A fifth of dot.com start-ups fail over fulfilment

The new general manager of DHL Middle East believes that dot.com start-ups risk bankruptcy unless they concentrate more attention on fulfilment in their business plans.

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By  Barnaby Chesterman Published  October 11, 2000

When new dot.com start-ups plan and then put in place their business plans, there is a minefield of bunkers and pitfalls threatening their very existence.

Business plans need to be meticulously catalogued right down to the smallest detail. The slightest indiscretion can lead to the ultimate failure: bankruptcy.

In the current climate, where dot.coms sprout faster than weeds in an unkempt garden, and many fail almost before they’ve even got their feet off the ground, one such detail that is often overlooked and has proved crucial to the survival of start-ups is fulfilment.

A recent Global Commerce Report conducted by DHL Worldwide produced some alarming findings in relation to the fulfilment part of online trading. The study, which covered 621 companies with turnovers in excess of US $15 million across 12 of the busiest trading countries, found that 20% of all e-commerce deliveries were arriving late.

In addition, 41% of companies considered fulfilment as a barrier to e-commerce growth and 25% of companies have yet to define their e-commerce fulfilment policy, and that in the most developed countries in the world.

The new general manager at DHL Middle East, David Wild, is particularly concerned with this trend and is using the report findings to try to help Middle East dot.com start-ups prepare a more secure future. “What we’ve found with the dot.com start-ups is a huge number, even the ones that are well funded and well supported, never really considered the fulfilment of logistics as a core element of their business plans and a huge number failed because of that,” he said. In fact, it’s not just that these companies didn’t consider it as a core element, it would appear that for many that aspect was simply never considered.

“They might have a great idea and they might have a great handle on the technology,” he continued, “but in terms of then physically managing the delivery of goods to the consumer and all the activities that go with that, a lot of companies just didn’t consider that aspect of the business.” DHL did not despair and worry about how these failures would affect its business, however, it took stock and looked upon these oversights as a window of opportunity.

Wild sees DHL as having an even greater role in the process of fulfilment with regards online trading. DHL not only delivers the packages but also acts as consultants to new dot.com start-ups to ensure the role of fulfilment is given sufficient attention in the business plan.

“It all really revolves around how we integrate our systems with the companies’ systems but also how we consult them on the elements of the business they need to consider on the logistics and fulfilment side,” explained Wild. “Here in the UAE, we are dedicating resources, technical, commercial and strategic in a marketing sense to make sure that what we are doing here is responding and making us able to respond to the customers’ requirements.”

So the question begs, what’s in it for DHL? Is it a case of the global shipment company branching out into consultancy, or is this just part of a wider plan?

Wild was adamant that there was no profit in branching out into a new area of business, it’s just a means to an end. “What we really want is the packages: after all, our core business is the door-to-door deliveries. It’s a revenue string for us. One thing that’s never changed is the need to deliver something.”

It would seem DHL, and indeed other package shipment companies, can profit as much as anyone from the increased traffic in online trading. And the Middle East, and the UAE in particular, is one of the most lucrative areas.

It may seem incredible, but David Wild’s branch in the UAE processes more shipments electronically than any other DHL entity. Wild attributes this successful penetration to his company getting involved with dot.com start-ups at an earlier stage. “Here in the UAE we’ve got to stay ahead of the game,” he said. “There’s a unique situation in Dubai where there are a lot of redistribution opportunities. Here, our plans for the future are going to build on that and extend from the traditional courier type activities to redistribution activities.”

DHL’s bottom line goal is to make sure its customers are considering a lot of the things that it feels they sometimes overlook. “I think we’ll see some pretty strong messages in the marketplace from DHL that will make people understand that this is a pretty significant part of our business,” said Wild.

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