Handling Logistics for E-Commerce Vendors: Maria Haggerty, COO, and Bill Follett, CEO – Dotcom Logistics (Part 3)

Sramana: How did your third and fourth years of business look?

Maria Haggerty: As we continued to build the business and grow, we continued to build out our sales team. Our first real break came in 2004. Bill had served as chairman of the board of Lighthouse International, and I was a co-chair of a subcommittee. One of the people Bill established a relationship there sat on the board of Kenneth Cole. They were looking to outsource fulfillment, and he recommended us as the solution.

We got very lucky and we were able to pitch the deal to Kenneth Cole. That was the watershed moment that turned everything else around for us. Everybody knew who Kenneth Cole was. When we had them as a reference client all the pieces to the puzzle fell into place. We had Johnson and Johnson in our area, and we were able to get their employee store distribution. We got another company called ThinkGeek, which is an Internet 100 company, after that. Those companies forged the trail for us and we were able to generate more business from them. Most of our business has come from word of mouth.

Bill Follet: In 2004 we did $7.4 million in revenues, almost doubling our revenues. We had landed Sirius Satellite Radio, Black and Decker, and a few other key accounts. We continued to do some B2B business for the no-name clients but we were really gaining strength in the B2C area. In 2006 we discontinued B2B with one exception. We had one client who wanted one inventory to handle multiple distribution channels. Other clients brought in inventory that was dedicated to direct consumer shipments. In 2005 our growth continued. Our sales climbed to 10 million and in 2006 they climbed to 16 million. We have been cash flow positive since 2004 and we are over 50 million today.

Sramana: What were some of the strategic decisions you have made through your company building process?

Bill Follet: The first important thing we did was recognize that we needed to build a good management team. As much as I enjoyed being out on the floor packing boxes, it was not my number one skill. We needed reliable labor and managers of that labor on the floor. We were fortunate to get top-notch warehouse managers. Over the years we have constantly upgraded that management team. The tools change and the quality and skills of the managers need to keep pace.

Second, we had to deal with volume. They relied on us to ensure that our SLAs were good enough to keep their clients happy. We built SLAs into our system that enabled us to do same-day shipping for 99% of our orders. We discovered that we were really good at packaging. When packages arrived at the doorsteps people, felt that they were like gifts because the packages were put together very well with a sense of style. It was different for every client, but we held a high standard for all of them. We continue that today.

Maria Haggerty: Bill and I also have a partnership that is very much a yin and yang partnership. If you are going to start a business with someone, it is important to be in business with somebody who does not think exactly the same way you do. Sometimes what he thought was very important was in conflict with what I was trying to achieve. His philosophy is to do the absolute best job that you can do for the customer day in and day out; while you must be conscious of costs, your customer service needs to be first.

From my perspective, the most important thing that we did was managing cash. Cash is king, and it is one of the most important things we managed properly early on. If we could not pay our vendors then I was on the phone with them to keep them informed about our situation. Startups have to manage cash closely. We built credibility and they knew that we would be there for the long run. We were open and honest with our vendors even when the news was bad.

This segment is part 3 in the series : Handling Logistics for E-Commerce Vendors: Maria Haggerty, COO, and Bill Follett, CEO - Dotcom Logistics
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