-trip to the print house it preferred just to get color proofs — a hefty order even when a job didn’t require same-day turnaround for last-minute tweaking. “There was never enough time,” says Mouser, one of several Grizzlies executives who collectively take on at least 20 presentations a week. The marketing materials for the naming-rights sale brought the time and cost discrepancies into clear focus. For each company that’s bidding for the naming rights, the Grizzlies create a 50-page presentation that includes images of the bidding company’s logo on such structures as the arena’s walls, marquees, roof, floor, and dasher boards (the boards that the hockey players crash into), on street signs surrounding the arena, and in the ice. Each packet produced in-house, Mouser calculates, would cost the Grizzlies about $7; each one outsourced, he says, costs roughly $450. “The whole organization ultimately realized that a color copier is not necessarily a luxury — it’s a tool of profitability,” he says. Though Mouser was happy with the efficiency of the Xerox DocuColor 5750, he wanted to see how a couple of other models — a Minolta CF910 and a Sharp AR-C150 — measured up. After all, spending $30,000 to $40,000 on a single item for a 30-employee organization is not something a company president does lightly. Having already established contact with Xerox, Mouser undertook a decidedly unscientific search for dealers that handled Minolta and Sharp products. He found a Minolta dealer through a primitive medium by today’s standards: the phone book. And a Sharp dealer essentially fell into the company’s lap. “I drive by their place every day on the way to work,” says Devin Allen, director of marketing and sales. The features of the Minolta CF910 (list price, $20,495) impressed the team during a one-month in-house test-drive of the machine. With its ability to print on 12-by-18-inch paper to produce an 11-by-17-inch, full-bleed image with crop marks — dimensions that the Grizzlies needed to customize posters for its game sponsors — the Minolta clearly had the technology that the company required. But it fell a bit short in the resolution department: to achieve the quality Mouser was looking for, a copier needed to have a resolution of 600 dots per inch (dpi); the Minolta came in at just 400 dpi. Moreover, though the Minolta did have a module — called a Fiery Z4 print controller — that allowed users to turn the copier into a network printer, it cost $19,950. The option was important, because with the increase in volume of graphics-heavy, customized presentations, the Grizzlies would need the machine as a printer as much as a copier. The team could use it to design a layout, refine the color choices, and print out a final version, all with the click of a mouse. Handling the work in-house would cost the Grizzlies 12¢ to 24¢ a page, compared with $14 to $20 a page for the color press check alone. Next Mouser revisited the Xerox DocuColor 5750, which was still on loan. The Xerox was a strong contender from the beginning since the Grizzlies already had a taste of what the machine could do. That machine, too, could handle the full-bleed, 11-by-17 image that the Grizzlies needed for its sponsors’ designs. But the Xerox missed the mark with its 400-dpi resolution; like the Minolta, that was about 200 dpi short of the Grizzlies’ goal. And even with the Fiery X2 print controller (list price $10,495), the machine was a little below par for the color quality the Grizzlies wanted. Mouser moved on to the Sharp AR-C150 (list price, $22,995), which he viewed at the dealer’s site for several hours at a time over a two-week period. Like the others, the copier could produce 11-by-17, full-bleed printouts, also by printing on 12-by-18 paper. And it had a print controller, called a Fiery AR-PE1, whose price of $14,995 was well below that of the Minolta. But particularly pleasing to Mouser was the Sharp’s 600-dpi resolution and its speed of 25 copies a minute for black-and-white, letter-size sheets and 15 copies a minute for color — well ahead of the competition. “The whole organization ultimately realized that a color copier is not necessarily a luxury — it’s a tool of profitability,” says Tim Mouser, president of hockey team Utah Grizzlies. After two months of searching, the time finally came to review the choices. Here’s how the cards fell: After Mouser tacked all the options he wanted onto the standard $20,495 price tag, the Minolta exceeded the Grizzlies’ budget by about $10,000, knocking it out in round one of the purchasing process. And while Mouser and company considered the Xerox to be an excellent machine despite its lower resolution, the salesperson they had been working with left the supplier midway through the comparison stage. Though his departure wasn’t a determining factor, it definitely didn’t help boost Xerox’s position in the race. The Sharp AR-C150 had triumphed. Mouser purchased the Sharp color copier outright in February for about $40,000, passing on the option to lease for 36 months at $782 a month or for 60 months at $552 a month. To the standard copier, he added a reversing automatic document feeder (which allows both sides of a two-sided document to be copied automatically) for $1,400 and a duplex module (which enables the machine to automatically copy both sides on the same sheet) for $1,100. And, of course, he