The Perfect Cup

The Perfect Cup has been providing gourmet coffees, fine teas, medicinal herbs and accessories to the wholesale and retail markets for 10 years. They specialise in chemical and preservative free ingredients sourced from the world's finest coffee and tea producing regions. Based in Adelaide, South Australia, The Perfect Cup employs 30 full time staff.

E-commerce was implemented 12 months ago following advice by a web developer.  It was suggested to Managing Director, George Ghinis, that business transaction efficiency could be improved by utilising Internet technologies.  In particular, George aimed to establish an online ordering system that could be integrated with the company's accounting system.  This would automate the ordering process and eliminate tedious paperwork.

Business-to-Business (B2B) sales to cafés and shops represent a significant amount of The Perfect Cup's revenue. The company has established a system using FlexeGate software whereby retail stores can place orders online via the company website. Direct invoicing and credit card settlement occur automatically.

In 2001, The Perfect Cup's online ordering system increased gross profit by $25,000 as a result of an expanded customer base and the seamless ordering system. Annual costs were reduced by $30,640 contributing to a net operating benefit from e-commerce in 2001 of $50,220.   The Perfect Cup invested a total of $13,680 into the e-commerce system.

The Business

The Perfect Cup has been providing the world's finest coffees, teas and medicinal herbs to the wholesale and retail markets for 10 years. They specialise in chemical and preservative free, single-origin 'grands crus' coffees from the world's premium coffee producing regions. The company's range of teas are selected from an Orthodox Factory range from the world's finest tea producing regions.

Based in Adelaide, South Australia, The Perfect Cup employs 30 full time staff.

Getting Started

Following advice from a web developer, Managing Director, George Ghinis initiated e-commerce at The Perfect Cup 12 months ago.  George aimed to improve business transaction efficiency and expand the company's customer base through development of a website.  In particular, George sought a web-based solution that would integrate an online ordering facility for retail shops with the company's accounting system.   As a result, sales processes are simplified and cumbersome paperwork is minimised.

Business to Business (B2B)

B2B sales to cafés and shops represents a significant portion of The Perfect Cup's revenue. The company has established a system using FlexeGate software whereby retail stores can place orders online via the company's website.

Flexegate facilitates direct data entry of orders into The Perfect Cup's MYOB accounting system. The transaction involves the retail store selecting products and entering contact and payment details online.  Credit card information is sent securely through the Camtech Internet Payments Gateway to be authorised before settlement with The Perfect Cup. Once approved the FlexeGate system sends an order notification to staff via email.  An invoice is then automatically forwarded to the retail store.

Flexegate simplifies inventory management.  Following the placement of online orders by The Perfect Cup's retail customers, the system automatically updates total stock holdings across the company and assists the ordering process.

Flexegate is a total business integration package which has provided The Perfect Cup with website design, hosting services, payment processing and integration of online shopping carts with the company accounting system.  In addition, Flexegate offers several value-add functions including online order retrieval, data management, and reporting on key indicators (sales by customer, item or date).

Current e-commerce strategy

The online shopfront forms the core of the company's e-commerce system.  The automatic importation of customer data into the MYOB accounting system has streamlined the company's inventory ordering process and reduced the incidences of data entry errors.

Apart from the web-based ordering facility, the company website itself is an important part of the e-commerce solution.  By providing company and product information, the site has been successful in enhancing the profile and accessibility to the business.  Although initially maintained by a web developer, George now updates the website when required.   The website is promoted through listings on popular search engines, company stationery, as well as on take-away cups and coffee bags.

Revenue and Costs

* Note: Capital Expenditure was amortised over a four year period

Financial Analysis

In 2001, The Perfect Cup generated additional revenue of $25,000 from the e-commerce initiative.  This was primarily due to the sales received through the online shopfront and customers having found the business through its website.

Cost savings totalled $30,640 in 2001. A significant proportion represented the increased efficiency in which retail store orders are processed following implementation of the Flexegate software.  Subsequently, staff productivity in the areas of administration ($24,960) and banking ($4,680) have improved.  Savings have also been achieved in printing ($500) and stationery costs ($500).

The Perfect Cup invested $13,680 in establishing e-commerce.  The majority of this figure was allocated to website development and implementation of the Flexegate software ($10,000).  New purchases of hardware to operate the system included a computer ($2,000) and printer ($1,000).  Time spent by George in researching appropriate solutions for the business amounted to $500.

Ongoing costs totalled $5,420 in 2001.  Most expenses are associated with support of the website. George updates the website on a quarterly basis at a cost of $1,000 while system maintenance fees and website hosting incur $400 and $300 respectively. In addition, $3,420 is allocated to the amortisation of capital expenditure over a four year period.

Non-financial Benefits

Following implementation of the e-commerce system, The Perfect Cup has achieved its aim of increasing business transaction efficiency.  By minimising paperwork, the company has enjoyed an increase in staff productivity and subsequently shorter delivery cycles.  In addition, development of the website has heightened the company's profile and provided customers with another point of reference for obtaining product information and submitting enquiries.

Challenges

The Perfect Cup's e-commerce implementation presented no significant issues that would affect its success. George recognises, however, that many customers have yet to realise the full benefits of the online system.

Future

George intends to enhance collaboration between retailers and wholesalers across the supply chain and encourage greater use of online technology by customers.  As reliance on web-enabled transactions grows, it is envisaged that an upgrade will be made to Broadband Internet to ensure faster and more reliable execution of transactions.