±±¾©Èü³µpk10

In the dotcom era, online retailing was virtually touted as the Eighth Wonder of the World. Instead, e-commerce became the Grinch who stole Christmas as logistical bungles and delivery delays saw many early-adopters opening their presents on 25 January.

Six years on, e-commerce is finally starting to deliver on its promises. There are now 18.7 million online shoppers in the UK and the amount spent online is set to top £35bn in 2006, according to the Internet Advertising Bureau. However, as technology has improved and the e-commerce industry has got its collective act together on logistics, the expectations of consumers have risen.

Customers now not only demand that the goods are delivered on time - they expect to be able to track their orders from acknowledgement of the order being placed through to delivery times. "These days, expectations are really high," says Michelle Chambers, account manager at fulfilment provider Ion Group. "They want to have full information at every stage, especially for higher-value items."

Increasingly more companies are turning to the internet as a sales channel, but competitive pressure makes it more important than ever to provide a user-friendly, efficient service that fits with their brand image.

The results of getting it wrong can be disastrous, as Trevor Alderson, director of customer marketing analytics at research firm Ipsos Mori explains. "As more people use online and understand what's possible and as more certain companies are delivering against these expectations, the more demanding their consumers are going to become," he says. "If you get it wrong, you risk losing not just that order but losing the consumer thereafter - so it's the value of the lifetime of that consumer. There are also indirect issues around reputation and word-of-mouth."

Fortunately, improvements in technology mean it is now possible to track orders more closely than ever before. Not everyone has an Amazon-style "where is my stuff?" feature on their website, where customers can log on at any time and check the progress of their order, but it's becoming increasingly common.

Fiona Strong, managing director of Ark-H Handling and a member of the Direct Marketing Association's Response Management Council, says this feature should be on the shopping list for anyone seriously investigating fulfilment options.

Even if the customer does not want this information, the business should be able to access it if and when provided.

Progress of order fulfilment is a key point, whether choosing software, logistics carriers or an outsourced fulfilment provider.

Stephen Bentley, chief executive of response fulfilment company Granby Marketing Services, says his clients can track their orders all the way from order entry to receipt of delivery, identified by name and time.

"We're based in Blackburn, Lancashire and the majority of our clients are based in London or on the South Coast," Bentley says. "We want them to feel as if we are next door, so all our information and systems technology is available through secure linkage to our clients."

DMA BEST PRACTICE

Best practice includes all the mandatory and regulatory elements of the industry, but goes beyond that to help members achieve the highest standards.

Fiona Strong, managing director of Ark-H Handling, says the Direct Marketing Association (DMA) currently offers an approval scheme, inviting members to pass through a series of rigorous tests to ensure that they are performing to a high level.

"This enables clients to choose partners who have been effectively pre-vetted by industry experts - another comfort factor when outsourcing such a key customer-facing element of your business," she says.

The DMA plans to convert to a fully fledged accreditation scheme, which it believes will become as much a pre-requisite for success in the fulfilment industry as the ISO 9001 standard is to quality.

FULFILMENT FAQs

Q: Is it better to farm logistics and fulfilment out or do it in-house?

A: Companies have two choices of how to manage fulfilment: they can either do it in house or they can outsource to a specialist.

Fiona Strong, managing director of Ark-H Handling, says companies considering outsourcing must first identify the reasons why.

She argues it is impossible to arrive at the right solution without being clear about the answer, which could vary from lack of resources to handle the fulfilment internally or management of risk. "Outsourcing is rarely the easy option because to some extent it requires trust and a commitment to a working relationship," she says.

"It may in fact be simple to stay up half the night fulfilling orders from your kitchen table. It is not always the cheap option - after all most entrepreneurs do not put a price on the hours they spend packing parcels in the garage."

"But it is a liberating option," she adds. "It is an option that leaves the business free to focus without worrying about stock reports, parcel deliveries and whether there are enough jiffy bags."

Although his firm is a provider of outsourced fulfilment, Granby Marketing Service's chief executive, Stephen Bentley, acknowledges some companies may be better off managing it in-house. "There's undoubtedly a role to play if the volume of the activity is consistent ... then I'm the first to recommend they take it in-house," he says. "It doesn't always work in this way and outsourcing is best when there's a level of infrequency."

Bentley says dealing with peaks of business such as the Christmas rush is manageable but it is more difficult to cope with the expense of keeping an internal fulfilment department going during troughs. He adds that the other advantage of outsourcing is that it allows the company to focus on its core business rather than becoming distracted by logistics issues.

Q: What questions do you need to ask when choosing a fulfilment provider?

A: First, you need to ensure you are dealing with professionals. Ion Group account manager Michelle Chambers says the first step is to check if the company is approved as a response and fulfilment company by a governing body such as the Direct Marketing Association.

The next stage involves getting quotes, asking for references from existing clients and checking the service-level agreements (SLAs).

Ark-H's Strong says there are several questions to ask, including whether the company wants to understand your aspirations, not just your brief, and whether it is the right size to both cope if demand takes off and care if it takes time.

Since you are buying a logistics solution, it is also important to ensure it has the right storage facilities for your product and the best systems, both software and human, to support your plans.

"Ask yourself whether you feel that these people/this company will become a long-term trusted partner in your business," she says.

"Of course price matters, and if you are seeking cheap and cheerful then don't go wasting time with the 'Rolls Royce' companies - your time or theirs. But don't buy on price - buy core competencies, professionalism, value and, importantly, on fit and feel."

