E-Commerce Logistics: Delivering goods

An unquenchable thirst for reading books drove me to the great Connemara Library at Egmore, on 28th September,2013.  I usually hang around the history section trying to pick up some interesting books on people, both common and extraordinary, in the pre-independence period. This time I noticed that section contained books on a mix of categories: Computers, History, Biographies, Literature. It may have been the mistake of the librarian or a purposeful assortment of varieties. Whatever it is, as usual I picked up some armful of bulky books planning to skim and sip through whatever tastes good in all of them. Then, there was one particular book which attracted me the most: “E-commerce Logistics and Fulfillment, by Deborah.L.Bayles”. There were 2 things, in the first place, that attracted me to this book:

1.    One, the fact that I work at a place, which is aimed at designing and providing a web presence to retail giants in US and UK, coupled with the fact that my performance appraiser had recently pointed out my deficiency  in e-commerce knowledge.
2.    Second, being acquainted with friends from various walks of life, who have set foot on e-commerce business, I had some curiosity to dig a bit into this buzz word.
The book, at the end of reading  its initial chapters for about 2 hours, was excellent! It was clear, crisp and made me realize facts that I wouldn’t have thought about otherwise.

I have taken some notes on  few interesting concepts from the initial chapters and I wish to share them here.  These are in no way complete and will just give some idea to anyone who ventures into e-commerce business. I suggest you to buy hardcover of this book at Amazon

Tagline of this book: “The first e-commerce book that tells you how to get product orders from the Buy button to the doorstep – quickly, cost-effectively, and hassle free”.

In e-commerce or in any business, learn from the mistakes and successes of those who had already blazed a trail, partner with others when there is a mutual benefit, hire experienced guides to help you through parts unknown, and never assume that the road ahead is just like the road behind.

In order to make money, you must understand your expenses before establishing your prices, and the most flexible among the expenses are the charges of your partners, for advertising, banking, shipping, software development, Internet hosting etc.

40% of cost of selling online takes place after the customer presses the “Buy” button:  Payment processing, Order fulfillment, Product delivery and Product returns handling.

Most online businesses are doomed to fail because they won’t be able to fulfill orders or ship their products adequately to their customers as sales grow.

E-commerce logistics and fulfillment is ensuring the customer gets what the customer wants when the customer wants it.

E-Logistics Landscape:
Today’s online customers want to be able to track their orders instantly, from the moment they click the “Buy” button  until the moment the package arrives at their doorstep.
Land’s End and Victoria’s Secret are two catalog retailers that have transitioned to the Internet very successfully.

Defining your own business:
When defining your business you need to answer the following questions:
1.    What business am I in?
Determine complete range of products that you plan to stock and to offer online. Start out with the top 20% of the     products that represent 80% of your business.
2.    Are all your offerings  physical goods, or will you be selling digital goods, such as service contracts, insurance policies or software?
3.    You need to figure out how many unique products, including variations in size, color, fabric, texture, and the other features, you want to offer, and develop a Stock Keeping Unit(SKU) system for your product line.
4.    Will you be selling a product mix that will change frequently(eg. Seasonally) or technical products with constantly    updating versions and data?
5.    Are any products hazardous in any way?
6.    Are there any special packaging requirements?
7.    Are any products perishable?
8.    What are the core requirements?
9.    Do any products require assembly?
10.  Product description, promotional verbiage, care instructions, sizing charts, and a whole host of other documentations need to be written and assembled so that your online product catalog can be comprehensive and your customer service staff can be fully informed.

You should  also weigh each product and measure its dimensions(both packaged and unpackaged) so that you will have that data for shipping purposes as well as for customer reference online.

As per Federal Trade Commission(FTC) rules you need to  offer the Substitution Products for out-of-stock products, before the customer places the order.

