RSR Research: Websites Behaving Badly and the Back-End Fixes They Need
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.