FULFILLMENT

Although most websites currently receive fewer than 400 orders per day, as the buying public gains trust and comfort with Internet purchases, web sales should increase exponentially. Inventory and fulfillment issues resulting from increased orders will continue to catch many an unwary e-commerce site unprepared. Now is the time to perfect the fulfillment systems and services needed so that when your website’s business takes off, everything is in place.

When a customer orders a product from a website, that customer is trying to achieve one or more objectives:

• Save money on product cost (which is partially offset by the addition of shipping costs).
• Avoid the additional expense of state sales tax.
• Purchase specialty products that are not available locally.
• Convenience by avoiding a time-consuming trip to a mall or specialty store.

What your customers fear most about buying from an e-commerce site is the uncertainty of whether their purchase will be delivered when promised. Web newsgroups are full of tales about products ordered and not received when promised (sometimes never).

There comes a time when every web-based business selling a physical product as opposed to a virtual product (such as software or music that can be downloaded over the Internet) must decide how to pick, pack, and ship the product to its customers in a timely manner. As stated many times in this book, online customers have zero tolerance for delays and poor service. But there are steps an e-commerce business can take to provide superlative fulfillment services. They include:

• Linking the website directly, in real-time, to the fulfillment center (in-house or otherwise).
• Building a real-time inventory management system so that the inventory is constantly verified — if a customer sees it on the website, the product should be in stock and instantly available. If it is out of stock, but on order, have a system on the website that can advise the customer that the product is backordered and when the customer can expect it to ship.
• If the customer places the order by 5:00 p.m. (local time), the product should be shipped to the customer that day.
• Orders should be bar coded and scanned during picking, and check weighed at the manifesting scale to insure complete picking accuracy.
• If an order will take more than 2 days to deliver, special low rates on 2nd day shipping should be offered to the customer (i.e., fulfillment center is in Vermont and customer is in Hawaii).
• If an order placed prior to 5:00 p.m. (local time) cannot be shipped the same day, it should be shipped the next day with free upgrade to “next day” delivery to insure it is received within two days.
• As soon as the shipment is manifested, an email should be sent to the customer, showing shipping date, expected arrival date, final costs and tracking number. If the order is to be shipped from multiple sites, an email message should be sent for each part of the shipment.
• Another email should be sent the day after expected delivery for verification that delivery was made and accurately fulfilled.
• A bar coded “return” label and document should accompany each part of the shipment, just in case any part of the order must be returned.

Outsource what can’t be done in-house. Re-visit the situation regularly and when the return on investment (ROI) shows it is feasible, integrate the process in-house with the necessary technology, personnel, and facilities in place.

Keep the Customer Informed

The e-commerce site that understands the importance of the logistics involved in timely order processing, notifying customers of unavailable items, providing real-time order tracking and status information, implementing billing procedures and inventory-tracking procedures will soon become a favorite online shopping site. What customers don’t see on their favorite e-commerce site is its behind-the-scenes rapid and efficient ordering and fulfillment process. But although your customers could care less about the underpinnings of your website and how it works, they do want it to work for them easily and accurately, 24x7.

Order processing and logistics is where an e-commerce business’s back-end transaction management takes center stage. Delivering order and shipping confirmations to the customer’s email in-box at the time the order is processed should be common practice. Customers should be kept informed as to where their order is in the pick, pack, and ship process.

Order confirmations should contain enough data to give your customers confidence that their order will arrive on time. Once your website has confirmation that the order is on the way to the customer (it is in the hands of the shipper), you may wish to follow with an email to the customer. The email may say something like “Just thought we would let you know your Order Number 12345 is on its way.” (Also provide the shipping and tracking information plus a link to use if they want to check on the status of the shipment). When the website obtains confirmation that the package has been delivered, a rigorous customer service will follow-up with another email to the customer confirming that delivery was received and verifying that the product(s) met the customer’s expectations.

THE DROP-SHIP MODEL CONUNDRUM

If you use the drop-ship model to provide all or part of your products, you may find it difficult and time consuming to keep up with the “order-processing end.” The drop-ship model requires 100% diligence. Your customer does not care that your drop-shipper didn’t supply you with current inventory data, or that a tracking email didn’t make it back to you. It’s up to you to maintain communications with your drop-shippers. Obtaining confirmation of shipments is vital, as is getting your orders processed and sent to the drop-shipper on time. The easiest way to solve shipment tracking is to have the drop-shipper use your shipping account (UPS, FedEx, AirBorne, U.S. Postal Service). This will enable you to receive all shipping and tracking information directly, rather than depending on the drop-shipper to supply you with the information.

Questions you should ask before delving into the world of drop-shipping include:

• How do you manage your drop-ship programs in order to ensure consistently superior customer service?
• How do you receive a confirmation that your customer has received the order?
• Are you alerted of potential problems (e.g. out-of-stock, shipment lost, etc.)? If so, how?
• Does the drop-shipper(s) provide tracking numbers for the products shipped? If so, how will you track each shipment?
• How are returns handled?

Some drop-shippers are slow to adopt new technology, so even if you are using cutting edge technology your drop-shipper may still use faxes and telephones as its main mode of communication, making it difficult to automate your logistics and fulfillment processes. If you find this to be the case, establish internal monitoring processes, assign employees to monitor drop-shipments, and leverage technologies that will help to integrate the website with the drop-shipper’s systems to aid you in keeping the customer informed.

Another tack to take is rather than managing the drop-shipping process on your own, consider hiring a third party order management company to handle the task. If you choose this route, look for a company that will allow you to interface with their systems (e.g. a web-based tool that provides you with up-to-date information on product availability, shipments and customer deliveries). But know that while contracting with an order management company will make your life easier, the costs may cut deeply into your profits. Those web operators that may want to investigate the possibility of third-party help should check out CommercialWare.com, Dotcomdist.com, Netship.com, and Vendornet.com.

The confidence a website instills in its customers will be worth the struggle that it went through to provide the information. And your web brand will be paid ten-fold in ongoing consumer loyalty. A lack of shipping confirmations results in worried customers interacting with customer service representatives to obtain assurance that the order is on its way (an avoidable expense).

The “Holy Grail” of customer confirmation is to keep the customer in the loop by providing a confirmation that outlines the order’s details with everything from the recipient’s name, to the cost and billing information. Include:

• A personalized greeting.
• The order number and summary with charges.
• Estimated shipping and arrival date.
• Bill-to and ship-to addresses.
• Customer service contact information.
• Special request information (gift wrap/gift messages, special delivery instructions).
• Links to order status and order history.
• Links to return information.

The shipping confirmation should include all of the above information plus tracking numbers (when relevant) and links to the website’s package tracking service.

Again, a website’s customers expect a lot of information — ideally shipping costs, delivery times, order status, product availability, real-time online customer service — and they want easy access to it on the Web. Providing this information on your website — versus the fulfillment provider or the shipper providing the information — is preferable for branding purposes. All of this may require a large investment in what may seem like an overly aggressive web-based supply chain management technology, but as your web-based business prospers it will become a necessity.