Navigation in e-commerce sites:
One of the most important features customers remember is whether or not they can easily navigate through your site to find what they are looking for. Put yourself in their place and try to figure out the terms they would use for  searching, for categorizing products, for price ranges, for brands, for specific requirements, for specific features, or other criteria when looking for a product. The more fun and engaging you make this process, the more often a customer is likely to return.

Custom configurations:
Dell Computer’s online  configurator is so accurate that there are fewer product returns from the customer who have used the configurator than from those who used Dell customer representatives to configure their orders.

Customer Dialogs:
Your e-business site will be open for business 24 hours a day, 365 days a year. You must determine how you will respond to questions and conduct customer dialogs throughout the sales cycle.
1.    Who will answer emails?
2.    Will you accept phone calls, faxes, and snail mail from customers asking questions or placing orders?
3.    What scripts will you use for the most frequently asked questions?
4.    Do you have written policies and procedures for handling customer inquiries?
Many sites offer live chat, online video conferencing thru’ NetMeeting and 24 hour toll free customer service.
5.    What kind of response time you will offer?

Order Processing:
If you are selling high-ticket items, buyers may not want to put the hefty sum on their credit cards. In this case, you’ll have to decide if you want to offer terms, take purchase orders or credit applications, and set up a billing infrastructure.

Tax and Shipping Calculations:
Your site must automatically calculate all taxes and shipping expenses and add them to the total cost – prior to the customer placing the order.

There are software and services such as those offered by Vertex and Taxware  that can provide the tax calculations for your site. You should be familiar with the states in which the tax is applicable to your sales and which items you’ll be selling that are taxable.

First, consider which products are small enough to ship with small parcel carriers. For larger products, you may be dealing with a variety of shipping methods, such as by truckload, Less than truckload(TTL), train, ocean carrier, and so on.

Also, its important to note that some U.S. carriers do not ship or deliver on New Year’s day, Independence day, Labor day etc.

International Ecommerce:
First, make sure your site covers all of the expected ecommerce conventions for the U.S. In other words, you should include privacy and customer services policies; contact methods(English only or other languages); participation in industry groups(Better Business Bureau, etc); seal programs(Verisign, Trustee etc); and clear product guarantee policies.

Also include any information about restrictions, limitations, or conditions on purchases;  instructions for proper use of products, including safety and health care warnings; cancellation or refund policies; gift wrapping and special handling; and ongoing customer service.

Next, decide on the currency in which you will handle all sales(e.g. U.S. dollar). Determine how long it will take an order to de delivered to various worldwide locations and if any unexpected taxes/duties may be added to the cost.

Finally, think about whether you will localize the site for different countries. Localization is more than language translation; it is transforming the site according to local customs and idioms so that a native buyer will feel  comfortable.

Integrating with inventory and fulfillment:
When you first launch your site, I strongly suggest that you offer only those products that are in your immediate inventory.
Figure out policies for when you want to stop offering an item for sale – when inventory count is at a minimum or when there are none left in inventory.  Also, chart whether the same policy should be applied to all products or should differ by product.

Some very successful sites offer the ability for a customer to place an order by 5.00pm for an overnight delivery and have the order leave the dock that same day. Other sites batch up their orders and only process them at the end of each day. The timing and techniques of how you’ll conduct order processing is of paramount concern.

According to Forrester research, online customers check order status on an average of 7 times to figure our when their item will arrive and who will deliver it! UPS and FedEx both offer free online tools to enable you to track packages through assigned shipping numbers.

A brand is not a catchy tagline – a brand is the entire experience someone has that is associated with your company.
How do you want people to experience your e-business? As the most trustworthy?  The most competent? The most innovative? What makes your site unique?

Think carefully about your value proposition. Why would someone shop at your site instead of a competitor’s? What “pain” are you solving with your e-business?

As we’ve seen, anyone can develop a pretty web interface, slap it onto an electronic shopping cart, and say they’re doing e-commerce. In truth, they haven’t even started and they will eventually fail.