opted for the Fiery AR-PE1 print controller. For the service plan, Mouser opted for a guaranteed maintenance service agreement, which meant that the company would pay 12¢ per color print and 4¢ per black-and-white print monthly. A counter on the copier determines the invoice. In return, when the copier needs to be serviced, Mouser doesn’t have to pay any additional charges. Mouser figures that the copier will save the Grizzlies a whopping $15,000 a year. And if the customized designs and quick turnaround help it attract sales, the copier will have paid for itself after signing on just three or four new sponsors. “As they say, a picture is worth a thousand words,” adds Allen. “I can describe something all day long, but if a company can see players standing in front of its logo, the value of the product that we’re trying to sell is really enforced.” Quick Fix Last year Sherri Leopard was debuting a new service for one of her biggest clients, a division of IBM, when she realized that her color printer would have to go. The Tektonix Phaser 340 that she’d relied on for 4 of the 16 years that her marketing-consulting firm, Leopard Communications Inc., had been in business just wasn’t fast or sophisticated enough to produce the “brand toolkit” that her consulting team had developed for the E-business folks at Big Blue. And the project — 30 copies of a 132-page document stuffed with color-logo comparisons and positioning statements — would have cost a small fortune to send to a print house. Convinced that the future growth of her $12-million company, based in Boulder, Colo., depended in part on her ability to offer brand toolkits to customers, she asked the company’s director of operations, Wayde Austad, to search for a solution. Austad’s wish list was short: The new machine would have the capability to digitally transform brand -toolkit files from designers’ computers, and it would be able to print more than the six pages a minute that the old color printer cranked out. And though the company would continue to outsource the printing of its customers’ marketing materials, stationery, and business cards, Austad needed a machine that could produce sharp color proofs, complete with vivid ink tones, for customers to review. In the past, customers didn’t see the final version of Leopard’s work until proofs came back from the printer, and by then even tiny changes cost some $400 a page — an expense that Leopard either absorbed or split with the customer, depending on the nature of the revision. Austad’s first move was to call friends in the service-printing industry and a few of the outside color print houses that Leopard used. Each recommended a different brand, with a different supporting argument: Kodak offered top-notch color quality, Ricoh assured reliability, Xerox provided solid service. Someone fired off the Canon name as well. Austad had wanted to bring the color printers in-house to try them out, but he quickly learned that with his company’s relatively small output — about 3,000 color printouts a month — vendors were reluctant to loan out the expensive machines. So he downloaded a bunch of images onto disks and drove 25 or so miles to the dealers’ Denver showrooms. Austad’s first stop was Xerox. When he explained what he was after, the sales rep showed him the DocuColor 12, a higher-end version of the DocuColor 5750 used by the Grizzlies, as noted earlier. The DocuColor 12 (list price, $31,495) spit out 12 color pages a minute — twice the speed of the old Tektonix printer. “That’s a big difference when you’re trying to make 350 printouts in time for FedEx and you have 10 designers sending print jobs at the same time,” says Austad. The Xerox satisfied on color quality as well. Its resolution of 600 dpi was twice that of the old machine. Moreover, the DocuColor 12 had trays for standard letter, legal, and 11-by-17-inch sheets of paper, and 12-by-18-inch sheets could be fed through manually. In addition, the DocuColor’s feeder was specially designed to grip glossy or extra-thick paper. Taken together, the features made printouts that closely resembled an offset printer’s final output — just what Austad was looking for. Austad was also impressed with the service he had received from Xerox. “The rep was very attentive and very patient,” Austad recalls. “I would point something out, and he would explain it honestly.” He was particularly grateful for the rep’s explanation of the difference between the two print controllers — the Splash G620DFE (list price, $26,000) and the Fiery EFI XP12DFE (list price, $19,500) — that the machine could use. Austad had used Fiery at a previous job, but the Splash, it turned out, was better suited to producing the brand toolkit because instead of transforming a digital file repeatedly — a time-consuming process — it transforms a file once, saves it, and prints multiple copies. So far, so good. Still, Austad thought, it would be too easy to buy the first machine he tried. To lay his doubts to rest, he set off to check out the competition, using the Xerox as a benchmark. Austad knew he was on the right track with the DocuColor: the next step up was printers that whipped out 40 pages a minute, at almost triple the price. “There’s no cost justification in that for me,” Austad says. So when he went to the Ricoh showroom, he asked to see a model in the same class as the DocuColor. The