December 7, 2007
RSR Research: Websites Behaving Badly and the Back-End Fixes They Need
By Nikki Baird, Managing partner, Retail Systems Research
Through a special arrangement, what follows is an excerpt of a current article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
Ecommerce sites are behaving badly this holiday season – more, actually, than I expected to see. Somehow I thought the industry was well past “eCommerce 101”, but that’s not the case. For example, I was looking for a very popular kids’ book and found a small bookseller who said they had it. I placed my order, had it confirmed, and felt confident that I would get the book in time for the holidays. Then I got an email the next day that said the item was out of stock and wouldn’t be available for another 3-4 weeks – well past Christmas. They should have told me so right away – not 24 hours later.
I found another example of sites behaving badly this season at a gardening site, where I added a $10 item to my shopping cart, filled in all the order and shipping information, and my credit card number, only to find at the final confirmation screen that it was going to cost me $15 in handling charges on top of $7 to ship it, bringing the price of this little $10 item up to a total of $32. Choke! Another big eCommerce no-no – don’t surprise your customers with shipping charges at the very end of the transaction.
But it’s not just small online retailers behaving badly. Amazon often uses affiliate sellers to fulfill orders, but it’s not always clear that you’re buying from an affiliate until you complete all of the order and shipping – and payment – information and get to that final confirmation screen. I found that of the seven items in my cart, five were coming from affiliates and the earliest ship date for any of them was going to be 12/19, with some shipping on 12/21. Hmmm. I had the impression when it said the item was “in stock” and when I added it to my cart that it was going to ship sometime in the same week I placed my order. 12/19 doesn’t sound like “in stock” on 12/1.
At Toys R Us (TRU), it was a different experience – but just as distressing. For the hottest toys of the season, you could see the item online and you could locate the nearest store. But you could not buy the item online, defeating the whole purpose of shopping online for toys: avoiding the trip to the store.
Amazon’s and TRU’s bad behavior is of a different sort than their smaller competitors, and it underscores the limits of today’s capabilities for online selling. Sure, consumers now get email updates (“Your order was picked,” “Your order was shipped and here is the tracking number”), and inventory availability and shipping costs are usually presented to consumers much earlier in the process nowadays. But how do you promise inventory when you’re relying on third parties to deliver it? How do you offer limited quantities of products to an unlimited audience?
Discussion Questions: What basic “eCommerce 101” failures are you still seeing out there? What basic areas do you think need the most improvement?
[Author’s commentary] My holiday shopping list for next generation eCommerce
capabilities? It doesn’t include Web 2.0 – it’s a little bit more back-end
focused:
1) Inventory accuracy: Many online retailers are still living off of
the original warehouse and inventory systems that they built their business
on 5-10 years ago. Not only do you need to know where your inventory is, you
need to know how much your suppliers, distributors, and partners have as well.
2) Available
to Promise (ATP): It’s not enough to know how much inventory you have; you
need to be able to soft-commit inventory to soft customer orders for high-demand
items. This is the Ticketmaster paradigm of selling limited quantities to an
unlimited audience.
3) Price optimization: This is about setting each channel’s
price based on demand and available inventory across channels. Out of stock
in the store? Offer it as an online purchase with free shipping.
4) Promotion
optimization: You need to match price optimization against what offers that
particular customer responds best to. You might want to offer one customer
free shipping if they order it online rather than try to get it through the
store, but a different customer might respond better to a free accessory or
10 percent off the price of the item instead.
These are complicated and sophisticated supply chain and customer service capabilities. But it will be these capabilities – not the fancier shopping cart or the jazzy online merchandising tricks – that will distinguish the online winners from the rest of the pack in the years to come.
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Nikki is right: ecommerce is not all perfection and roses. Many warehouse systems don’t decrement available inventory continuously because they run a batch update once a day. Many retail web sites know that shipping costs are a major customer obstacle, so they aren’t prominently stated up front. Very few ecommerce web sites clearly and prominently state whether prices and assortments online are the same as the bricks and mortar stores. Even though it’s hard for an aggregator like Amazon to promise inventory reliably, it isn’t impossible. eBay does it well. As for ship dates: the retailers who want to build a lifetime of trust tell shoppers up front, well before a transaction starts, what to expect. They clearly state the last ordering date before Christmas delivery.
Retailers running both brick-and-mortar stores and websites seem to have some of the biggest disconnects between the two. These include:
1. Erratic inventory demand forecasting: There are so many dynamic models in use by everyone from airlines to CPG companies, it’s a wonder that apparel and home goods retailers haven’t embraced these technologies more aggressively.
2. Fulfillment issues: I still see retailers that struggle getting goods out the door, especially as they add assortment to their sites. This totally undoes the supposed added convenience of online shopping.
3. Return policies: Not all retailers have the policies or systems in place to make the return process (from web purchases to brick-and-mortar store) seamless.
There’s a lot of work to do…recognizing that online shopping is still in its relative infancy.
