Professional Documents
Culture Documents
Key Objective: To determine the feasibility of an e-commerce and stock control service,
which integrates social enterprises with conventional SMEs and sole traders and vice
versa.
For the purposes of this report, Alston Wholefoods has been used as the sample
enterprise. The report demonstrates whilst there is great interest in setting up such a
scheme both in the sample enterprise and among businesses generally, there is a lack of
IT infrastructure and trained personnel to support the scheme. Many obstacles could be
overcome with additional funding but this remains the main barrier. Many see the
benefits of e-commerce going far beyond increasing sales. An online prescence can also
be used as a marketing tool and an interface with customers. Five other key retailers and
producers in Alston were interviewed for this report to determine general interest levels
and feasibility. In the final report, a poll of cybermoor users and further discussions with
businesses in Alston Moor could be conducted if required.
Alston Wholefoods (AWF) is a co-operative and has been running since 1996. It first
opened as a cheese shop which expanded to include wholefoods and a wide variety of
other products. There are currently 6 members and 3 workers who cover any additional
hours required.
As a small business, only one member of staff generally works any single day at the shop.
Each member has certain responsibilities for stock takes, ordering and taking deliveries.
As only one member of staff has to manage the shop, attend customers and fulfil their
other responsibilites time is extremely pressured.
Product Overview
The table below outlines major product categories and suppliers.
Product Category Supplier/s
-----------------------------------------------------------------------------------------------------------
-
Beans, grains, pulses, pasta SUMA
Bread, cakes, pastry SUMA, Juniper, Moordale Foods
Moody Baker
Cheese Bruce Oliver, Thornby Moor Dairy,
Hunter House Farm, Slack House
Chilled and frozen goods SUMA, Juniper
Coffee, tea, hot drinks SUMA, Juniper
Condiments SUMA, Juniper
Dried fruit, nuts SUMA, Juniper
Flours, baking sundries SUMA, Juniper, The Watermill
Gifts Moorland Candles, Cloth bags
Herbs and spices SUMA
Household, hygiene, remedies SUMA
Meditteranean cuisine SUMA, Juniper
Selected Japanese, Indian, Chinese lines SUMA, Juniper
Snacks, chocolate SUMA, Juniper
Sugars, jams, honey SUMA, Juniper, Chain Bridge
Nook Farm, Wild & Fruitful
The products are sold with a standard 33% mark up in most cases although bagged down
goods carry a 50% mark up. All existing products could in theory be sold online but by
concentrating on local products, and bulk orders, this would put Alston Wholefoods in a
unique position. For example, Alston Wholefoods is the only retail outlet for Hunter
House Farm cheeses. These cheeses are extremely high quality and are only otherwise
availalbe at farmer’s markets.
By opting to promote local produce and certain bagged down goods, Alston Wholefoods
could position itself as a centre for local producers in the area with a strong selection of
good value wholefoods. Customers could use an e-commerce site to make their special
orders ensuring greater discounts for bulk orders.
The table below gives an average price across the most suitable categories.
In a remote area such as Alston, one would assume the figure could be much higher once
the service was established.
However if a take up of only 3% is assumed, the amount of profit gained through online
sales would be small. The table below shows the sales and profit for five product lines
from March 2007, based on order lists for that period.
March is a fairly busy time of year with half term and the run up to Easter.
Product Average weekly RRP Profit
sales sales
____________________________________________________________________
Using the 3% online sales figure, a profit of £1.23 would be generated across these
categories. This illustrates the low level of profit gained.
If you look at a month’s turnover for example, 3% looks a more healthy increase, but
once running costs and wages are taken into account its hard to see how the operation
would generate increased profit.
For example:
An e-commerce operation would have a range of other benefits over and above
increasing sales. The website presence would raise awareness of Alston Wholefoods,
could be used as a marketing tool, an interface with customers, and would be a way of
collaborating with other local businesses. These factors alone would deem the project
successful even if it just managed to break even.
2. Identify existing stock control system and modifications required to meet objectives.
The stock control system relies heavily on one member of staff having years of
experience and knowing what stock is required. There is an XL spreadsheet which keeps
records of orders placed.
A stock take of the main SUMA products in conducted roughly every Sunday, but a lack
of time means that this data is often incomplete. The ordering process ends up being
rather random, and it isn’t clear as to which lines are consistently doing well.
Deliveries from Suma arrive in the shop every Thursday, and from Juniper every two
weeks on a Friday. A print out of each order is given to the member of staff on that day
and they then check it off with the invoice.
Goods are priced up and stored, special orders are put to one side for individual
customers. The process is extremely time consuming and as only one person manages the
shop on any day, with the exception of particularly busy times, frequent mistakes cause
errors in pricing and the special order system.
The quickest most accurate system would be have a computerised bar code system for all
products sold in the shop.
Pricing
Due to amounts bought, and trading trends among the countries of origin, prices of
bagged down goods such as grains, pulses and nuts vary greatly depending on the
amounts bought and trading trends in the countries of origin. This makes predicting
profitability difficult and can put off customers.
Delivery system
The shop doesn’t own a van but most members have transport. Again time precludes
most members from carrying out deliveries. The cost of using delivery companies like
DHL are prohibitive. Chilled and frozen goods would have to be transported according to
government guidelines, which again would add to the time and cost of the operation. A
community based devliery system along existing routes could be a solution. See section 4
on how this could provide the framework for a box scheme.
IT and Personnel
Apart from one Alston Wholefoods Co-operative member, the other members of staff
have low levels of IT skill and or interest in the internet. This could potentially be a
barrier when trying to gain buy-in from the Co-operative as a whole although most are
open to ideas which further the business.
4. Identify other SMEs / social enterprises in Alston which would be interested
collaborating in the project and find out how they could be involved.
A short set of interviews was conducted among a cross section of retailers in Alston.
Participants were as follows: Alston Fruit and Veg., the Flower shop, newspaper shop,
Moody Baker and Haldon’s Fudge Shop. Most local businesses have the same set of
challenges largely concerning the huge seasonal variations in business and the need to
find ways to expand business during leaner winter months.
Whilst all are in favour of having an online retail system except for the newspaper shop, a
range of significant barriers to the system were cited. They can be summarised as
follows:
• Lack of computerised stock control system
• Lack of website
• Lack of man hours to manage the process
The Moody Baker, Flower Shop and Fruit and Veg shop all currently run delivery
services. They are all positive in theory about linking up delivery routes and taking
additional products to customers.
The most popular idea was a box scheme which could pull together all retailers and
producers in Alston. Boxes could be delivered to customers along existing delivery routes
initally. Such a scheme would suit all age ranges who either haven’t got time to go
shopping or find transport difficult.
An additional promotional box scheme could also be rolled out to local Hotels and
B&Bs as a way of promoting local businesses to visitors and to encourage them to come
and shop in Alston. The box scheme might be a good way to test out how businesses
could work together to deliver to customers in the first instance.