The Wall Street Journal
Suggest to Gregor Wolf that gardening is a distinctly low-tech industry and he doesn't hedge his response. "Technology," replies the founder and chief executive of Germany's Wolf - Garten GmbH, "is the gardening world's dream come true." Mr. Wolf should know. Ever since the head of Europe's largest gardening-supply company wired its thousands of dealers around Europe early this year, business has been blooming. Inventory problems that hurt sales are a thing of the past. Orders that demanded valuable staff time to process now get logged automatically. And dealer questions that took several days to answer are settled in just minutes. Welcome to the world of business-to-business Internet commerce. As big-name companies plow millions into consumer sites, collect membership fees or grab advertising revenues, more and more European firms are using the Internet for a different purpose: to bolster the bottom line. By linking with dealers and suppliers and putting their main business operations on-line, companies are saving money, boosting sales and improving customer service. "The Internet makes our core business even better," says Mr. Wolf. "Better speed, quality and service."
Companies world-wide are catching on, too. U.S.-based Cisco Systems Inc., for example, does $11 million of business daily via the Internet, or about 50% of its annual sales. Dell Computer Corp. maintains the entire corporate-customer side of its business on-line. Market-research companies estimate that business-to-business electronic transactions in Europe will total some $879 million this year and rise to $56,700 million by the year 2001.
"There are a lot of companies, especially small and medium-size businesses, that are starting to take a serious look at this," says Chris Buerger, a consultant at London-based market-research firm Datamonitor. "The benefits can be immense -- if they get it right."
Mr. Wolf believes he is getting it right. Wolf - Garten , started as a small gardening shop by his great-grandfather August Wolf in 1922, has grown into a company with a network of some 5,400 dealers across Europe and a product line of about 2,500 goods -- from rakes and lawn-mowing machines to seeds, fertilizers and plants. Privately held Wolf - Garten doesn't release sales figures, but competitors say it is a force to be reckoned with in Europe.
A year ago, Mr. Wolf had good reasons for seeking out new technology. While the company already was internally savvy -- sporting e-mail and other computer-based business programs -- some 65% of Wolf - Garten 's sales were rung up outside Germany: Mr. Wolf needed a better way to communicate with his far-flung dealers. By the time Wolf - Garten received an order for fertilizer, processed it and sent it out, the supplier often wouldn't need it anymore, he notes.
The seasonal nature of the gardening-supply industry also needed taming. The vast majority of Wolf - Garten 's sales for the year take place in just six weeks in May and June. To take advantage of that short window of opportunity, suppliers have to get what they need -- fast.
So Mr. Wolf made a critical decision to forgo the idea of selling directly to consumers on-line, and focus instead on improving ties with vendors. He turned to the German subsidiary of USWeb Corp., a California company that specializes in business Internet trials. USWeb created the framework on which Wolf - Garten has since hinged its entire future business strategy: an enormous private network that wired the gardening firm to its subsidiaries and vendors. Previously, Wolf - Garten estimated it would take three to four days to process a vendor order. Now the order goes out the same day.
Things are now easier for vendors as well. If a Wolf - Garten item wasn't on hand in the past, they typically would show a client a page in a bulky catalog, and estimate a delivery date. Now, vendors can offer detailed on-line descriptions of items, make sure they're in stock and give an exact date of delivery. Moreover, dealers can answer most end-customer questions on their own, and smaller outlets have access to detailed information about products they don't have in stock. "We wanted to focus not just on the scope of products, but the depth of products," says Mr. Wolf.
Wolf - Garten has started monitoring dealers' activities as well. The company can tailor a screen for each dealer as they log on, promoting those products of interest and de-emphasizing others. While Wolf - Garten sales agents visit dealers on a weekly basis, the new system is linked to the company's service and support call center, opening a new line of communication. Finally, dealers could order new goods around the clock, view estimated times of delivery, and then track the shipment all the way to their front door.
Of course, getting all the dealers to give the Internet a whirl hasn't been easy. Many gardening outlets are still small operations that are unaccustomed to technology; Wolf - Garten estimates that only half of its dealers have joined its network. "We just don't have a big enough reason to be on-line yet," says an employee at Andrews Ltd., a garden-equipment center just outside London. As incentives to companies like Andrews, Wolf - Garten has offered to help get its dealers on-line and to give them links to their own Web pages. This has helped, although Mr. Wolf admits some dealers may never join the system.
Still, other dealers and subsidiaries that don't yet have access to the network are eagerly awaiting their chance. Alan Calverley, marketing manager at the U.K. division of Wolf - Garten , says his management is planning a trip to Germany in September to get up to speed on the new system. "We're convinced this is the direction companies will all be heading in the future," says Mr. Calverley.
It's too early to say whether the company has reaped what it has sewn, and Mr. Wolf won't release how much he spent on the project. However, he's betting on substantial returns on investment by the end of its first year. What he's really excited about, though, are the upbeat messages he's getting from his distributors.
"It is a dream for a marketing company like ours to know who we are talking to and understand how to serve them better," says Mr. Wolf. "For us, technology wasn't about the best computers or software, but about building the best business prospects."
**Reprinted from The Wall Street Journal, September 7, 1998