The ecommerce industry is still maturing–and clearly showing some growing pains. Amazon in particular has–in my experience–gotten less reliable over time. I’ve recently had a couple of incidents which illustrate the point.
I ordered a book, had it confirmed, and then had them tell me the book wasn’t available–a month after I placed the order. In the case of my own last book, everyone who pre-ordered it on Amazon received a message saying it wasn’t going to be available and that they had to re-qualify their order. The book, in many cases, arrived a few days after the notice that it wasn’t available. Obviously, these aren’t sales practices that build high levels of consumer confidence. My guess is that the systems need to be fine tuned to meet accelerated demand. Of course, if they aren’t, demand will drop back to levels the online retailers are capable of handling.
Real time chat functionality with customer service should be standard for all retailers by now (even Comcast’s website has that functionality now). Also, I expect to know if the local brick & mortar store has what I see online in stock–especially in clothing.
I wish the option to select more than one choice had been available. Consumer expectations from e-commerce transactions have risen in the last 8 years; e-tailers who can capitalize on this not only obtain new customers, but set themselves up to retain their existing customer base. In my experience, smaller retailers tend to do this better than the big box stores. However, big box retailers have the advantage of offering the ability to pickup order at the store (free shipping) and return merchandise to the store.
Other things retailers can do to make the e-commerce transaction better for the customer (and to their own mutual benefit):
1. Complete merchandise descriptions. This is your opportunity to “sell” the product, as well as giving the customer the information they need in lieu of the brick and mortar experience. Include the complete list of ingredients and in light of all the product scares we’ve experienced coming out of China, please include WHERE the product was made/assembled. I’m not yet sure if we’re ready to start grouping products into categories like “Not Made in China,” but it’s certainly something I would be interested in.
2. Make it easy for your customers to find what they’re looking for. This should be a no-brainer, but I’m still amazed at how difficult it is to navigate some on-line websites. Offer multiple methods and the combination of keyword searches, brand name searches and category searches so your customers can find what they’re looking for without having to wade through a lot of the stuff they DON’T want. Think about the # of sales lost because of either too little or too many results.
3. Checkout experience. Make it easy to check out or create an account. Offer incentive to create an account and make your privacy policy very clear with the opportunity to opt out at any time. Be sure the field names are large enough to type in a complete address (at least 50-75 characters). If a required field hasn’t been filled out when the customer presses the submit button, don’t make them fill out everything all over again. Save what’s been entered to reduce the frustration of having to re-key everything.
4. Offer live chat so questions can be addressed and the transaction completed. Anytime your customer has to interrupt the transaction to make a phone call is a potential sale lost.
5. Return and shipping policies should be made very clear, preferably on the home page. Stores that offer easy returns and free return shipping are more likely to get the business than stores who charge a restocking fee or make the customer pay return shipping. And no one wants to go through the entire checkout process only to find the money they saved by shopping will be eaten up by exorbitant shipping & handling rates.
My experience this season is that many of the big brick and mortar stores have been ill-prepared for the increase in online shopping.
The biggest issue I’ve noticed are poor communication with where the status of the order stands. From Circuit City, an item I ordered on 11/21 generated an auto-notice via email that the items were in stock and available – that was the last I heard and I only just got the item this week. I sent a Wal-Mart gift-card to one of my forum moderators. It charged my account, but I never got a communication from Wal-Mart that they’ve sent it and she has yet to receive it (the one I bought from Target the same night was already received by the recipient). I’ve actually had better luck from smaller retailers with communication and having the communication be an accurate depiction of where the items are in the purchasing process.
The other issue is inventory. As others have stated, going to an online site only to be directed back to the B&M location isn’t convenient, and defeats the purpose of shopping online. The other thing that kills me is taking orders for (and charging) for items that have long back orders. Good form for a manufacturer would be to charge my account when the item is ready to ship. Irobot (whose products I love) took my order for a Looj in October–over a month later, I still don’t have the product in hand but have the charge on my card.
I do like what a few retailers have done in setting up notification when an out of inventory item is available for purchase online again. With the exception of the Nintendo Wii, this did work for several companies I shop with.
People want to be assured that their purchases are going to get where they are intended to go. Online retailers who have a highly communicative, accurate system of keeping in contact with the consumer are going to do a better job of securing repeat business.
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Nikki is right: ecommerce is not all perfection and roses. Many warehouse systems don’t decrement available inventory continuously because they run a batch update once a day. Many retail web sites know that shipping costs are a major customer obstacle, so they aren’t prominently stated up front. Very few ecommerce web sites clearly and prominently state whether prices and assortments online are the same as the bricks and mortar stores. Even though it’s hard for an aggregator like Amazon to promise inventory reliably, it isn’t impossible. eBay does it well. As for ship dates: the retailers who want to build a lifetime of trust tell shoppers up front, well before a transaction starts, what to expect. They clearly state the last ordering date before Christmas delivery.
