E-tailers Prepare for the 2000 Holiday Season: Page 3

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There are many such systems on the market. SmarterKids.com, for example, uses San Jose, Calif.-based Cisco Systems Inc.'s Customer Interaction Suite to provide online chat and online help to its customers. In addition, SmarterKids.com uses a homegrown, browser-based system that helps the company anticipate FTC violations and other problems that could lead to customer dissatisfaction, Secor says.

Elves Kept Busy Filling Online Purchases

Source: Jupiter Communications, 2000

For its part, EddieBauer.com chose Servisoft's Servicesoft 2001 to help bolster its customer service capabilities. Before implementing the system, EddieBauer.com was inundated with customer service requests. Instead of responding by phone, the software allowed the company to answer almost 75% of its inquiries by email--most often in less than two hours. In fact, the automated customer service tool helped Eddie Bauer Inc. avoid adding even more people to its call centers during the last holiday season, according to Susan Knight, vice president of customer satisfaction at the Redmond, Wash., retailer.

Rethinking the Warehouse Strategy

The single most important change e-tailers can make to ensure that fulfillment issues don't rear their ugly heads again this holiday season is rethinking and reorienting their warehouse strategies, Forrester Research's Williams says. By adding more warehouses or developing more efficient warehousing, companies can get the biggest bang for their buck, she adds.

CDNow, for example, plans to ensure that all warehouses back each other up so the company can reroute order shipments through alternate warehouses, if necessary. "We're going to make sure we have extra resources on hand, both at CDNow and at the warehouses, to make sure orders are processed as quickly as possible," Belew says. The e-tailer will continue to use a proprietary system that tracks orders and transmits the information to various warehouses, and it will continue to outsource fulfillment to third-party companies, she notes.

E-Tailing Lessons Learned
Here's how to woo and please customers consistently to avoid government reprisals:

  • Focus on having strong documented processes in place that lead to highly repeatable, predictable processes. --Dave Morrison, COO, Patriot Computer Corp.

  • Try to be as proactive as possible instead of waiting for problems to occur. --Amy Belew, vice president of customer service and operations at CDNOW Inc.

  • Focus your energy on making your warehouses more efficient, and devise a plan that allows warehouses to back each other up. The key is warehouses--not IT systems. --Seema Williams, senior analyst at Forrester Research

  • Know the technicalities of the FTC regulations and create systems designed to prevent violations. --Rich Secor, CIO of SmarterKids.com

  • Don't shortchange resources, especially during the holiday season. And don't wait until December to bring them onboard. --Amy Belew

  • Design your company around the goal of providing the best possible customer experience, and you'll have a better chance of avoiding problems. --Rich Secor
  • Convinced that internal control of warehousing will lead to more efficient fulfillment, other companies are reclaiming warehousing from outside vendors. SmarterKids.com, for example, has begun managing its own warehouse in Mansfield, Mass., to maintain greater control over service, says Secor. "We have tried as much as possible to avoid outsourcing any function that could affect customer satisfaction, and we believe we can provide better service by taking it in-house," he says. "[By doing so,] we can integrate the fulfillment and customer service functions better--things like gift wrapping and attaching gift cards to packages," Secor adds.

    More Steps to Ensure Customer Smiles

    To truly ensure a trouble-free holiday season, many e-tailers--both those embroiled in this year's FTC actions and those not directly affected--are taking additional steps. Patriot Computer, for example, is installing new fulfillment systems designed to cut one to two days off the end of the fulfillment cycle. The company also is moving from a build-to-order system. In its place, Patriot Computer is installing a Web- and SQL-based build-to-forecast system from Syspro Ltd. of Manchester, England, which should be running shortly after the 2000 holiday season, says Morrison.

    CDNow has reworked its organizational structure, making customer service and fulfillment the responsibility of one department. Both are now Belew's responsibility. By making customer service and operations--including fulfillment--the ultimate responsibility of one division, the two areas can work more seamlessly, says Belew.

    Even SmarterKids.com, which did not suffer any significant fulfillment or customer service problems last year, continues to improve its operations. In addition to appointing an FTC compliance officer and reclaiming its warehousing duties, the company now generates a daily audit report that shows orders that need attention or intervention. The homegrown report draws from all the company's systems, including fulfillment, shipping, credit authorization, customer service, and accounting.

    But no matter what systems e-tailers put in place or how they restructure their warehousing, there always will be cases where suppliers sell faulty parts, causing problems such as those experienced by Patriot Computer in 1999.

    "We source from all over the world, and some items can remain on backorder for some time," says CDNow's Belew.

    Too Early to Tell

    E-tailers' efforts will help, but it's too early to tell whether they will totally eliminate customer complaints. "For the most part, we've seen progress since the last holiday season. But we won't know until this holiday season is over whether or not they did enough," says Forrester Research's Williams. "I suspect there will be an improvement, but since the market is growing so fast, [e-tailers] would have had to act faster regardless of whether or not they had problems last year."

    The FTC isn't relying on industry steps. In addition to receiving reports from the companies cited last November, the agency will continue to monitor a large number of e-tailers. The agency begins the monitoring process when it receives customer complaints through its customer response center, which consumers can contact through a toll-free number, says the FTC's Hippsley. "We'll be looking at companies that promise specific delivery times to consumers to ensure a level playing field and to ensure that consumers get the services they have been promised," she says. "But we're hoping we got the message across and they will do a lot better this year in fulfillment."

    Karen D. Schwartz is a freelance writer specializing in business and technology. Based in the Washington, D.C. area, she can be reached at karen.schwartz@bigfoot.com.

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