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| Fighting the ghost of Christmas past |
March 5, 2002 |
By Risha Gotlieb
CHRISTMAS SHOPPERS WHO BOUGHT PRESENTS ON THE WEB THIS PAST YEAR HAD A MUCH-IMPROVED experience over those who ventured online during Christmases past.
That’s because e-tailers worked on fulfillment— moving the stuff consumers bought from the warehouse to their mailboxes—and it appears they did a good job. During the ’99 Christmas season many e-tailers, with Toys“R”Us perhaps receiving the most attention, faced serious fulfillment problems and learned painful lessons.
But in 2001, customer expectations seem to have been better managed, according to James Crawford, a Cambridge, Mass.-based analyst with Forrester Research. For example, many e-tailers ramped up their shipping options; Amazon and LL Bean, among others, set earlier cutoff dates for holiday delivery and offered limited-time free shipping to nudge people into shopping a little earlier.
Crawford said many e-tailers also improved their order fulfillment infrastructure, a complex system that often involves outsourced operations such as inventory, warehousing, packing and delivery.
Surprisingly, although the Internet provides cutting-edge communications, many e-tailers are still meandering through the superhighway with out-dated shipping and warehousemanagement technologies. In fact, many companies with long-established bricks-and-mortar operations entered etailing by simply taking orders and feeding them into their existing distribution systems, which were never designed to meet Internet-time demands.
You’ve got mail
A positive spin-off of the frantic race to become the shipper of choice has been the development of new and creative delivery methods. John Lee, general manager of E-commerce Solution Sales for Canada Post, said the company launched several new services last year in an attempt to provide more convenience for e-tailers and their customers. These include additional delivery options, including service during evenings and Saturdays, and a supply chain management service that was made possible with Canada’s Post recent acquisition of Progistix, a third-party logistics subsidiary formerly owned by Bell Canada.
“We are now able to handle the whole back end, from order management and warehousing to fulfillment and delivery for online retailers,” Lee said. “We are even capable of handling merchandise returns.”
Canada Post, in partnership with Sears Canada, is also testing a new form of delivery called eBox. With the eBox delivery system, the customer doesn’t have to be home to receive deliveries. Items are deposited into an electronic dropbox —a large bin secured by a concrete base that sits outside the door of a home or business.The box can be opened with an electronic key.
Large and small Canadian e-tailers interviewed said changes at Canada Post improved its delivery service this year.
Jim Terkalas, general manager of Aren’t We Naughty, a chain of Toronto-based adult retail stores that also operates a popular gift-giving site, said they get orders from across North America, including some from the most remote areas in Canada. “Canada Post is one of the few carriers that has the capability to deliver to all these locations at an affordable rate.”
Pump up the volume
IDC estimates that Canadians spent $950 million online this past holiday season compared to $550 million the previous year, and that growth means online sales can stress an etailer’s infrastructure.
“Although we performed quite well in the 2000 holiday season, what we didn’t anticipate was the volume of orders, which strained our back-end systems,” said Lori DeCou, manager of corporate communications for Future Shop.
DeCou said Future Shop’s goal is always to have an infrastructure that is greater than the anticipated need.“We’ve built a system that is now able to handle a significantly larger volume, which allowed us to extend our shipping deadline from the 17th to the 20th of December.”
Tracy Nesdoly, vice-president of communications and executive online producer for Indigo Books and Music, said the greatest lesson learned from previous seasons is the importance of tracking the progress of any given order.That also means knowing when an item is out of stock so it can be quickly sourced.
And Gerry Smith, vice-president of online marketing for Sears Canada, said that although this year’s online orders doubled from the previous holiday season, they still managed the fulfillment end easily. Unlike many other e-tailers, Sears has a long history of involvement in catalogue shopping, the precursor to online shopping.
“Right from day one we made sure we integrated our Web site business with our catalogue business. That allowed us to take advantage of our existing distribution network, which includes 2,000 pick-up points across Canada and a call centre that is able to process more than 20 million orders per year.”
If online shoppers continue to see solid performance from e-tailers over the next eight months, next Christmas may be a boom-time online.
W e b f u l f i l l m e n t
Aren’t We Naughty http://www.arentwenaughty.com
Canada Post http://www.canadapost.ca
eBox http://www.ebox.com
Forrester Research http://www.forrester.com
Future Shop http://www.futureshop.ca
IDC Canada http://www.idc.ca
Indigo http://chapters.indigo.ca
Sears Canada http://www.sears.ca
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