Ncom is an internet company providing business-to-consumer services. They do all the work and provide all the functionality associated with running a business-to-consumer Web site. Ncom covers its costs and will turn a profit by taking 34% of every sale.
Ncom's 34% take of each sale is all any customer will ever pay for the service. Sound like a lot? Consider the upside. The manufacturers keep 66% of the sale, a far higher cut than what they would get from retail. "This is a significantly better profit margin than in the brick-and-mortar world," says Joshua Greenbaum, principal of Enterprise Applications Consulting. The profit margin on a retail store is "about 15% to 20%. For the small manufacturer, there isn't really a downside here," he says.
Doug Sapp, CEO and chairman of Ncom, believes mid-market manufacturers will welcome the Ncom proposition because it speaks to their specific woes: namely, a lack of time, money, and technical skills. Sapp understands their situation, since he is also president of a mid-size toy manufacturer, ReSaurus Company Inc. (Columbus, OH). "One of the great things about the Ncom model is that it comes out of a real-world need. It was designed by manufacturers for manufacturers," Sapp says.
Sapp started Ncom because he had a lot of trouble handling all the aspects of ReSaurus's e-commerce operation. "We tried doing e-commerce ourselves and then just proceeded to fail to handle the customer service side of the business," he says. He guessed that other small manufacturers were having the same problems. He was right. Since launching Ncom in April 1999, the company has signed on 40 companies and expects to have at least 100 by July. The original goal was to have that many customers by November.
Sapp recognizes that Ncom has competitors in different parts of its business, such as Fingerhut Business Services Inc. (Minnetonka, MN), which offers fulfillment services, and Pandesic LLC (Sunnyvale, CA), which develops and hosts e-commerce operations. But Sapp and Mark Prevost, Ncom's cofounder, president, and chief operating officer, dismiss these companies because their services are too expensive for small manufacturers.
Part of Ncom's attraction is the breadth and depth of its services. Ncom effectively does it all: the storefront, fulfillment, customer service, marketing, and gathering of real-time customer data. "What every manufacturer wants to know is who's buying their product. We give that information back to them," Sapp says. |