sales rep introduced him to the Aficio Color 6010. With a resolution of 600 dpi, a copying speed of 10.5 color pages per minute, the ability to handle thick paper stock, and a price tag of $28,950, plus an additional $18,995 for the Fiery print controller (here called an E-800) that went with it, the Ricoh was a close cousin to the Xerox. But one factor put the Ricoh out of the running altogether: the Aficio Color 6010 couldn’t handle the 12-by-18-inch originals. “We really need that size for double-page magazine spreads,” says Austad. “The clients need to know how their ads will look.” Next up was Canon’s Color Laser Copier 1150 (list price, $33,500). This machine offered 400 dpi with automatic image refinement (AIR) technology, which increases image resolution to the visual equivalence of 800 dpi, but its copying speed, at 11 color pages a minute, fell short of the Xerox model’s. The print controller available that met Austad’s needs was a Fiery: the ColorPASS Z60, which cost $19,500. But as Austad fed the machine pieces of a heavy-stock paper, the 1150 repeatedly jammed. When he asked the Canon salesman about the problem, the salesman blamed it on the fact that the sales-floor demo got so much use. Austad saw a red flag. “I figure your demo ought to run a lot smoother than your live product,” he says. The salesman then waved away Austad’s concern about the paper jams, claiming, “They all have the same mechanism.” (Not true: the Xerox’s gripper feeder, for example, is designed for heavier paper.) Austad says that the salesman’s surliness really turned him off. That, and the Canon machine’s apparent inability to handle thick or glossy paper, left Xerox alone at the top of Austad’s list. It was at the Kodak dealer that Austad found something really different: the ColorEdge 1550 Plus. It uses what’s known as dye sublimation technology. Instead of laying flakes of toner on top of a piece of paper like the other models that Austad saw, the ColorEdge actually dyes the paper. Though the resolution was lower than what Austad wanted — 400 dpi instead of 600 dpi — the dyed color images looked more like photographs. Austad considered the ColorEdge because the sharp images — which come at a price of about $8 apiece — would give clients the best possible idea of their final product, and any necessary changes could be made in-house before the digital file was sent to the printer, thereby cutting back on the expensive changes to printer’s proofs. But the ColorEdge wouldn’t do anything for the company’s mission-critical brand toolkit or other high-volume, high-speed projects. Satisfied that he’d explored the options, Austad concluded that the Xerox was the machine for Leopard. Sherri Leopard’s investment will pay off because her employees are working faster and her clients are more comfortable with her designs. One final incentive for going with the Xerox was the cost of “consumables” like toner and cleaner. Austad calculated the cost of consumables for each of the models he’d looked at based on an 11-by-17-inch page with 80% coverage. Consumables for the Xerox machine, he found, would cost him several cents a page less than one competitor’s and half as much as another’s. (Austad demurs when asked to name names.) In December, two months after CEO Sherri Leopard had sent him shopping, Austad signed on with Xerox. The company happened to be the manufacturer of the black-and-white copier that had served Leopard for years. Austad told the Xerox rep about his comparison shopping, and the rep made a deal: Xerox would wipe out the remaining three years on Leopard’s five-year lease on the black-and-white copier and set up a new five-year lease for the color machine. Payments would be set at $1,700 a month, which was only $250 more than the old lease and a very competitive price, says Austad. And Austad negotiated a service agreement whereby the company would pay 12¢ per color copy — about half the usual Xerox price — and receive free maintenance for the machine. (Since then, Xerox has lowered its color click charge to 10¢ a sheet.) For the first few months after the Xerox machine arrived, Austad tracked how much time workers spent on projects. Because the new machine prints and copies projects like the brand toolkits much faster, he says, employees spend less time waiting around. He estimates the company now saves a few grand a month on employee productivity alone. Thanks to the Xerox, the company reduced its outsourcing by 77.6% for the first six months of the year, a figure that amazes Austad. He adds that the color-proof changes — the ones that used to cost $400 a page — are way down, too. The business’s investment in the new machine will pay off, Leopard says, because her employees are working faster and her clients are more comfortable with the designs they’re paying for. “This machine helps us be a better partner, which helps us grow along with our clients,” she says. Mie-Yun Lee is editorial director of BuyerZone.com (www.buyerzone.com), an Internet buying service that features expert purchasing advice and tools for small and midsize businesses. You can use its tools to explore color copiers for your company at www.buyerzone.com/office_equipment/copiers-color/index.html. Jill Hecht Maxwell is a reporter at Inc. Technology. Doreen Vianzon contributed to this story. Please e-mail your comments to editors@inc.com.

