It doesn't matter how well you market yourself, how much of your product you manage to sell, or how great your Web site is if you can't manage to get the products you're selling to your customers once they've ordered them.
Logistics can make or break a company, whether it be online, or in the bricks-and-mortar world. Vivienne Fisher assesses the options for getting your products delivered.
Worst case scenario: you've got a fantastic product (or products), the sexiest Web site in the world, and have put in place all the necessary payment processing systems. The orders pour in, totally overwhelming your ad hoc pick-and-pack methodology, which is largely manual. You screw up-some orders don't get fulfilled, others either go to the wrong places, are late, or are incorrect. Customers get angry, cancel orders, or simply don't order from you again. All those orders which previously had overwhelmed you dry up. The customers go elsewhere-either to your competitors' Web sites, or back to other bricks-and-mortar stores. You don't make money and are forced to close your online shop.
This may seem far-fetched, but it is a very real possibility for businesses who don't carefully consider the logistics behind their Web sites. Sure, not everyone will end up being a worst case scenario, but just because it isn't a total disaster doesn't mean the consequences of getting it wrong aren't dire.
In her bulletin, "eLogistics and Australian eCommerce: What's happening behind the order button?", IDC Australia senior analyst for Internet and e-commerce, Lisa Shishido offers a strong warning to companies that don't get it right. "Businesses that fail to understand the importance of eLogistics processes such as order management, warehousing and distribution, delivery, returns management, and customer service are destined to lose customers and waste money."
It's something emphasised by David Hobbs, regional vice president of business development at interBiz, the e-business applications division of Computer Associates. Hobbs says that if a customer has a bad experience, it hurts repeat business, as well as the concept of purchasing over the Internet in general. "It reduces confidence in the Web as a marketplace," he says. "Typically what we've found is that organisations focus a lot on the Web order entry system and cataloguing and credit card validation, but have neglected to consider the fulfilment and delivery aspects of the transaction. This has led to disappointment on the part of the customer."
Dot-com lessons have become rather boring and repetitive, but getting logistics sorted from the start is one of the very real ones that many companies learned the hard way and are still learning. The fact that companies got it wrong wasn't connected to the Internet being a new marketplace. In fact, a common theme seems to be that impatience in getting it all up there and capturing that potential cash cow, meant people forgot to think about how they would deal with sending out the products they were selling.
Dr John Gattorna, managing partner of the supply chain practice for management consultancy Accenture in Australia and New Zealand, talks about what we learned from that era. He thinks companies rushed in, and didn't anticipate the possible demand.
Gattorna also points out that Australia is automatically at a disadvantage in the sense that we've got a relatively small population and therefore don't have the scale companies in the US or Europe can take advantage of. Gattorna advocates a completely new business model where consortiums of companies form single logistics facilities. This may seem like a concept which is a decade down the track, but he believes it's starting to already happen in certain industries.
"We're on the point of it now . . . as things get more difficult and margins get squeezed people get more innovative-they'll get a bit more creative about trying different things.
"We've had a situation in Australia where we've had growth for many years . . . as markets flatten off companies will have to get more creative about how they manage their logistics."
Gattorna believes the recent online era we've been through focused on front-end technology at the expense of setting up logistics capabilities. "The singular reason why many of the dot-coms failed was because they had not put in place fulfilment arrangements to get the product to the customer, and that's exactly why online companies and dot-coms have to be interested in logistics."
