PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
(Page 2 of 2)
“When something like that happens it wakes you up to the potential problems that can occur by not fully integrating all aspects of the fulfillment process,” Cohen says. “Retailers have to be more thoughtful about connecting all the pieces when building their fulfillment systems.”
Another advantage to outsourcing part of its fulfillment to UPS is Tool King can better manage space in its own warehouse. “Our warehouse space is fixed and outsourcing allows us to better leverage how we warehouse inventory while giving us a cost model that is scalable to our activity in the outsourcing facility,” explains Cohen. “We can get the right product mix between the two facilities to better service our customers and manage our fulfillment costs.”
Closer to home
Splitting inventory also reduces freight costs, as each facility services a specific portion of the country. As a result, freight moves through fewer shipping zones. “The closer inventory gets to the customer, the more cost effective and timely the fulfillment,” says Aberdeen’s Hobkirk.
One of the easiest pieces to overlook when integrating a fulfillment application with the back office is compatibility with an existing hardware platform. That was an issue for SLG Publishing, which uses an Apple Inc. Macintosh in its back office and a Linux platform to take orders at book shows, and runs its e-commerce site on a Microsoft Windows server platform. The maze of hardware platforms greatly slowed the data flowing into the warehouse and opened the gate for viruses to enter its back-office systems through e-mail correspondence with customers.
“We not only had a lot of I.T. and database corruption problems, but the cost of addressing them over time was more than purchasing and installing a fulfillment application,” SLG’s Vado recalls. “We also needed an application that was more compatible with our hardware platforms, which we weren’t inclined to change.”
SLG found the solution by opting for a hardware-agnostic hosted application from CoreSense. The new application links fulfillment data to its online customer service center, which has enabled SLG to provide customers with real-time tracking through the web store once an item has shipped.
“Order tracking not only cuts down on customer service calls about order status, it makes it easier to meet customer expectations of the self-service shopping experience,” Vado says.
SLG Publishing also can use its fulfillment application to run reports that break out the carriers it uses to ship packages-whether the package is sent on a priority basis, second-day delivery, etc.-and what type of customer placed the order, such as book reviewer, retailer or consumer. SLG uses that information to provide more insight into controlling shipping costs.
Another place retailers are tying customer service and fulfillment together is in the returns process. GreenHouse International LLC, a direct consumer sales company that generates 35% of its total sales through the web, is working with Moulton Logistics Management to enable customers to initiate returns via the GreenHouse web site. The first step is to send an e-mail to customers requesting a replacement item notifying them when it has shipped.
“Consumers like as much information about the delivery process as possible,” says Chris Lundin, CEO of Greenhouse International.
Ultimately, retailers can leverage returns initiated through their web store to aide in restocking and fulfillment of new orders, according to Aberdeen’s Hobkirk. Fast turnover requires retailers immediately put back into inventory returned, undamaged items-i.e., those that did not fit or were the wrong color-and in some cases straight into the fulfillment bin.
“Sometimes returned items need to be picked and shipped as soon as they are received,” Hobkirk says. “To do that, retailers need full visibility of what is being returned and what has sold across all channels.”
The growing use of automation within the fulfillment process and the integration of data around it to provide better customer service is a clear sign fulfillment is no longer an afterthought in retailers’ strategic plans.
For many retailers, upgrading their fulfillment process to meet changing customer needs requires little more than automating time-tested concepts embedded deeper in the fulfillment process. “E-retailing is not a cash-and-carry business; it requires a fulfillment system that brings the sale to a positive conclusion,” says Tool King’s Cohen. “Retailers can’t afford to over-promise and under-deliver on fulfillment.”
Peter Lucas is a Highland Park, Ill.-based freelance business writer.
Click Here for the Internet Retailer Guide to Fullfillment Products & Services