Strong adds that something is bound to go wrong along the line but a good partner will keep you informed, admit to their errors, put things right at their expense and, if appropriate, apologise to the customer.

Ion Group's Chambers says SLAs should spell out all expectations and it's advisable to have the most important points in a formal contract.

Q: What software is currently available to help?

A: There is no way an online retailer can operate without software, and fulfilment applications are essential.

If you are using an outsourced provider, it will have software in place. If you are handling fulfilment in-house, you will need to buy it.

Most fulfilment houses tend to have their own bespoke systems. Ark-H's Strong says the reason for this is that there are not many good off-the-shelf packages available and the ones that do exist are often expensive or inflexible.

Web services, including Microsoft's.NET technology and Sun Microsystems' J2EE, make it possible to write systems that will interface with the existing or proposed web solutions.

"I would suggest that anyone planning to go into fulfilment, especially internet fulfilment, without software is making a serious mistake," Strong says. "But they don't need their own. The market leaders are already well geared up and can offer a total solution to their client partners."

Q: Who are the main logistics and delivery providers?

A: A vital part of fulfilment is finding the right logistics and delivery partner. Not only do you depend on this company to deliver the goods to your customers, but you are also reliant on it having adequate systems in place to provide the close tracking that customers require. The main carriers for small and single consignments are ANC, Business Post/Fedex, DHL, ParcelForce, Royal Mail, TNT, Target Worldwide and UPS.

James Edie, retail spokesman for Royal Mail, advises choosing a partner with a full range of delivery options, both nationally and internationally, and the capacity to cope with demand at all times of the year, including the Christmas period.

"If someone is not at home to receive the item, what's their experience then?" he asks. "What are the activities of a particular carrier to get the item to the consumer? For example, we take it to a Post Office branch for them to collect at their convenience or they can arrange redelivery; but some companies may try redelivery once, after which the customer would have to drive 20 miles to the depot."

Ark-H's Strong says the carriers vary enormously in terms of price, service offering, coverage and reliability and choosing the right one is complex and time-consuming. She adds that an outsourced provider will usually have contracts with several carriers and can help decide on the right one for the job.

"Most fulfilment houses have some sort of system that enables them to choose different carriers for different jobs and, because they are buying in large volumes, they get much better discounts than would normally be available to small/medium-sized individual businesses," she says. "So if you trust your handling partner, trust them with the dispatch element as well."

Q: How important is fulfilment to the overall customer relationship?

A: Ipsos Mori's director of customer marketing analytics, Trevor Alderson, says fulfilment is the essential link between marketing and customer retention, especially for e-commerce.

"It's not like going into a shop where their view or perception is influenced by what they see in the shop, how they're treated in the shop, how helpful the staff are and their experience at the checkout," he says. "Even if it's telephone sales, there is still human contact. With online purchasing, the service aspect is entirely represented by how the order is fulfilled, and in that context it's very important."

Alderson says a lot of companies have identified their most valuable patrons as "gold customers" and give them a higher level of service. He believes this should be taken one step further so that it's not just based on customer value but also on the level of service they have received in the past. "Call centres are a classic example - when they bring up consumer details, they could know if they've complained in the past and then treat them in a slightly different way to keep them sweet," he says.

However, Ion Group's Chambers says it is important to get the balance right. "If you over-compensate someone, you risk the brand being abused but if you under-compensate, you could get bad press," she says. "When P&O had the cruise liner that didn't leave the dock, it paid the cost of the cruise and extra, so it got excellent press and turned a negative into a positive."

CASE STUDY: QCA

When it comes to needing to track orders closely and precisely, it's hard to get more demanding than the Qualifications and Curriculum Authority, a client of Granby Marketing Services.

"The QCA is responsible for delivering highly confidential test papers to schools," Granby chief executive Stephen Bentley says. "The orders are placed through a secure web ordering system and we fulfil them through a secure dispatch."

The key is ensuring that nothing goes wrong and that, if there is a leak, Granby can pinpoint exactly where, when and how it happened.

Granby's system allowed the logistical management of 1,800 pallets of printed matter under secure conditions and the collation of 1.8 million packs into tamper-proof poly bags with high traceability.

There is also an emergency fulfilment solution built in so that, if schools have misplaced papers or made an incorrect order, they can arrange an emergency delivery within three hours anywhere in England.

AFTER-SALES SUPPORT

Customer care doesn't end once the item is delivered. After-sales support is crucial for everything from answering simple questions about the product's use or construction to dealing with complaints and returns.

Granby Marketing Services chief executive Stephen Bentley says there is a legal requirement to provide contact details so that the customer can get in touch, and it is then essential to have someone answering the phones and checking the post or email so that questions don't go unanswered.

He advises companies to provide a freepost address so customers can return faulty or unwanted goods at no extra charge.

The primary ways to provide after-service care are by email and telephone. Bentley notes that if you provide a helpline service, it is important to review it regularly to work out the best scripts for call-centre staff to use and if there are any efficiencies to be gained by implementing something like interactive voice response.

The other aspect of after-sales support is emergency helplines and Bentley says it's important to be prepared. "You need to get a provider in place just in case, even if it's just that you've vetted potential suppliers," he warns.

Ark-H Handling MD Fiona Strong says it is desirable to provide your customers with as many different contact points as possible, including helplines, email, web messaging and even SMS.

"It is a simple rule of thumb that the better and more comprehensive your after-sales support - the better your business will become," she says. "Customer relationship management is the fertiliser of growing businesses - ideally selling products that don't come back to customers that do."