Retailers running both brick-and-mortar stores and websites seem to have some of the biggest disconnects between the two. These include:
1. Erratic inventory demand forecasting: There are so many dynamic models in use by everyone from airlines to CPG companies, it’s a wonder that apparel and home goods retailers haven’t embraced these technologies more aggressively.
2. Fulfillment issues: I still see retailers that struggle getting goods out the door, especially as they add assortment to their sites. This totally undoes the supposed added convenience of online shopping.
3. Return policies: Not all retailers have the policies or systems in place to make the return process (from web purchases to brick-and-mortar store) seamless.
There’s a lot of work to do…recognizing that online shopping is still in its relative infancy.
The ecommerce industry is still maturing–and clearly showing some growing pains. Amazon in particular has–in my experience–gotten less reliable over time. I’ve recently had a couple of incidents which illustrate the point.
I ordered a book, had it confirmed, and then had them tell me the book wasn’t available–a month after I placed the order. In the case of my own last book, everyone who pre-ordered it on Amazon received a message saying it wasn’t going to be available and that they had to re-qualify their order. The book, in many cases, arrived a few days after the notice that it wasn’t available. Obviously, these aren’t sales practices that build high levels of consumer confidence. My guess is that the systems need to be fine tuned to meet accelerated demand. Of course, if they aren’t, demand will drop back to levels the online retailers are capable of handling.
Real time chat functionality with customer service should be standard for all retailers by now (even Comcast’s website has that functionality now). Also, I expect to know if the local brick & mortar store has what I see online in stock–especially in clothing.
I wish the option to select more than one choice had been available. Consumer expectations from e-commerce transactions have risen in the last 8 years; e-tailers who can capitalize on this not only obtain new customers, but set themselves up to retain their existing customer base. In my experience, smaller retailers tend to do this better than the big box stores. However, big box retailers have the advantage of offering the ability to pickup order at the store (free shipping) and return merchandise to the store.
Other things retailers can do to make the e-commerce transaction better for the customer (and to their own mutual benefit):
1. Complete merchandise descriptions. This is your opportunity to “sell” the product, as well as giving the customer the information they need in lieu of the brick and mortar experience. Include the complete list of ingredients and in light of all the product scares we’ve experienced coming out of China, please include WHERE the product was made/assembled. I’m not yet sure if we’re ready to start grouping products into categories like “Not Made in China,” but it’s certainly something I would be interested in.
2. Make it easy for your customers to find what they’re looking for. This should be a no-brainer, but I’m still amazed at how difficult it is to navigate some on-line websites. Offer multiple methods and the combination of keyword searches, brand name searches and category searches so your customers can find what they’re looking for without having to wade through a lot of the stuff they DON’T want. Think about the # of sales lost because of either too little or too many results.
3. Checkout experience. Make it easy to check out or create an account. Offer incentive to create an account and make your privacy policy very clear with the opportunity to opt out at any time. Be sure the field names are large enough to type in a complete address (at least 50-75 characters). If a required field hasn’t been filled out when the customer presses the submit button, don’t make them fill out everything all over again. Save what’s been entered to reduce the frustration of having to re-key everything.
4. Offer live chat so questions can be addressed and the transaction completed. Anytime your customer has to interrupt the transaction to make a phone call is a potential sale lost.
5. Return and shipping policies should be made very clear, preferably on the home page. Stores that offer easy returns and free return shipping are more likely to get the business than stores who charge a restocking fee or make the customer pay return shipping. And no one wants to go through the entire checkout process only to find the money they saved by shopping will be eaten up by exorbitant shipping & handling rates.
My experience this season is that many of the big brick and mortar stores have been ill-prepared for the increase in online shopping.
The biggest issue I’ve noticed are poor communication with where the status of the order stands. From Circuit City, an item I ordered on 11/21 generated an auto-notice via email that the items were in stock and available – that was the last I heard and I only just got the item this week. I sent a Wal-Mart gift-card to one of my forum moderators. It charged my account, but I never got a communication from Wal-Mart that they’ve sent it and she has yet to receive it (the one I bought from Target the same night was already received by the recipient). I’ve actually had better luck from smaller retailers with communication and having the communication be an accurate depiction of where the items are in the purchasing process.
The other issue is inventory. As others have stated, going to an online site only to be directed back to the B&M location isn’t convenient, and defeats the purpose of shopping online. The other thing that kills me is taking orders for (and charging) for items that have long back orders. Good form for a manufacturer would be to charge my account when the item is ready to ship. Irobot (whose products I love) took my order for a Looj in October–over a month later, I still don’t have the product in hand but have the charge on my card.
I do like what a few retailers have done in setting up notification when an out of inventory item is available for purchase online again. With the exception of the Nintendo Wii, this did work for several companies I shop with.
People want to be assured that their purchases are going to get where they are intended to go. Online retailers who have a highly communicative, accurate system of keeping in contact with the consumer are going to do a better job of securing repeat business.