The after sales process: Getting your logistics right
The after-sale experience is just as important as cutting-edge web design and efficient payment systems
The headline figures are staggering. UK consumers alone spent more than £46bn with online retailers in 2007. A look behind the high-profile brands that have claimed their place in cyberspace will reveal efficient logistical operations that seem to effortlessly take an order, process it and then deliver the goods to the customer’s door.
All online businesses know that building a website and attaching a payment mechanism is a relatively straightforward exercise. What many smaller companies are also discovering is that the after-sale processes are a little harder to perfect. Moving goods from your warehouse to a customer may seem a simple undertaking, but to ensure it is done efficiently and cost effectively is now a major focus for all e-businesses that want to ensure their long-term future.
“Without efficient fulfilment systems, the customer could get a bad experience,” says Gerry Farwell, head of supply chain for Royal Mail. “Then the effort spent attracting people to the website and getting them to place an order has been wasted, as they may never return.”
Recent Royal Mail research revealed that delivery comes second only to price in the eyes of the consumer. “With 94% of people saying they are more likely to buy from an online retailer if they are happy with their delivery, the benefits of good fulfilment are clear,” says Farewell.
Alan Moody, UK managing director of business software firm Mamut, says there’s a big gap between online presentation and back-end practice. “Most websites don’t reflect the companies’ capabilities as they are produced by third parties,” he says. “As websites are marketing windows, they are more concerned with setting out key information than fitting into the supply chain. Plus, many smaller enterprises don’t understand supply chains properly, so it is an ongoing business challenge.”
The fulfilment component of your business can mean you develop a close, almost symbiotic relationship with your logistical partners. This can mean a modification of your systems to ensure orders flow efficiently and accurately from your website to your fulfilment partner.
“The conversations I have with most businesses revolve around getting the data they need to put on their website, and they understand that we have a warehouse of the product – in our case books – that we can ship if we have the correct details,” says Bob Jackson, commercial director at Gardners Books. “Both these aspects are very much in focus at the beginning of the conversation. These days I think that businesses are more pragmatic and realise they need to ensure they can deliver what they have promised on their websites.”
Online businesses now sell a bewildering array of goods. Many multi-product retailers, such as Amazon and Play.com, integrate their logistics to enable them to offer a diverse range of goods that their customers can combine into any single order. If your business sells just one product, you can completely focus on designing a fulfilment system that supports it. This is what LOVEFiLM, the market-leading postal DVD rental service, has done since it began on one of its founders’ kitchen tables just four years ago.
The company’s chief marketing officer Simon Morris outlines LOVEFiLM’s approach to logistics and fulfilment. “The retail component of our business is outsourced, but our core rental business is all managed in-house,” he says. “Many of the early start-ups we were competing against did outsource their systems, but we took the decision to build our own. Despite the headaches, I think one of the key reasons behind our success is the fact that we maintained control over every aspect of our business that included evolving our own systems. We developed our own bespoke algorithms that support the business and also our own logistical and delivery systems.”
Look closely at your business model, and it will give you a roadmap to either developing your own logistical systems, or locating a trusted outsourcing partner. But Moody is clear on this issue. “If fulfilment is key to your businesses, you should never outsource,” he says.
Paul Galpin, sales and marketing director at direct communications firm dsicmm, is less strident than Moody, but does offer a word of caution, saying: “Every logistics requirement is different, which means it is increasingly important for companies to source a logistics partner that is flexible enough to develop bespoke solutions to meet their needs and go the extra mile to deliver the goods.”
Outsourcing your logistical component, however, can be a sensible move until you have the resources you need to build your own systems. It should be approached just like any other project. The reasons to consider it are manifold and include the need to free up your own or an employee’s time to complete other essential tasks. You may not have specialised skills within your business, or your company’s fulfilment process could be performed faster and at lower cost by contracting it out.
When looking for a fulfilment partner, the goods your business sells should be your guide. Shipping books doesn’t present a challenge, but large pieces of furniture do. If your logistical partner understands your product, this will mean a much smoother integration with their systems. The practical upshot is better customer service.