About 4826 days ago Telecom and Wireless

The Editorial Oui

Techniques: Microcases Communications Problem: Rapid communication of document changes Solution: A product that turns a copier into a networked scanner Payoff: Paperless document distribution When Craig Erdmier and Robert Stroup, co-owners of $50-million Cord Construction Co., in Rockford, Ill., plunked down about $12,000 on a state-of-the-art digital Canon copier a year ago, they envisioned the machine as a panacea for Cord’s document difficulties. The problems were standard for the construction industry, where job specifications can change from moment to moment. Contractors must be ready not only to make eleventh-hour changes to blueprints but also to (quickly) apprise a bevy of involved parties — vendors and subcontractors, architects and superintendents, office personnel and field personnel — of the alterations. “We sometimes have as many as 30 jobs at a time,” says Stroup, the company president. “You could clear a forest with the paper we used around here.” The cutting-edge copier did make a big difference. Because it doubled as a network printer, Cord’s 25 office employees could produce collated and double-sided documents from their desktops, which freed them from having to toil away in the company’s print room. The copier also had scan capabilities, so employees could scan a document without making a trip from the copier to a separate machine. But the efficiency gains were offset by what Mark Jones, Cord’s head of information technology, calls “a sharing problem”: to send a fax, employees still had to stand at a fax machine rather than sit at their PCs. The Canon’s scanning features were limited as well: scanned documents could be copied but could not be routed to individual desktops for easy editing. Wanting to get the most out of his bosses’ equipment investment, Jones contacted his Canon salesman and asked how he could fully tap the machine’s networking properties. The salesman recommended the software ShareScan, from a Canon partner called Simplify Development Corp., in Nashua, N.H. (603-881-4450; www.simplifyinc.com; $1,375 for five users). ShareScan converts digital copiers into devices that enable users to share documents electronically over a company’s local area network. It was just what Jones needed, because it allowed any paper document scanned on the copier to be forwarded to employee desktops equipped with the software. Now, using a ShareScan application called MailRoom, an employee at Cord can call up and electronically annotate a scanned document using margin notes, approval stamps, and whiteout, and then pass the edited version along to a colleague for further comments. Once all the project changes have been made, the document can be E-mailed as an attachment to anyone outside the office. “If we need to notify several vendors about a paragraph in the spec, we can scan that section and get it out instantaneously with an E-mail,” says Jones. “In the old days we’d have to make a copy and fax it.” The new technology has also assisted Cord in design planning. It’s customary, says Stroup, for the company to ask customers to find photos of building designs they like and dislike; Cord then uses the photos to guide its aesthetic suggestions. “It might be, say, the gargoyles on a cornice on the outside of a building,” explains Stroup. “Before, we’d go to the cornice manufacturers, and we’d verbally describe the photos. Now we can scan and attach them.” If ShareScan sounds as if it’s just what your company needs, be forewarned: though compatible with Canon and Ricoh machines, as well as other devices that support ISIS (image and scanner interface specification) standards, Simplify’s suite doesn’t support Xerox products. “Xerox offers its own proprietary solution,” says Noel Coletti, Simplify’s vice-president of sales and marketing. And as happy as Jones was with ShareScan, he soon realized that the oldest of copying problems has no antidote. “Spreading a big book apart and getting it on the machine to scan it can still be a problem,” he says.

About 4826 days ago E-Commerce

When Something Clicks

Editor’s introduction: Sometimes it seems as if the Web has turned the world upside down. In the hype-ridden landscape called “dot-com,” it’s easy to assume that only the young, the new, the original idea conceived by two kids in their basement will survive. Out with the old. How untrue that is. The two companies profiled here, Plural in ” The Metamorphosis” and Camera World in “When Something Clicks,” are hardly start-ups. Their leaders have been running steady, profitable companies for years. They’re taking those years of experience managing entrepreneurial brick-and-mortar companies and using every ounce of their knowledge to transform their businesses into winners in the online world. CEO Roy Wetterstrom, never a guy to fear change, is rebirthing his 11-year-old company to take great advantage of the new economy. And Camera World has built on its 22 years of experience fulfilling customers’ expectations to transform itself into an E-commerce business. BRAVE NEW COMPANIES Over 22 years Camera World Co. honed its expertise in fulfillment, customer service, and supplier relationships. Today, as Cameraworld.com, it can teach Internet start-ups a thing or two about what matters most It’s a sodden, gray pre-Christmas workday in Portland, Oreg., but the jeans-sporting photographers who handle incoming calls at Camera World Co. (a.k.a. Cameraworld.com) are oblivious to the weather. Sitting in their white cubicles, they dispel the clouds with their cheerful “Thanks for calling Cameraworld- dot-com!” They repeat order information and occasionally murmur soothing guidance to Ansel Adams wanna-bes on the other end of the line, who need to know things like the difference between the Hasselblad 203FE Medium Format Chrome single-lens reflex camera and the 202FA model. In the 20,000-square-foot warehouse behind the