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July 18 2008
Comment – Fulfilling a customer need
Stewart Oxley argues that fulfilment shouldn’t be just something that’s added on to your strategy at the last minute
With more and more businesses moving to e-commerce sites, giving consumers more choice that ever before, what are the deciding factors that keep consumers coming back? Is it cost, variety, easy of navigation or the speed at which orders are handled and fulfilled? Stewart Oxley Sales & Marketing Director of Granby Marketing Services explores the role fulfilment plays in the world of online retail.
The ease of access to the internet has facilitated the rapid expansion of e-commerce. It’s notoriously hard to measure but recent estimates suggest that the internet comprises of nearly 30 billion pages on over 109 million distinct websites. In 2005 the value of internet sales by businesses to households was £21.4 billion, which was an increase of 30% on the previous year and is increasing constantly.
We are all aware of the wealth of opportunities to be had as a result of the internet. However the rewards are not reaped without investment and the ability to overcome issues affecting e-business. But what affects e-businesses? From my experience technology is without doubt the biggest issue for getting orders from a website and into the customers’ hands.
Firstly, consumers expect a website to be easy to navigate and quick to get them from one location to another or rapidly move them through the payment process. Therefore it is vital that the bandwidth is adequate to host the website. You don’t want to be losing customers because they got bored of waiting for high resolution images of your products to load.
Secondly, the ability to constantly monitor stock information means that you’ll be able to assess what your most popular items are, therefore intelligently targeting your marketing activity as a result. This information will also help with future financial planning
And finally - and perhaps most importantly - guaranteeing that the payment process is efficient and secure. With the rise of online fraud there are those groups of consumers who are nervous about entering sensitive details online. But there are a number of safeguards that can be implemented to reassure consumer confidence including Payment Card Industry Data Security Standard (PCI), Qualified Security Assessor (QSA) or an APACS accreditation.
Relating directly to the payment process is the volume of regulations and legislations relating to e-commerce. And believe me there are plenty! For example the EU Distance Selling Directive, the 7 day return option, the tax on shipping and privacy matters. But most recently, we have witnessed the introduction of the limited time period that businesses can retain the details of consumers’ credit and debit card details.
Even if you are up to speed on all the above points there is still one resounding criticism of online businesses. It is often said that they concentrate too much on making websites as good as they can without actually building robust fulfilment into their business plans. Many companies try to handle the fulfilment themselves to get the operation up and running. But it’s not long before they realise that this is a specialist market. More often than not have to either invest heavily in equipment and facilities or - the more cost effective option - outsource the fulfilment side of the business.
My advice would be that until the company has enough mass to manage the operation internally, it should focus on outsourcing. This allows many businesses the opportunity to test the feasibility of response and fulfilment without contractual problems, sourcing premises or investing in equipment. Most e-businesses find that outsourcing fulfilment makes more commercial sense. An outsourced supplier can provide supply chain resource, stock control management online, order processing and response management. This will not only improve cash flow but also contribute to customer retention and brand strengthening. For example, if a company can’t fulfil its customer’s orders then the brand will ultimately be affected. The power of the internet isn’t just a fantastic portal for e-commerce it has also given consumers a power voice which can make or break a business. So always do everything to keep your public happy!
Consumers like a choice; they like to see things in their own home. Take my wife for example; she enjoys shopping for me which more often than not means that she has to take whatever she has bought back! Some of these items are purchased from a shop making the return process relatively easy. But it isn’t always this easy for your customers. The 2006 survey by the Office of Fair Trading into internet shopping revealed that music and videos are the most popular products bought online followed closely by books. This might seem obvious as iTunes and Amazon are truly embracing the demand for their services. However, when you think about it, what are the costs of consumers returning items such as books?
The process of consumers returning goods has a considerable impact on confidence, your bottom line and the cost of quality coding in order to re-use stock. But if you ultimately want to build trust with the consumer, don’t slap a hefty charge on returns, don’t make the process long and drawn out and don’t place the emphasis on the consumer to ensure that the package has been received. Otherwise there is the risk that could place a negative association with your brand.
So how do you keep track of everything? If you haven’t got open access to a reporting system with your outsourced supplier, you won’t know what the stock control levels are, what the process of fulfilment for each order is or what how returns are being handled. An good e-commerce fulfilment reporting system allows e-business owners secure online access to view all their business information 24 hours a day, seven days a week. There are other variations of this system that are product dependent but make sure your fulfilment partner has a system that is easily adaptable, as a fulfilment system can be a great asset to any e-business.
In conclusion there are three key elements of a good fulfilment business transparency, scalability and accessibility. These fundamental components will develop trust, loyalty and a strong online business. Ignore them at your peril.
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