Gardners ‘ Bob Jackson says: “I think the fulfilment system has to be specific to the goods in question. There are issues regarding shipping canoes and bicycles that are clearly not the same as shipping books and CDs, and I think you have got to play to the product. This does mean that you have to get your systems to integrate with your fulfilment partner. They will have specific solutions for shipping products, and will have the most economic strategy, which you really need to fit into.”
A comprehensive logistical system should be at the core of an e-business. Internet-savvy customers have a very high level of expectation with the online brands they buy from.
“If you want to understand your business, bespoke is best,” says Tim Gibbon, director at brand consultancy Elemental. “You simply have to do this yourself even if the systems you’re building are a bit Heath Robinson. This gives you far better control of not only your systems, but also the market you’re operating in.
“Retailers can have the most impressive website, smoothest browse, purchase and transactions process, but if the items don’t arrive on time, or at all, then that is the only thing that is going to be firmly lodged in the purchaser’s mind.
“People shop online for convenience. Interrupting this process and having them turn detective to locate what they ordered will only serve to damage brand reputation bothoff and online.”
The internet is a great leveller that enables smaller enterprises to punch well above their weight. One way to enhance your operations is through a fulfilment service that is second to none. This will not only give your business a commercial advantage, but also differentiate it from others in your sector. Customers want to give their loyalty to a brand they can trust. That means knowing they are buying from a business that can deliver on its promises.
Mark Patterson, supply chain director, of £25m lingerie etailer figleaves provides some hands on fulfilment advice:
What are the unique challenges that figleaves faces with their fulfilment operation?
As the world’s largest retailer of branded intimate apparel we stock a huge number of items, currently well over 100,000. We also have a huge customer base of over one million people, and so getting the right item to our customers quickly and accurately are a major challenge for us. One of the features of figleaves.com that we know our customers love is that they can receive their goods hassle free from us in the comfort of their own home with the benefit of a very simple free returns policy. From the distribution point of view this also gives a significant challenge of reverse logistics.
Why did you decide not to outsource your fulfilment?
Customer service is at the very heart of what figleaves does. This has several dimensions like high stock availability, a great edited choice, and class leading speed reliability and accuracy of our fulfilment centre. This is a strength of figleaves.com that we need to have complete control over. Outsourcing such a time and service critical component of our business has therefore not been on our agenda. We have several key partners in our supply chain who we are very reliant on, such as our carriers, but we want to retain control of our overall distribution process.
Many eBusinesses seem to concentrate on building their website, with little thought to the fulfilment component of their businesses. Do you think that businesses today understand the complete supply chain from online order to delivery?
There is no question that having a good website is critical for a business setting up – first you have to attract your customer. In the early days it is not practical to have a massive investment in a warehouse, but when volumes are low it is possible to have great service from a low capital cost set up. However, as the business grows it is easy to not spend the time money and effort on the fulfilment side of the business. As businesses grow it is critical that they do understand their end-to-end supply chain costs, and realise not just the cost but also the value that the fulfilment part of this brings. Figleaves.com has moved warehouse four times in its ten-year history, each time moving to premises and using technology and equipment appropriate to the level of growth and scale of the business. We are always trying to look at least two years into the future and planning the requirements for that time; that is the key.
Do you think that returns have a massive impact on a business, or can they be managed just as well as fulfilling new orders?
Returns can be managed as well as new orders, and in fact to keep customer service levels and confidence high they need to be given equal priority as poor returns management can cause a lot of customer service issues and costs. They are a significant cost to the business as they are the most labour intensive part of the warehouse operation, but can be planned and resourced for accordingly.
If there was one piece of advice that you would give to an SME as it sets up its fulfilment operation, what would that be?
You need to be clear of your objectives and where fulfilment sits within this. For us, customer service in terms of speed and accuracy and an overall good customer experience were high on our list, as we believed this created value. For other businesses that are perhaps maximising low price opportunities this may not be the same case. In this case it may be more appropriate to outsource part or all of the fulfilment operation – it really is horses for courses.