front office, 15 workers scurry down long concrete aisles, clutching sales orders fresh off the network printer. To the casual observer, these warehouse folk seem to have X-ray eyes. Quickly scanning the metal racks loaded with thousands of indistinguishable-looking boxes of equipment, they have an uncanny ability to tell a box holding a $10,000 lens from a virtually identical package bearing a $1,000 one. When they locate the box they’re after, they place it in a plastic tub; a bar-code check at the packing station ensures that the order is complete. There, a young man nodding to rock music on a boom box pours Styrofoam peanuts into labeled cardboard shipping boxes and then seals the goods with a deft pull and twist of tape. Camera World’s order-fulfillment and delivery systems have stood the company in good stead. During the 1999 holiday season many of the company’s stalwart 300,000 customers came back and spent an average of $600 a pop. And thanks largely to the explosion of interest in digital cameras, sales soared last year, growing from $80 million in 1998 to more than $115 million. Last December the company’s Web site handled an average of 25,000 unique users a day, and Web sales rose by 245% over the previous year’s figure for the month. (At the same time mail-order business shot up 67%, and sales at the company’s downtown Portland store were up 22%.) Some 90% of Web and mail-order shipments left the warehouse within 24 hours. Return rates for Web sales hovered around 4%, paralleling the rate of returns from the store and the mail-order business. “We maintained heavy inventories to ship on time, and it all worked pretty well,” says Camera World’s new CEO, Terry Strom. “But one thing’s for sure: the Internet is raising the standard of performance for any retailer.” No kidding. This past Christmas season, during which shoppers spent an estimated $6 billion online, saw many a Web site disappointing customers. According to a November 1999 report by the New York City Internet research firm Jupiter Communications, 46% of business-to-consumer Web sites took five or more days to respond to a query, never responded, or failed to post an E-mail address on the site for customers’ inquiries. “If we didn’t make our goals,” says Walt Mulvey, “we couldn’t make payroll.” “An awful lot of Web sites don’t realize that customer service should be a priority,” says Jupiter analyst Cormac Foster. “They focus on customer acquisition but don’t spend time on the unsexy stuff, like customer-support infrastructure. Infrastructure doesn’t get you headlines, but if you don’t have a staff of people to take care of business behind the firewall, you won’t get much.” Case in point: Toys “R” Us, whose online subsidiary ToysRUs.com (announced with great fanfare in June 1998) found itself suffocating under the rush of online holiday traffic and was unable to fulfill orders on time. The company’s back-end infrastructure was built to send truckloads of products to hundreds of stores — not to ship single orders to millions of consumers. Don’t call Camera World a “click-and-mortar” or an old-fashioned retailer with a Johnny-come-lately Web site. Call it, rather, a dot-com with lots of back-end “not-com” experience. Camera World has long known that the boring stuff — attention to the fine details of customer service, simple and solid fulfillment processes, and trusted supplier relationships — is what really matters. Unless you master those three areas well before you put up a Web site, no amount of bells and whistles or transactional and design prowess online will make the Web component of your business successful. To understand how Cameraworld.com operates, view the company through a wide-angle lens. Founded in 1977 by a Korean-born businessman, Jack Shin, Camera World began as a 4,000-square-foot mom-and-pop shop for shutterbugs in a musty downtown area of Oregon’s sprawling, river-straddling city. Shin had come to Portland by way of New Jersey, where for about two years he’d owned a camera store that catered to well-heeled amateur photographers with National Geographic daydreams. From the moment he began his business until the day he said good-bye to Camera World in 1997, Shin refused to sell the cheap “gray market” goods that many dealers were hawking at the time — a practice that stood him in excellent stead with his suppliers. ( Gray market refers to goods that are not meant to be sold in the United States and generally are not covered by warranties.) Building on the relationships he’d established in New Jersey, Shin developed close contacts with executives from Fuji, Canon, Nikon, and the other rulers of the photo world. Ultimately, he constructed an intimate universe comprising 15 primary suppliers. “The gray market is a big problem for the industry,” says Eliott Peck, director and general manager of the camera division of Canon USA. “Canon has had an excellent relationship with Camera World because the company adds value to our products. It’s always provided the best customer support, sold only fresh merchandise, stocked all our products, and had very loyal repeat customers.” On a scale of 1 to 10 among camera dealers, Peck adds, “I’ve always given them a 10.” In return, the manufacturers saw to it that Shin was first in line to receive new or on-order stock. The Internet is raising the standard for retailers. Shortly after opening the retail store, Shin added a mail-order component to the business. “Mail order was easy — we didn’t have to speak much English,” explains Young Ui Shin, who acted as her husband’s business partner and interpreter. The Shins and Young Ui’s brother ran the mail-order business in a space five floors above Camera World’s street-level retail store, which also doubled as a warehouse. Their goal was for customers to receive their merchandise within five days of placing their order, compared with the standard mail-order lag of three to six weeks. Within 10 years the company was