The explosion of eCommerce continues to transform how we connect with everyday products and services. When Amazon started selling books online in 1994, few (except perhaps Steve Jobs) could envision our phones would be smart, and we’d have apps to order pizza or a case of beer, but that’s all possible today.

If you’re launching an eCommerce strategy, you can learn a lot by examining the approaches taken by food and beverage players Dominos, Chipotle and major liquor distributors, as noted below. You will also find several tips in this post to help you weigh options and protect your intellectual property rights along the way.

Dominos’ eCommerce Strategy: Do It All In-House

Dominos is one of today’s major players in food and beverage eCommerce. As Digiday reports, the company now sees itself as an eCommerce business that sells pizza, not the other way around.

Dominos has gone all in and manages its eCommerce business in-house with its own technology and has built the company around multiple platforms. Along with dropping “Pizza” from its name, Dominos has deployed its “Anywhere” program, which allows you to order pizza and other menu items from, well just about anywhere, whether by phone call, online, with an app and even by tweeting a pizza emoji on Twitter.

eCommerce Strategy for Chipotle and Liquor Distributors: Chose an Alternate Route

Unlike Dominos, many businesses opt to utilize third parties to help deliver their food and beverage products. Inspired by the success of Uber, more startups are developing apps to connect people who need a service with people who provide a service, just as the Uber app connects drivers who have vehicles for hire with consumers who need a lift.

Seeing the genius to this approach, the trade association Wine & Spirits Wholesalers of America (which represents more than 350 liquor distributors) invested in startup Drizly Inc. The Drizly app connects thirsty consumers who want to order booze with liquor retailers that want to sell it. Retailers pay a monthly fee to Drizly.

Chipotle took a slightly different approach to eCommerce. Instead of creating its own proprietary technology or investing in someone else’s app, the burrito giant outsources its delivery program. San Francisco startup PostMates handles Chipotle’s delivery through its app, as well as delivery duties for other business’s food and beverage products, household goods and even school supplies.

How to Pick an eCommerce Solution for Your Business

Today, more food and beverage companies are jumping on the eCommerce bandwagon, because more consumers expect to do business online and through mobile applications. They also see the value of eCommerce as a moneymaker.

If you’re thinking about integrating an eCommerce solution into your business, the following steps should help you kick off the process.

STEP 1: Consider the three approaches described above and decide which commerce strategy makes the most sense for your company. Ask yourself:

• Do I want to have more control over the consumer experience, feel comfortable enough to take on the technology risk, manage the workflow and employ everyone in the process like Dominos? OR …

• Am I better off focusing on what we do best (like Chipotle) and rely on a third-party to handle the mobile services application technology and manage all aspects of delivery? OR …

• Should we consider a middle ground, as did the liquor distributors, where we invest in the delivery mechanism (or app), potentially have a say in the consumer experience, but still don’t have to worry about managing people who deliver our product to consumers?

STEP 2: Weigh your tolerance and ability to safely handle issues pertaining to privacy rights, information handling and increased responsibility for damaged goods. This is where insight from a corporate lawyer and/or intellectual property (IP) attorney with eCommerce and commercial litigation experience is invaluable.

How you securely handle a customer’s credit card and other personal information in a brick and mortar location vs. online is quite different. What security measures will you need to employ to protect consumers' personal information from hackers? Are you prepared to take on that risk?

With eCommerce you also increase the odds that the product you’re delivering could get damaged or lost. Unlike brick and mortar, where damaged products are typically the manufacturer’s responsibility, you as the business owner take on more risk when something goes wrong during the delivery process.

STEP 3: Determine how much you are willing (and able) to invest in added technology, infrastructure and human capital necessary to do it all on your own (like Dominos) or decide which pieces of the puzzle you would feel comfortable handling.

As your business grows, will you fulfill orders through a central warehouse or multiple locations? Are you prepared to train a growing number of staff? And are you better off developing your own technology or going to a third-party provider for your app?

Developing an App or Buying One? Protect Your Intellectual Property Rights

If you would like to develop your own app, you need to evaluate the costs associated with hiring a third-party technology firm to develop the software. You should also take steps to execute a software development agreement and protect intellectual property rights associated with the technology.

When developing your own app, ask your IP attorney how to:

• Get a patent for the software (which can be difficult).

• Protect any trade secrets associated with the technology.

• Ensure any data transferred through the app remains secure.

• Protect any consumer data obtained during a transaction.

• Be compliant in regard to information storage in the short- and long-term.

• Develop appropriate terms of use, privacy policies, and nondisclosure policies for your app and eCommerce site.

• Execute agreements with developers and tech vendors to ensure IP ownership regarding technology and any software copyrights belong to your company.

Alternatively, you could opt to buy or license the technology and leave most of the risk to the third-party app provider (like Chipotle did). In which case …

When buying the technology from a third-party provider, ask your corporate or IP attorney to help you prepare contracts that ensure data security:

• Clearly define what the third-party app provider can and cannot do with customer data.

• Include an adequate service policy with strict service level commitments that have teeth and remedies if violated.

• Clarify how and when the provider can leverage data and ensure they do so appropriately to reinforce that data protection is a top priority.

Every business has some unique needs when it comes to protecting IP rights in the world of eCommerce. Rely on your legal team to customize an approach that best fits your eCommerce strategy.

Photo Source: Dollar Photo Club

For more information on this topic visit our Internet Business and eCommerce service page, which is part of our Internet & eCommerce practice.

For more information on this topic, please visit our Trademark Protection service page, which is part of our Trademark practice.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. 

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