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 NEWSHolidays offer lessons to e-tailers By Dan Briody and Ephraim Schwartz December 28, 1999 2:07 pm PT With the busiest online shopping season ever behind us, e-tailers are looking back at the numbers and finding several lessons to be learned.
Industry observers speculate that the root of the problem of missed orders and irate shoppers is that back-end fulfillment systems are not well integrated with front-end electronic-commerce applications. And order fulfillment and customer service is a major challenge that some e-tailers may have taken too lightly, according to one dot-com start-up. "The most significant issue was fulfillment," said David Schatsky, director of commerce infrastructure strategies at Jupiter Communications, in New York. "It caused the biggest disappointments among customers." "I think there are really two classes of problems," Schatsky said. "First is the availability of the Web site, particularly Web site outages and performance. Many customers were turned away because there were sites that couldn't handle the volumes. The more serious problem is fulfillment -- getting the goods into the boxes and getting them into the hands of the shippers." For their part, many e-tailers are fessing up. "I won't deny that online retailers have underestimated the amount of effort to apply to the customer-service angle. It's a huge effort. The dirty little secret is not everybody can do [order fulfillment and customer service]. The goal is to keep the customer satisfied by knowing how to transfer bits to atoms," said Brent Cohen, chief operating officer and co-founder at eHobbies, in Santa Monica, Calif. But Cohen believes e-tailers are also getting a bad wrap on customer service, especially when compared to their brick-and-mortar counterparts. E-tailers provide better customer service, not worse, by being able to answer more detailed technical questions than a seasonal worker at a traditional retail outlet can, according to Cohen. "If someone calls us and asks, 'How much track do I need for HO gauge trains in a 17 by 12 foot room?', we can answer them. I'd like to see a Toys R Us or any retailer do that quickly," said Cohen, who noted that they team their customer service reps with the buyers. The most difficult part of customer service comes from the fact that the warehouse and customer service are not physically next to one another, so companies rely on accurate databases to know what is in stock at any given moment in time, Cohen said. No matter how quickly changes are included in the database when products come off the loading dock, are taken from the shelves, or shipped out to customers, the real key to success is putting people into the mix to constantly update and check inventory, according to Cohen. The inability to get goods to consumers on time caused concern with investors, which sent shares of bellwether e-tailers Amazon.com and eBay down this week. Though many analysts had speculated that the shipping industry might falter under the added demand that online retailers would place on them over the holidays, the shippers are reporting glowing results and pushing back on the e-tailers. "I think the problems are a little further upstream than the shipping," said Sally Davenport, a spokeswoman at Federal Express, in Memphis, Tenn. "The problems the e-tailers have been facing are more on the order-entry and fulfillment side." Davenport said that Federal Express exceeded its expectations this season in terms of volume shipped, delivering more than 4.5 million packages on Dec. 20, which was more than were originally anticipated. The company announced that it works closely with its large customers to assess what volumes over the holidays will look like, and in many cases chartered additional aircraft for companies like eToys, which needed extra shipping capacity this year. "We take a look at their business plan and come to a decision as to how much of the volume we can handle, because the fact of the matter is that our reputation is on the line too," Davenport said. Likewise, UPS officials claim the holiday season went smoothly and that they exceeded all of their goals. By adding 90,000 temporary employees and thousands of extra vehicles, spokesperson Dan McMackin said UPS was able to meet demand. But McMackin said consumers can confuse shipping and handling, which ends up making the shipping companies look bad. "Our forecasting efforts for the peak season begin the week after Christmas," McMackin said. "So you need to separate the handling from the shipping when things don't get there on time. If it gets to our docks, we get it delivered." Senior Editor Eugene Grygo contributed to this article. Dan Briody is an InfoWorld editor at large based in New York. InfoWorld Editor at Large Ephraim Schwartz is based in San Francisco.  RELATED SUBJECTS  E-CommerceSPONSORED WHITE PAPERS 
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