In its second-largest acquisition, Amazon buys the company for $970 million.
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To successfully make the transition into the multi-channel environment, retailers require real time data to properly manage their growth. In addition to knowing available inventory, multi-channel retailers may also need to schedule installation dates and provide customers with an estimated time of arrival for the installers. Knowing the availability of space on a delivery truck to determine when an order can be shipped, as well as receiving alerts that indicate the company is reaching its maximum capacity for order fulfillment can also positively impact customer satisfaction levels.
Reduced training costs
"Real time operational information is critical to multi-channel retailers, because the web has created a sense of immediacy as far as consumer expectations when they cross over into other sales channels," says Donny Askin, founder and CEO of Natick, Mass.-based CommercialWare Inc. "Multi-channel retailers need to be able to locate a product or any piece of information about an order anywhere in the supply chain at any time, regardless of the channel the customer uses to make the purchase, and then contact them."
Funneling all order and fulfillment information into a single database also allows multi-site Internet retailers to evenly apply business rules across each site. Business rules may include running each transaction through a scoring application to determine the risk associated with a customer buying on house credit, detect the potential of fraudulent payment, apply the correct state sales tax or create reports on transaction processing costs.
Such information can be presented on a single screen to customer service agents, which in turn speeds training. It also allows agents to handle and track orders through more than one site more efficiently, which is a boon for Internet retailers selling through multiple sites under multiple brand names. Having one screen for all order management needs can reduce agent training costs by as much as 50%, according to Jim Mangan, vice president of sales and marketing for Indianapolis-based Sigma Micro Corp.
"Order management systems are becoming a core part of the multi-channel retailer`s business, but they still need to be able to be integrated with other applications that are part of the order process," Mangan says. He adds that Sigma Micro recently added an interface to Providence R.I.-based Retail Decisions fraud detection applications.
The ability to integrate order management systems with software from other vendors can provide a huge edge in service and dramatically lower operating costs. Sunnyvale, Calif.-based HPshopping.com, the e-commerce arm of Hewlett-Packard Co., has tied its order management system to FedEx`s delivery tracking application. HPshopping.com ships all orders made through its web site via FedEx.
The link to FedEx notifies HPshopping.com when two unsuccessful delivery attempts have been made. After three failed delivery attempts, FedEx places the item in a holding pen before returning it to the sender. For HP, that means having to wait several days before it can regain custody of the package, eating the cost of the return fee, plus the cost of restocking and reshipping the item at a later date. Less than 1% of orders are returned to the warehouse due to delivery failures.
Heading off dissatisfaction
"It`s the 1% of orders that go sideways we want better tracking on, not the 99% of orders that get delivered," explains Michael Butler, supply chain and logistics program manager for HPshopping.com. "It does not matter what the value of the order is, because when a order is not delivered as promised, it creates customer dissatisfaction."
Once an order has been flagged for two unsuccessful delivery attempts, HPshopping.com will contact the customer to identify the problem. Sometimes it is as simple as having the wrong address or that the customer lives in a new subdivision for which FedEx does not yet have accurate street maps. "That is a common occurrence in rapidly growing areas like Las Vegas," Butler says. "In those cases we usually end up getting directions from the customer and passing them on to the delivery agent."
The operating efficiencies gained from order management systems are also enabling multi-channel retailers to redistribute human resources. Vancouver, B.C.-based UrbanFlorist.com, for example, has been able to free personnel from having to troubleshoot orders containing errors and reassign them to taking orders. Prior to installing its CommercialWare order management system, the company had to halt taking orders the week before Christmas 2003 to fulfill orders taken up to that point.
"This year we went right through the holiday season without skipping a beat," adds Alif Somani, CEO of UrbanFlorist.com. "Ideally, from a consumer perspective, good customer service requires interaction with a person. But as with most companies, we have limited human resources, so it made sense to find a solution that allowed us to move personnel from order processing to customer service."
Managing rapid growth
More efficient use of personnel can also be achieved by providing packing clerks with an electronic image of each item and the weight of each item to be included in the order. Having an image helps ensure the right item is packed by visual verification. Knowing the weight in advance makes it easier to calculate shipping charges and notify the customer before the item goes out so there are no surprises when the customer receives the final invoice.
"Small Internet retailers want this type of information so they can start running their business more seriously and better manage rapid growth," says Barney Stone, president of Blue Bell Penn.-based Stone Edge Technologies Inc., which includes 30 order management events in its application.
With consumers increasingly zig-zagging between a retailer`s web site, call center and store while shopping, multi-channel retailers can no longer afford to rely on order management systems to simply track availability of inventory. Nor can small Internet retailers afford to go without one.
The reason is simple, consumers expect the same level of service regardless of whether they order through one sales channel and follow-up on the order through another. "Service is more complex than just processing an order," says UrbanFlorists.com`s Somani. "It is having a better understanding of customers` needs so they can be cared for in a better fashion."