ASPs FOR THE ENTERPRISE

By Ramin Ganeshram,
PC magazine
Published: March 2001

By Ramin Ganeshram
March 14, 2001
Federal Express may be an $18 billion overnight delivery giant, but it made its mark hanging with companies a fraction of its size. Throughout its history, some of its biggest clients for shipping services have been small businesses. That's why last year, pressured by competition from UPS, DHL, and other rivals -- and faced with the need to develop a new revenue stream -- FedEx thought of small businesses first. But this time, the Memphis, Tennessee-based company was going to try to sell Web sites, not shipping services.

FedEx executives wagered that a number of its small-business customers would like nothing better than to use the Net to manage inventory, track customer orders, and market products, but were scared off by the prospect of taking on such an ambitious project. FedEx already had some experience with Web design: Its own Internet site is recognized as one of the best. But for this new plan to work, FedEx was going to have to masquerade as a Web developer.

Or maybe not.

"We knew that our brand name would make for a compelling sell but that speed to market was critical," says Lisa Short, who was FedEx's director of e-commerce solutions marketing at the time. "We needed to find a partner."

Short's team began evaluating companies that built Web platforms and soon found that traditional providers weren't what it was looking for. The main reason: Most of them just developed Web sites and didn't host them -- a key feature that FedEx wanted to offer to customers. It became clear that a full-service ASP was the way to go.

FedEx looked at six high-profile ASPs in what Short calls a "quasi-RFP" process that included visits to the ASP sites. FedEx chose Orbit Commerce, primarily because its corporate culture matched well with the team that was going to work on what eventually became called the FedEx eCommerce Builder. Additionally, Orbit had already proven itself in hosted Web development, handling the business for local heavy hitter Cincinnati Bell.

FedEx also wanted its ASP to have Web page templates that were fast and easy for customers to use. And FedEx needed to be able to layer additional proprietary content onto these pages, such as customer relationship management programs and other basic marketing tools.

"The stability of the ASP's network was crucial, too; we wanted to know about backup plans and redundancies and scalability," says Short. "We knew it would be difficult for our small-business customers to predict the number of customers they'd have and the number of catalog items they would need to have."

There were practical matters high on the agenda as well. FedEx wanted a company that was financially secure and that wouldn't embarrass it. "Our brand name is crucial," she says. "We couldn't be involved in a project that compromised the brand name or overshadowed it."

The result marries FedEx's strengths -- package tracking and order management -- with a full storefront. Companies using the product run the gamut of small businesses: florists, booksellers, lawyers, and accountants, to name a few.

FedEx's eCommerce Builder is designed around Orbit's proprietary eSymphony, a Java development tool. Orbit's network consists of Cisco routers and Sun servers.

FedEx charges small businesses anywhere from $20 to $239.95 per month, depending on the package purchased. The possibilities range from a basic free package to multiple solution levels that include paid online support and customer-built versus FedEx/Orbit-built Web sites. An "advanced" Web site with a search engine, online help, and burstable bandwidth is available, and a business can also launch a full catalog. "Without a full-service ASP partner, I don't know if we would have made the decision to enter this market," says Short.

Perhaps the most intriguing part of the FedEx/Orbit relationship is the terms of the deal. In exchange for taking a lower fee from FedEx, Orbit takes a percentage of the profits that FedEx gets from sales of Web sites to small businesses. Additions to the service include a recently launched SMB Center with management advice on cash flow and marketing, taxation, and finance, as well as downloadable forms and other tools. FedEx is so pleased with the success of its new small-business program that it plans to offer a similar Web-hosting product for global trade managers this year.

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