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Britons have more than doubled their online spending in the past four years, with credit card holders alone spending 123 per cent more in 2004 than 2003, according to Visa. This Christmas, nearly £2 billion was spent online, with December now bringing in more money then the entire amount spent online during the whole of 1998.

But, if recent reports are to be believed, continued growth in this sector could be on borrowed time. According to a report by Prolog last month (Marketing Direct, December 2004), home delivery is so bad that three-quarters of consumers have experienced problems with it. More seriously, 85 per cent of the 1,000 people questioned said bad delivery would stop them shopping with that retailer again, with four-fifths saying they would tell others about their bad experiences. High-profile PR disasters - like the hundreds of thousands of people who didn't receive their Fat Nation health packs until the recent BBC1 series finished - keep shining the spotlight on this issue.

Exaggerated expectations

Perhaps consumers have exaggerated expectations of what fulfilment can offer, but, with the likes of Amazon upping the ante, continued pressure is being put on fulfilment companies to improve their service commitments.

"Online firms set the standard for fast turnaround," says Steven Dole, solutions development manager at DataForce. "People now expect next-day delivery from the e-tail offerings of high street stores, but many still operate on 48-hour or later delivery times. The bar is constantly being raised."

Matt Cannon, director of the Braywood Group, which fulfils 25,000 orders a month for clients including Help the Aged and AOL, believes customers must be realistic. "Consumers need to be educated about living in the real world and, certainly over Christmas, about being in a extremely busy period," he says. "Traditional carriers are stretched to their limits. Customers will return whether products are delivered rapidly or not as long as their expectations are monitored promptly."

DataForce research shows customers actually reveal nuances of satisfaction, and would much rather know they are getting what they ordered on a guaranteed day, just so long as they get it. "They'd much prefer this than finding out they should have ordered two hours earlier to meet the 3 o'clock next day cut-off time," says Dole. "That's when they get angry, as they can't see why, if they order at 3.05pm - just five minutes later - they have to wait a day longer."

Standards are something fulfilment houses say must be properly firmed up. "We recently sent a political pack out with Royal Mail, but 20 per cent of people didn't receive it," says Rachel McGowen-Kemp, business development manager at MM Group. "The trouble is, more recordable options like delivery tracking cost more, and clients can be cautious, especially if the cost of the product being ordered is small."

The irony is that delivery tracking is a sure-fire way to gauge whether service levels are being met. In their absence setting standards can seem like plucking figures from thin air. "We say mis-picks should be less than one per cent," says Caroline Matthews, sales manager at Aspect Marketing Services, but such agreements have often been criticised for being constantly low across suppliers, with no one supplier willing to commit to really service-busting, client-winning metrics.

Dole defends such metrics, however. "Metrics, such as fulfilling 98 per cent of orders within 24 hours, are tough and most clients are savvy about what to expect. Those promising 100 per cent can't deliver, those only promising 90 per cent will not even be considered. The most important aspect, though, is having the monitoring to prove this."

Fulfilment company Zendor has just gone through many of these issues after pitching for, and being awarded, the fulfilment contract for Woolworths' online channel last September. It holds 2,800 separate products in its central Manchester warehouse for the retailer and service levels have been cast in stone until 2007. One of the service elements includes rigorous checking of packing. "We have separate pickers and packers, with the packer assigned to check on the standard of the picker," says Keith Jordan, fulfilment director at Zendor. "On top of this, 10 per cent of all orders are re-opened and checked again. If necessary, we can identify a packer and suggest extra training."

Risk and reward

DataForce, which handles the orders of Reader's Digest customers, works on a 'risk and reward basis' whereby agreed service levels are monitored weekly. If it over-achieves on some it can charge a premium, while underachievement incurs a penalty. "If you set a two-day delivery agreement rather than a one-day one, you have more time to better monitor quality of product, packing and picking standards," says McGowen-Kemp. "These are the things customers don't mind waiting for if they know their product arrives as advertised and in good condition."

And while it's difficult to beat next-day delivery, other, simpler service techniques are where some fulfilment houses say they can make the difference.

Many now test seed mailings as standard. Here a sample of products will be ordered to see how long they take, and, more importantly, what state they arrive in, as often clients will not think about packaging.

"You'd be surprised just how many items arrive at people's doors damaged, and we will intervene to advise on how best to package them properly," says Ian Dignum, sales director at Prolog, which handled POS material for Euro 2004. "We actually prefer hand-picking our items because labelling or quality faults can immediately be seen. This is the sort of feedback clients want as often they are responsible for products arriving damaged at the warehouse before they are sent out."

Prolog can phone customers up if their order is damaged before it's sent, and let them know when the next delivery of that item is expected. Few cancel their orders. MM Group is also set to start telephoning customers of Tourism Ireland to check they are happy with what they have just received to reinforce the customer experience.

Surprisingly though, mystery shopping results often go unreported to the fulfilment house. Fulfilment houses often know it happens, but don't hear the results, or, worse still, don't even know for sure if clients conduct it or not.

"We want more of it," says Aspect's Matthews, which is mystery shopped by RNLI. "And we favour as much openness as possible. We've developed our own PRIAM software system that gathers all our service and documentation information together. We need to move into greater conversations at all levels. You still hear horror stories of clients doing the marketing and not letting fulfilment know enough in advance to plan stocks and manpower."

TEAR FUND

Tear Fund is the Christian action organisation that only sells fairly traded products. Because this typically means they are more expensive to buy than high-street equivalents, fulfilment company Prolog's service targets are all about making sure products are sent with minimal returns and damage.

The range of stock held varies from items as small as a necklace to large wicker baskets and wooden trunks. This means a variety of packing solutions are needed, including sourcing the most cost-effective delivery.

Because products also come direct from developing world producer villages, all products are checked for quality as they arrive. They are also checked again as they are packed. Because most goods are not machined, they can look slightly different, so customers will also be called if the product doesn't look exactly as it does in the catalogue - such as a slightly different colour wood. All this means products are not sent in 24 hours, but within five days.

RNIB

When your target audience is sight-impaired making sure the right products go to the right people is of paramount importance. For the RNIB, this is a job managed by DataForce. It despatches a joining pack to 20,000 RNIB members a year, plus any products they subsequently order from the included catalogues. Fulfilment begins at the call centre, where people's preferred format is recorded, be it CD, Braille or large print so that the right stock goes to the right people. Any individual can still have many different formats per order and the work includes whether the enclosing letters are also Braille or large print.

The RNIB database is set to grow by 10,000 a year, but speed of delivery is deemed to be of lesser importance than accuracy in all the constituent parts of the mailer. As such, it has only specified a five-day delivery service, but DataForce is strictly judged on how well it avoids calls from people who did not receive what they asked for - something that would create above average inconvenience.