earning close to 70% of its revenues from the distant customers it reached through back-of-the-book advertisements in magazines like Popular Photography. On the back end, Shin put together a supersimple order-fulfillment and shipping infrastructure that the company still uses today. Prior to computerization, sales staffers would write a phone order on paper, then send along a copy to the warehouse for picking, packing, and shipping. Working with those paper “pick tickets,” warehouse workers would pull the cameras and lenses (and occasionally camcorders and televisions, which Camera World also sold) from the shelves and place them in plastic tubs. Before the items were packed, other workers checked to make sure that the products matched the order, recorded the product serial numbers, and filled out a receipt. Then shippers packed the items and loaded the boxes onto a waiting UPS truck, which carted off the packages every afternoon. If an item was out of stock, the warehouse workers would pass the information along to the sales reps, who would find out from Shin when the shelves would be replenished, so they could tell the customer when to expect the order. Returns were handled similarly: When a customer called, a sales staffer issued a return number and ordered a UPS pickup at the customer site. When the product came in, the return number was recorded; if the package had been opened, the product was sold at discount, since it could not be returned to the manufacturer or sold as new. The paper-based system stayed in place until 1992, when Shin discovered that a networked computer system could increase efficiency. He purchased a set of Compaq 386 computers, one of which was installed in the warehouse area, and a Platinum database-management system for which he had a consultant design a unique order-fulfillment, inventory, and shipping program. Using the new system, salespeople keyed in orders on PCs at their desks. Hourly, a warehouse worker would download and print out a batch of orders for picking and packing. The computerized system allowed Camera World’s sales reps to maintain an easy-to-access record of customer purchases; it also allowed Shin to keep better track of inventory and to speed up deliveries. The Shins’ five-day shipping goal had become a consistent reality. Shortly thereafter, Shin added a bar-coding system. By passing a wand over the various products prior to packing them up, workers were able to match orders in the database to actual shipments, and the inventory manager was able to see which models had gone out the door. From the get-go, Shin went the extra mile for his customers, retail and mail-order alike. He staffed the phones with a sales force of professional photographers (or photographers with day jobs), who could guide callers through the technical complexities of camera selection. If customers weren’t happy with their purchases, they could return them for a full refund, no questions asked. In one instance, a company selling five-year extended warranties on Camera World’s equipment went belly-up. Though Shin was under no obligation to do so, he set up a fund to cover the cost of repairs for the customers who were left hanging. “We make customers very happy, and they remember we give service, service, service. Repeat customers big part of our business,” Shin recalls in emphatic, if stilted, English. “We never cheat. If customers happy with service, they trust us.” “We had to completely change the mentality of the organization,” says Mulvey. In the early 1990s, despite Camera World’s computerization, a confluence of external and internal problems began to slow the company’s growth. The market for the high-quality 35mm single-lens reflex (SLR) cameras in which the company specialized had flattened by the late 1980s and stayed that way, thanks to a saturated market and a recession. Until digital cameras appeared on the scene, in 1998, the market for SLRs never moved substantially beyond the 700,000-units-per-annum mark. By 1999, according the Boston-based market-research firm Lyra Research Inc., the number of 35mm SLRs sold in the United States had actually declined to 600,000. Shin’s management style also kept Camera World from rising off that plateau. His operations gave new meaning to the phrase lean and mean. He selected office supplies, shipping companies, telephone services, and other necessities on the basis of low price, and replaced equipment only when it fell apart. The company had long outgrown its warehouse, but Shin balked at moving from the low-rent building. “Mr. Shin ruled with an iron fist,” says the company’s longtime buyer, Shawn Weishaar. From a glassed-in loft perched above the retail store, Shin would keep a sharp, Big Brother­like eye on his workers’ activities. Employees did stay — they were well paid by Portland standards — but because promotions were few and far between, their motivation waned as the years passed. “Mr. Shin had great insight, but he didn’t allow mistakes,” says Weishaar. “He wanted full control over everything.” In 1996, frustrated by flat sales and worn out by the demands of the business (according to company veterans, Shin never took a day off in all his years at Camera World), Shin decided to sell. He hired a retail-management veteran, Walt Mulvey, to help ready the company for sale. A former banker who’d had experience in helping stagnant companies improve their operations, Mulvey saw a profitable company with a good reputation — but one with cramped quarters and lackluster employees. Mulvey reorganized, setting up an incentive program and a “no-blame” management system that allowed workers to air problems openly. Within a year, sales had climbed 31%, and Mulvey helped Shin put out the word that the company was for sale. Word of the sale reached Alessandro Mina. A gentle native of Sweden who’d lived in Italy, Switzerland, and France, the multilingual entrepreneur came to the United States in 1989, at