A new forecast from Forrester Research credits greater online spending by Canadians, lower shipping costs and more selection for the spending increase.
The new twist in fulfillment answers customers` questions before they ask them.
Consumer expectations always outrun reality on the web. And nowhere is that truer than in order fulfillment. Customers don’t like paying for shipping. And they want their orders right away. Thus WIZMO has become one of the most expensive parts about operating a retail web site.
Where is my order-WIZMO-costs retailers at least $2 every time a customer asks the question. “WIZMO calls can really eat up profit margins,” says Mark Layton, CEO of Plano, Texas-based fulfillment provider PFSweb Inc., a company that knows first hand about overwhelming customer calls. It provided fulfillment for Roots Canada, the sporting goods store that sold the popular U.S.A. Olympic berets featured at the Salt Lake City Winter Olympics 2002, and fielded more than 90,000 calls in just one day.
A brand-building experience
Thus more retailers are adopting automated notification technology that keeps customers informed of their order status every step of the way. Their goal: Answer questions before customers ask them. “This service gives retailers the ability to create the sense that there is somebody in their operation who is paying attention and cares about what each customers is doing,” says David Himes, senior vice president of business process solutions at Greenwich, Conn.-based NewRoads Inc., which provides a service called Customer Concierge to notify retail customers of order status. “And that means telling customers what they want to know about their order before they even think of it.”
While large, sophisticated online marketers like Amazon, Lands’ End and 1-800-Flowers have had such notification systems for some time, the availability of such programs and their ease of implementation haven’t penetrated to the mid-size and smaller retailers, observers say.
But that may change as more providers offer the service. A number of fulfillment service providers as well as shipping giant United Parcel Service of America Inc. are offering automated notification services that range from simply providing the customer with a package tracking number and UPS’s URL to keeping the customer informed every step of the way. Growing demand for the services is fueled not only by heightened customer expectations but also by more product flowing through the fulfillment system which inevitably creates more kinks and by the low cost and easy implementation that most providers offer.
Retailers derive several benefits from incorporating proactive customer notification into the fulfillment process, observers say. One major benefit is that some have been able to reduce their workforces because they receive fewer WIZMO calls. Others who have not reduced their workforce say they have been able to use customer service reps more effectively as sales agents because they aren’t answering WIZMO calls. And there’s the harder-to-measure benefit that better customer service creates better customer relations. “One of the objectives is to create a brand-building customer experience by making sure the customer knows you are shipping what they want on time,” says Frank Di Maria, president of APL Direct Logistics, which launched its Proactive Parcel Management service this year. APL developed the product to give retailers better information about their drop ship management.
Some small retailers who have adopted e-mail notification systems have experienced dramatic and immediate results. Seattle-based Groovetech.com, for instance, which sells vinyl records to disc jockeys all over the world, has saved 40 hours a week-the job of one employee-by implementing UPS’s Worldship software that sends an e-mail to each customer with tracking information for orders. The company takes about 150 new orders per day and the customers are usually DJs who want the latest vinyl mixes for their gigs. “Timing is critically important for our customers because the music we sell is very time sensitive,” says Alex Hillinger, director of marketing. Hillinger says the shelf life for its music is only about six weeks because customers are always looking for the latest mixes. And so when they order music they want it now-or they want to know why they don’t have it. “We’ve been able to save a tremendous amount of time and money,” Hillinger says. “Before using this we had a person just answering calls and sending e-mails.”
Another small retailer that has benefited from proactive customer notification is Valencia, Calif.-based XDR2.com, which sells blank media such as CDs and jewel cases. The company is saving more than $26,000 a year by using a shopping cart product from PDG Software that integrates UPS’s e-mail notification feature. “We got rid of the person who answered shipping questions and we don’t even take phone orders anymore,” says G. Rick, president. He also says he no longer mails order status follow-up messages to customers. “I don’t have to pay anyone to stuff envelopes and my postage costs have gone down by thousands of dollars,” he says. The company gets about 100 orders per day and says it has almost no phone calls at all since it started using PDG’s shopping cart with UPS’ e-mail notification. “I’m even thinking of canceling the extra phone line,” Rick says.
Three calls per order
In addition to cutting staff, retailers can simply reduce their cost of operations with automated notifications, allowing them to grow without additional staff or to deploy their staffs to more productive uses. “The cost of doing e-mail notification is dramatically lower than the $2 per customer service call that retailers pay,” says NewRoads’ Himes. “If you can cut out 25% to 35% of those WIZMO calls you’ve more than recovered the cost of the product.” Some retailers receive up to three calls per order, analysts say. Furthermore, Himes says customer service representatives who spend their time taking calls from customers about their orders can instead be cross-selling and up-selling.
Himes adds that cost reduction isn’t the only advantage to automated notification. It also helps in maintaining customer relationships. “We’re all struggling with trying to translate the physical experience into the virtual experience,” he says. “And we all know customers are most frustrated when they can’t find out about their orders. Those are the details that our systems are able to provide to customers and it’s time to take advantage of that ability.”