In its second-largest acquisition, Amazon buys the company for $970 million.
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Hold the line
Retailers are holding the line on using any more outside software application developers and fulfillment service providers, but one area they are expanding is customer service. 87.2% of web merchants now provide shoppers with automated order confirmations, followed by order status tools at 65.3%, shipment tracking at 61.8% and account status and order history programs at 60.1%. “Retailers can’t forget the importance of good customer service in their shipping and packaging operation,” says Sambar. “Building a lasting relationship with unique merchandise offerings and quality service is much more important than discounted shipping costs.”
Many of the retail companies taking part in the latest Internet Retailer survey operate smaller shipping operations. A total of 46.1% of merchants ship fewer than 25,000 packages each year, compared with 23.9% between 25,001 and 100,000, 14.5% from 100,001 to 500,000, 5.6% from 500,001 to 1 million and 9.9% more than 1 million.
But going forward and regardless of size, merchants will be facing even bigger challenges to keep their operating costs in check. Web retailers can expect delivery companies to add on more fuel surcharges over the next several months, which in turn will drive up shipping costs, says Curt Barry, president of F. Curtis Barry & Co. Inc., a consulting firm specializing in e-retailing logistics. Retailers can also expect to pay new and existing fulfillment employees higher wages.
“Six or seven years ago the prevailing hourly wage for a warehouse employee was $7 to $10 and now it’s probably closer to $13 or $15,” Barry says. “Many of the retailers and direct marketers we work with are expecting their costs to rise this year. The challenge for everyone is going to be gaining more efficiency without any let-up in customer service or expectations.”