the age of 27. While working on his M.B.A. at Stanford, he embarked on an investment project with two fellow European students. In 1993 the trio founded Sverica International, an investment fund designed to help transform old-fashioned companies into aggressive-growth companies and often into Web-based businesses, and rounded up contributors. Camera World “fit all our criteria,” Mina recalls. “It was profitable. Sales were stagnant, but there was growth opportunity. The owner was retiring, and there was a successful mail-order business in place. It had a huge database of happy customers who came to Camera World in the same way people go to Amazon.com for books or Dell Computer for computers — they go there pretty much knowing what they want. I held the view that Internet and mail-order sales are basically the same that way, so I thought it had all the ingredients for a great Web business.” Another plus: Camera World had a sound infrastructure; there was no need to develop one from scratch. The company had already figured out how to take in orders, process them, and ship them out. Moreover, Shin had long-established relationships with top-tier suppliers and innovative systems in place to provide customer service. The company even had a Web site, though visitors couldn’t use it to buy products. And unlike any pure-play dot-com, Camera World had the unheard-of pedigree of profitability. “We saw this terrific sleeper and thought we could turn it into a full-fledged Net business,” Mina recalls. Mina and his colleagues bought Camera World Co. and named the online arm Cameraworld.com. Temporarily taking over the reins as CEO, Mina — along with Mulvey, who stayed on as chief operating officer — set about morphing the company from a primarily mail-order business into a primarily online business, knowing that companies like Dell (which had gone from no revenues to $26 billion in 15 short years) had followed the same path. As Mina had predicted, the path was clear of the thorny issues that trip up novices. The niche was already nailed: unlike pure dot-commers, he didn’t have to spend time and money on brand development, market research, and focus groups. Mina and company preserved and expanded the long-standing relationships with suppliers and customers that Shin had built. “We made it a point to visit every supplier personally, take them out to dinner, and assure them that the business would continue,” Mina says. “Walt and Alessandro had a vision,” says Canon’s Peck. “At first we had some doubts about their ability to take over the business and move it to the Net, but they were able to build on the infrastructure to handle it.” The nitty-gritty back end has come to matter enormously to investors. In forging a new business plan for the company, Mina spelled out his goals. For starters, the company’s Web pages would have to be transformed from simple brochureware into a true transaction site. And its back-end systems would have to be married to whatever happened on the Web. The company itself would have to move into a larger, better-organized space, with a warehouse that would allow orders to be shipped within 24 hours, as opposed to the five days required by the mail-order business. “We wanted to one-up everyone else,” Mina says. “To speed everything up, we had to cut out obstacles. We needed to staff up, to fix the bugs in the computer systems, to upgrade the telephone systems for more lines. In the past Mr. Shin had to check everything. Things were duplicated. We decided to streamline processes and empower people.” The toughest challenge was time. Mina wanted Cameraworld.com to become the leading online vendor of cameras — before a competitor could. “We had to completely change the mentality of the organization, from collect-a-paycheck mode to survival mode,” says Mulvey. “We ran the company on two urgent premises: We assumed that there was a competitor out there who would beat us to market with the biggest Web site in the world. And we told ourselves that if we didn’t make our goals, we couldn’t make payroll.” Camera World moved to a less expensive location in Portland four times the size of its former quarters. Though the order-fulfillment process remained the same, Mina and Mulvey reorganized the warehouse to speed up shipping. Frequently ordered products, like film, were kept closest to the packing and shipping stations, while rarely ordered equipment was kept in the back. The company added inventory and packing stations; instead of one packing station, for example, it now had four. And it upped the number of PCs in the warehouse from one to five. The move, Mina estimates, saved the company $7,000 a month in rent and about $4,000 in reduced manpower requirements in the shipping, receiving, and returns departments. (The displaced employees were reassigned elsewhere in the company.) “Because the warehouse was larger and better organized, we made more shipments on time with fewer errors,” he says. To turn the existing, 300-visitor-a-day Web site into an E-commerce factory, Camera World hired the company that had designed its original Web site, Web Northwest. With just six months in which to transform the site, Web Northwest owner Pete Chiboucas teamed up with a Camera World veteran, Internet administrator Gil Rocha, and together the pair hand-coded the pages as Active Server Pages to create a visually appealing, highly interactive site. Visitors could click on an image of a camera, a lens, or another product and order it using a shopping cart. The Webmeisters also cranked up the fire under the site, spending $20,000 to install a network of six high-powered Windows NT-based servers that could handle thousands of concurrent users at a time. Today Camera World’s site, which costs roughly $10,000 a month to maintain, handles at least 15,000 unique visitors and 400 transactions a day. It’s now a full-fledged community for shutterbugs. It keeps visitors interested with increasingly snazzy