Handling Logistics for E-Commerce Vendors: Maria Haggerty, COO, and Bill Follett, CEO – Dotcom Logistics (Part 2)

Sramana: Let’s bit about that first customer and how you got up and running. What were the dynamics of getting your foot in the door in that industry?

Bill Follet: Our business plan had to be adjusted almost immediately. We decided that if we were going to attract the right kind of customers, we would need a first class facility. We leased a 250,000 square foot building, and our timing was poor. We no sooner got all the paint on the walls and the automated equipment in place when the dot-com market collapsed. We were forced to alter our business plan from an e-commerce B2C plan to a B2B plan.

Maria and I had participated in building distribution plans for B2B in the past, and we had won the vendor of the year award with Walmart a few times. We had developed point-of-sale distribution systems. It was easy for us to make the switch from a business strategy that was not yet quite ready to be started to a business strategy that had been around for quite some time.

That plan worked out well for us, and it was important that we did it. Soon after the collapse of the dot-com business on Wall Street, there was 9/11, which further froze executive thinking about e-commerce business. In 2004 everything was behind us. The cash flow that had sustained us in the B2B business had proven to be enough to keep us going forward, and we were able to obtain our first e-commerce company.

Sramana: Between 2000 and 2004, what were some of the metrics surrounding your business? You survived for four years, which is no small task.

Maria Haggerty: It seemed like a long time. Our first customers were no-name customers. They were companies we had never heard of. They were small local companies that operated with lower-end products serving the discount market at Family Dollar–type stores. We were able to barely pay the bills in those early years. We were fortunate that we had angel investors who fed us a little more money to keep us going.

One of our investors told us that we had to keep enough gas in the car to get over the finish line. They were very lean years. I would go home and wonder if we could make payroll. Bill and I went for a long time without taking paychecks. The revenue in those early years was tight. We had high goals. Our first year we had projected $776,000 of revenue, and I don’t think we even had 10,000 dollars of revenue.

The second year we probably had $2 million to $3 million of revenue. For our kind of business, that was what it cost us to operate the facility. The staff and IT team that goes with our business was a significant cost. We did not operate profitably for the first four years.

Sramana: You were still able to get clients that could pay $3 million a year for your services. How did you get those clients?

Maria Haggerty: We were fortunate to have had a lot of good connections from our previous life at GoodTime. The early customer we had were tiny companies that were just starting their dot-com initiatives. The real money came from customers that we had in the New York apparel community. They knew our reputation from GoodTime, and they took a gamble to bring their business here. They made up the bulk of the initial revenue.

This segment is part 2 in the series : Handling Logistics for E-Commerce Vendors: Maria Haggerty, COO, and Bill Follett, CEO - Dotcom Logistics
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