IDC/CISCO FASTRACK CASE STUDIES : FRANCE

developed on behalf of CiscoSystems 03/00
Andrew Walton
Project Manager - Consulting
TEL: ++ 44 181 987 7100
FAX: ++ 44 181 995 7224

Saintonge Alimentaire is a food distribution company. It was established as a limited company in 1995 but the business was previously family run. It employs between 15 and 30 staff. This number varies because, for many of the sales reps, the work is seasonal.

- ‘regional specialities’ manufactured by the company, representing 5% of turnover.

97% of the customers are organisations (85% of which are institutions), 10% are companies and committees, and 3% are private consumers.

The company has about 900 regular customers. 75 % are in the same administrative area (Poitou-Charente), and 25% are in the rest of France. It almost has a monopoly on ‘dry groceries’ in its administrative area, with all the major institutions ordering from the company. In the ‘themed product’ market there are 4 other major distributors in the area.

The problem faced by Mr Bon, Managing Director of Saintonge, is that the Internet clients’ profiles are different from those of his traditional customers. Saintonge does not normally cater for the individual or the small business with irregular or one-off needs. Most of their usual clients make regular orders every week or fortnight and have an account with the company. They don’t use a credit card on the Internet and so far, the opportunity to do so has been restricted to 4 months of the year (from before Christmas through to Easter).

The chart below illustrates the difference between the traditional customers and the Internet customers.

	% of total business	% of orders on the Internet
Collectivités (hospitals, schools, universities, retirement homes)	80	30
Comités d’Entreprise (joint collaborative committees)	10	30
Not-for-profit organisations / individuals	5	15
Local authorities (councils etc)	5	10
Companies	0	5

The Internet customers may make new demands on the company but their business is profitable. Mr Bon estimates that costs are reduced by about 20% for orders taken on the Internet because no sales reps are involved. Furthermore, the business offers higher margins because the company is dealing in smaller quantities of specialist, high value products like chocolates, ready-made meals, wine etc. Mr Bon thinks that an online catalogue of products tailored for the individual and the small company could develop this branch of his business.

"The experience is getting more and more interesting. This new segment could represent a specialist, profitable activity in the future. But that means developing new offers tailored to the needs of these clients. This is a different business," says Mr Bon.

Unfortunately, at the moment Mr Bon doesn’t have the resources in time or staff to fully develop this side of his business, even though he recruited one person as an administrative assistant to help cope with the extra orders. He does everything himself, including developing and updating the site.

The company was originally set up as an information source with an email address and has evolved as orders have come in.

In 1997 Sébastien Bon, Managing Director of Saintonge Alimentaire, (then aged 25) set up a web site for the company consisting of one page of information including an e-mail address. His aim was to introduce the company to the Internet and explore this new method of communication, but he did so more out of curiosity than any great business ambition. This first page was updated and improved and by June 1998 hundreds of messages were arriving.

Sébastien Bon set up a second, comprehensive version of the site - including a list of products and an up-to-date information page on food safety - with more accurate and comprehensive referencing. He then started to register hundreds of queries and orders from institutions and from companies and private customers he had seldom dealt with before.

Still without any real plan or strategy, he transformed the site by integrating an order form with an online payment system for biscuits, special offers and meals in individual packaging. The first month (September 98) that this new site came on-line, he registered around 40 orders for his Christmas products.

The company now has 19 employees and is market leader for ‘dry groceries’ and one of five main players in the regional French market for ‘themed products’.

Apart from its on-line business, the company still works in a very traditional way, with sales reps and mailings of promotional literature. The orders come from the sales force, by telephone, by fax or mail. The processing of the orders is automated with every item of the order having a serial number that allows the company to follow the progress of the product from the producer through to the final delivery to the customer.

The site is hosted by Free (www.free.fr), a service of Proxad that offers up to 50MO of personal space for free. These free pages are on Apache servers with Linux OS. They use Cisco routers and are connected with Telia, Teleglobe, Sfinx and MAE Paris. Mr Bon developed his site using MS software and Java tools. The secure payment is a SSL solution provided by Clebox

The Internet has also led to the development of an Intranet for the reps that can only be accessed with a password. There are currently 12 people accessing this Intranet, so they can update and organise their catalogue as they want. This has saved the company time as well as stationery and postage.

The company has an average of 900 connections a month, leading to 60 orders (of which 10 are paid for with a credit card: online payment has only been available for 4 months a year until now). 95% of sales are from France, the rest are from the UK and Africa. However the complexity and cost of international transport of food products has meant that no export trade has been done yet.

The introduction of eCommerce has led to an increase in orders and turnover for the company and opened up a whole new customer base to it. 1998 2% of turnover was derived from the Internet (for a total turnover of 17 MF) and is expected to rise to 8% by end of 2000. All of these customers are new and are from a different demographic make-up than usual customers. There is also an estimated 20% cost reduction for orders taken over web.

Mr Bon wants to tailor on-line offers to the needs of the individual and the small organisation, with on-line payment at all times. He would also like to put all 1,600 product lines on an e-catalogue in order to encourage his bigger clients to browse and order on the Internet. The more orders are made on line, the more money he can save on sales reps salaries and mailings. He feels that the institutions will be the most reluctant to order online.

The relative success of his attempt at eCommerce, and the opportunities it has brought to him, are both exciting and a bit overwhelming.

SAINTONGE ALIMENTAIRE
49 AVENUE RENE CAILLE
17250 PONT L’ABBE D’ARNOULT
FRANCE