features — 3-D images of featured products, an online auction area, forums, online chats with celebrated photographers, a selection “wizard” that helps customers choose the right camera by assessing their expertise and frequency of use, and so on. Customers can also get quick answers to their E-mailed questions. Professional photographers respond to them by E-mail or phone — and customers even receive a notice via E-mail showing them where their question is in the queue. (“We try to get back to them within 24 hours,” says Rocha.) And for those who eschew telephone handsets, an Internet-telephony feature lets customers whose computers are equipped with a sound card and a microphone connect over the Internet to talk with the sales and support staff. When a customer orders a camera through the Web site, the transaction is zapped from the servers to the order-fulfillment database via a dedicated high-speed T1 line. A software interface between the Web site and the database reads the order and translates it into the order-entry system. Sales reps, customer-support personnel, and shippers and other warehouse workers can review the order by tapping into Camera World’s database from PCs. Every few hours, warehouse personnel print out a batch of 50 or so orders. Rush orders are printed on red paper; white paper signifies a standard UPS ground order. After a worker locates the correct product and places it in a plastic tub along with the paper order, he carts it to the shipping station, where the bar-code checking occurs. If the bar code doesn’t match the order, a computer screen at the station notes the mismatch. If the match is correct, the inventory database records the product model number; when inventory reaches a low-enough level, Camera World reorders. Once the product is packaged for shipping, it’s loaded onto a waiting UPS van, which departs at the end of the day. Meanwhile, an E-mail message is sent to the customer, noting the time the package is scheduled to ship. Using a confirmation number supplied by the company, the customer can check the Web site to track the order. Picking and shipping, of course, are hardly sexy stuff. But in the crazed world of cyberspace, the nitty-gritty back end has come to matter enormously — especially to prospective investors. “Back in 1996, when I was looking at Camera World, the guiding principle for Internet start-ups — according to venture capitalists — was to start from scratch with the model based on the new paradigm, and everything traditional was bad,” Mina recalls. “Early on, VCs were not interested in us because we had a history. But now infrastructure, customer service, and the ability to ship on time with inventory on hand are all key elements when the VCs come knocking.” So far, Camera World is keeping customers happy. “The consensus is that there are a few retailers out there that have a great reputation and that Camera World is among the few,” says Richard Rabinowitz, vice-president and group publisher of Popular Photography and American Photo. One of the happiest customers is Aneel Bhusri, who — like Victor Kiam of the old Remington razor commercials — liked the company so much that he bought (into) it. Bhusri is a partner with Greylock, based in Palo Alto, Calif., one of the six venture-capital firms that have just poured $60 million into Cameraworld.com. (The other major investor is Technology Crossover Ventures, also of Palo Alto.) Bhusri also happens to be an amateur wildlife photographer and a repeat customer. “I bought my first camera from them four years ago, and their staff were very helpful in explaining the pros and cons of the different models,” he says. “I found it unique that their customer-service people were trained professionals.” Last summer, when Greylock was looking for a photography Web portal to back while casting an eye at a future initial public offering, Bhusri remembered Camera World. “I gave Alessandro a cold call,” he recalls. “I said, ‘I’ve been a customer for a while. Are you interested in outside capital to help the business?” The infusion from Greylock was welcome. The cash, the executives say, will allow the company to move to an even larger physical site this year, add more products to the 7,000 items it currently offers, hire 20 more sales and support people, and keep the computer system shipshape. The marketing mix will remain roughly the same as it has been for years — mailing out catalogs and advertising in photography publications, on the radio, on television, on the Web, and on outdoor billboards — “but it will scale up,” says vice-president of marketing Tom Steele. The venture funding also frees Mina, the serial entrepreneur, to hatch another company. “Alessandro did a fantastic job of running the company, but his goal was never to run Camera World for the rest of his life,” says Bhusri. “So he helped us look for a new CEO.” Bhusri and Mina chose a man who had lots of experience with fast-growth and Internet companies: Terry Strom, who had been the CEO of Egghead Software and the marketing vice-president for Digital River Inc., a Minnesota service provider for E-commerce sites. (Bhusri is now chairman of the board, and Mulvey has moved to the president’s office.) Mina, now living in Boston, is glad to let others grow the company. “Aneel, Terry, and Walt can take the company from an Internet start-up to an established E-commerce player,” he says. “I can go back to what I do best — finding good companies to invest in.” For his part, Bhusri is thrilled to be the rudder of a company that, as he says, “gets it.” “If you look at what makes a Web site successful, most of it is logistics,” he says. “Camera World had this figured out a long time ago. Why don’t others? I honestly don’t know the answer. These guys are rare. I think they can be the Dell of the camera business.” Bronwyn Fryer is a contributing writer for Inc. Technology. Read about another Brave New Company in ” The Metamorphosis“