August 28, 2008, 12:00 AM

Exit Strategy

(Page 3 of 3)

Contracts don’t cover what experts say can be one of the most potentially damaging parts of having to jump to a new fulfillment provider, depending on how smoothly that transition goes-that of meeting customer expectations during the transition. For instance, retailers may want to expedite shipping to meet promised delivery deadlines. “You have to repair your service as fast as you can,” Moore says. “Be proactive with your customers. Let them know forthrightly what has happened and why, and try to retain as much of your customer base as possible.”

Smithsonian first posted a letter of explanation on its web site stating that is fulfillment vendor had unexpectedly closed and that order taking was temporarily suspended as a result. Later, Smithsonian updated the letter with another stating that it had identified a new fulfillment vendor, was in transition and expected to re-open its e-commerce store soon.

Any business partnership involves some risk, and if an outsourced fulfillment vendor for whatever reason closes its doors, retailers can’t force it to stay in business. That means the best moves to minimize the difficulty are to exercise due diligence in the initial vendor selection process and sharpen up key details of an exit plan in the contract.

The rest is staying actively involved in the operation, even after the retailer has handed off that function to the outside. “There is an expectation that you are going to turn the whole fulfillment business over to a third-party service provider and just walk away from it, and that they will take care of it all,” Betke says. “The reality is that there is a significant amount of time needed to make sure it all happens to your satisfaction.”

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