In its second-largest acquisition, Amazon buys the company for $970 million.
Outsourcing order fulfillment, though often the best choice financially for e-retailers, must reflect the fact that online consumers are raising the bar over the timeliness and accuracy of delivery, according to a new report by Bain & Co. and Mainspring Communications. The firms cited the performance of online florists on Mother's Day, saying that as many as one-third of orders were unfilled.
"It is clear from our research at this point--and the recent volatility in the financial markets--that the completely virtual model is defunct, and online survival will be tied to hard assets,'' says Julian Chu, director of eStrategy for Mainspring. "Companies that continue to shortchange order fulfillment will eventually surrender customers and revenues to those with superior infrastructures.''
Bain and Mainspring say their research shows that the expectations of online shoppers are rapidly increasing. They want data on timing of product delivery and availability, as well as instant quotes on taxes, duties and freight costs.
Warehouses, the firms say, become scale-efficient beyond about 15,000 transactions per day, or about 250,000 square feet. They note that few online retailers have reached that threshold.