Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

2007Q4 was mixed for fulfillment operations

It’s always a little dangerous to generalize about an industry as diverse as direct commerce operations. But at the very least, I can say there were some significant break downs at some fulfillment operations, both in-house operations, as well as outsourced operations.

I’ve received promotional offers of “20% my next order” to compensate me for messed up or delayed orders from one merchant (even though I had no problem with my order). Their email even cited all of their problems, as they apologized and made the offer.

I’ve also been given confidential reports from merchants about how serious their Q4 problems were. Miss-picks. Inadequate capacity planning for contact centers and distribution centers.

None of the problems seem to be really new or different — just more of the typical problems in such operations — unreliable volume forecasts, unrealistic expectations about productivity in the DC, unrealistic expectations about call patterns or average-handle-time, and poor inventory management. Even an occasional break down in order management applications.

I also think the problem is exasterbated by the continuing explosive growth in online commerce. In the face of declining same-store-sales in 2007Q4, many merchants continued to see growth in their online store sales. Driven by convenience, poor in-store customer service, and uneven inventory availability.

But I think the root cause is poor communications. Marketers don’t want to fess up to changing forecasts, because of their revenue impact. Contact center operators don’t want to admit being understaffed. Buyers don’t want to admit to being unable to manage the product supply chain. DC managers think they can simply throw bodies at any problem.

And on top of this, often there is insufficient management attention to the discipline of information flow and key performance indicators.

We all need to share more information and be more candid about what the facts really are.

Filed under: Direct Commerce, Uncategorized

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