How online retailers can avoid 2004's mistakes
Some retailers struggled to get their product fulfilment strategies and sales efforts exactly right during the holiday shopping season in 2004, with many by over-promising and under-delivering in terms of product availability and speed of delivery, according to fulfilment firm Zendor.
Statistics show that Christmas 2004 was a success for many of those retailers who operate a transactional website; according to IMRG there was a 64% increase in online spending compared with Christmas 2003. Hitwise also reported that traffic to online shops soared during December, with websites reporting 23% more visitors than Christmas 2003. But there are some lessons still to be learned.
Christmas is regarded as the biggest test of the year for retailers - a time when they will either sink or swim. With the online channel maturing quickly, and customer confidence and demand still growing, online retailers are especially vulnerable to criticism during the Christmas period; in fact, the long-term survival of online retail could be said to depend on getting it right then.
UK-based multi-channel fulfilment services provider, Zendor, has identified some of the most common mistakes and suggests ways of avoiding them in the run-up to the holiday period in 2005:
- Incorrect forecasting Inaccurate Christmas sales forecasts will have caused some online retailers to over- or under-stock their warehouses for the Christmas period. The result - customer frustration and/or a dent in profits. Forecasting for Christmas needs to begin ten months in advance of the big day and be reviewed nearer the time to ensure accuracy.
- Poor merchandising Product selection is always tricky to get right; what sells well in-store may not sell well online. Poor merchandising may also result in certain goods being damaged on arrival; for example, fragile goods such as light bulbs are intrinsically unsuitable for distance shopping.
- Inadequate call centre service Poor customer service over Christmas can be blamed on understaffed call centres and/or customer service representatives being inadequately trained. Recruitment of sufficient call centre staff is needed months in advance of Christmas and should be quickly familiarised with the retailer's products, packaging and services.
- Deficient packaging Poor packaging may be the cause of damaged goods. To minimise goods arriving damaged on the customer s doorstep, retailers should chose suitable, robust packaging and road-test well in advance of Christmas.
- Christmas delivery failure Retailers who failed to deliver by Christmas will have damaged their reputation. To ensure all orders arrive by Christmas, a home delivery contingency plan needs to be put in place which sets a cut-off day for Christmas orders and defines which day the standard delivery service should be upgraded to guarantee all orders arrive in time.
- Underestimating returns Retailers who did not cope well with returns over Christmas will have cost themselves money. To avoid this next Christmas, the volume of returns needs to be estimated months in advance so that adequate preparations can be made. Customers could also be provided with the option of returning items bought online via other shopping channels e.g. the high-street store.
- Inconsistent service across channels Contradictory levels of service across shopping channels will have created customer frustration and confusion in some cases, and the retailer is judged on this. Lack of consistency can be the result of channels being set up independently of one another and so a fully integrated multi-channel approach is necessary to avoid mixed messages being sent out.
- Poor customer targeting Not targeting customers with suitable offers may be to blame for disappointing Christmas sales. Retailers can analyse their customer databases to ensure that the right people are targeted with the right offers at the right time. Effective customer targeting can result in increased response rates, reduced costs and ultimately, increased sales and profitability.