Only 77 per cent of customers are satisfied with their Internet shopping experiences, according to research carried out by PA Consulting Group. The complaints range from poor delivery to inadequate Web site speed and functionality, along with sub-standard customer support. However, the survey also found that online shopping will grow if improvements are made. Other research, by e-fulfilment specialist Reality Group, found that one in five online shoppers is dropping out due to negative experiences. But, more positively, it found that 80 per cent of customers were "extremely satisfied" with delivery standards.
Alastair Charatan, head of PA's e-retail group, says some e-tailers have concentrated too much on speed of delivery rather than quality of service. "Most people do not mind waiting a few days to receive their goods, as long as they know what is going on," he says. This can include e-mails informing the customer that, for instance, the goods have been picked and dispatched. That is something that can easily be triggered by most warehouse management systems without any complex integration of technology.
Difficulties with e-fulfilment have caused many firms to consider outsourcing, although some of the most successful e-tailers have kept their operations in-house. Tesco uses store-based staff for fulfilment, while Amazon, which kept 99 per cent of its delivery promises last Christmas, also runs its own warehouse. Charatan believes there are arguments for both approaches. "If you're an established retailer and already pick single items to replenish the stores, it might be better to stay in-house. But if you're not geared up for singles picking and your facility is already pushed, outsourcing might be a better option."
There are other options for companies that do contract out, some of them provided by traditional home shopping firms which have enhanced their existing fulfilment capabilities. Reality Group, for example, is part of GUS and offers everything from Web design and IT solutions through to call centre operations, and deliveries and returns through its White Arrow parcels operation. N Brown, owner of the JD Williams catalogue, has set up an operation called Zendor to serve external clients – it owns 75 per cent of the venture with GE Capital taking a 25 per cent stake. So far, Zendor's two main customers, River Island and New Look, use the services for catalogue-based operations, but chief operating officer Nick Allen says the company is talking to a number of e-tailers.
One of the advantages of using such a service, he believes, is not having to invest in IT. "We have existing systems and infrastructure, which we tailor to suit a particular client," he says. Third-party logistics group Tibbett & Britten also offers e-fulfilment, with services from Web design to logistics. Among its customers is Dixons Group, which earlier this year signed up for a service covering Dixons, Currys, The Link and PC World in the UK and PC City in France.
Another major retailer that has outsourced is Boots The Chemists. The company is using specialist e-fulfilment company MetaPack for its Wellbeing.com joint venture with Granada. MetaPack provides the Web site with real-time information about stock availability and delivery options. Deliveries are then carried out by parcel firms and couriers.
Superdrug has also outsourced e-fulfilment with yet another specialist company, M-box, and offers its online customers a range of delivery options, varying in cost and speed – the fastest is two hours within central London. M-box offers its clients four delivery methods: couriers, parcel firms, Express Dairies' milk floats and customer collection at convenience stores. A key part of its operation is what it calls the M-box hub – an in-house system developed with the help of BT Syntegra – which connects its track and trace system, clients' systems and those of its business partners that include warehousing firms and call centres.
The last mile is the hardest M-box is not the only company providing customer collections, however. Pickupworks, for example, is to launch an automated retrieval service using lockers in public places, such as petrol forecourts and supermarkets, from which customers will be able to pick up goods 24 hours a day. The launch follows Pickupworks' acquisition of Dropzone1, which recently concluded a customer collection trial in Reading with software retailer Game.
Another scheme, Collectpoint, has signed up 3,300 retail outlets, including Dillons/One Stop, the Mills Group, two Co-ops and GT News. It has 11 e-tailers using the service with more than 30 signed up and ready to come on-stream. Although the service uses a paper-based system in-store, it has developed sophisticated central IT systems, mainly using its own expertise, but with some software elements bought externally. "Everything is driven in-house, including the specification and design of the systems," explains chief executive Jim Doyle. Such collection points could help with managing returns, as could specialist e-returns services. The US is already seeing this phenomenon with operations such as The Return Exchange and ReturnCentral.com, which use regional returns centres or allow e-shoppers to take goods to a local depot.
For multi-channel retailing, stores themselves can accept returns. But Charatan says that while some stores have the ability to do this and process the credit immediately, others do not. "Progress in this area has not been fast mainly because of the heavy investment needed to integrate returns with existing store systems," he says.
