Fulfillment Problems - Examples Of Fulfillment Problems

EXAMPLES OF FULFILLMENT PROBLEMS

Although many e-tailers had fine-tuned fulfillment systems by the early 2000s, this wasn't always the case. The 1999 holiday season in particular was characterized by a bevy of fulfillment problems. That year, many companies beefed up their physical infrastructures, buying additional servers to make sure no consumer's order went unprocessed. They also spent large sums on advertising their Web sites. However, in the end many consumers did not receive the goods they ordered online by Christmas. Some orders arrived late, some were wrong, and others never arrived at all.

As Planet IT explained, "Many starry-eyed etailers and dot-coms neglected the basics by not keeping a tight rein on inventory and inaccurately forecasting the heightened customer demand, analysts say. And when some e-tailers became buried in orders, they added fuel to the fire by promising unrealistic delivery times and capabilities." In addition to dissatisfied consumers, the mishaps led the Federal Trade Commission (FTC) to levy large fines on leading retailers for violating its Mail and Telephone Order Rule, which according to the FTC requires retailers to ship goods by the promised date, or within 30 days if no date is promised. Companies that are unable to do this must notify buyers with a revised shipping date and give them an opportunity to cancel their order if they desire. Toysrus.com, The Original Honey Baked Ham Company of Georgia, Macys.com, KBKids.com, CDNow, Minidiscnow.com, and Patriot Computer all received fines ranging from $45,000 to $300,000. The e-tailers eventually settled in July 2000 by paying $1.5 million in civil penalties for making promises they couldn't keep.

After the 1999 season, the FTC continued to scrutinize e-tailers who promised fast delivery. Macys.com, which in 1999 updated inventory on its site once per day to once per week, changed its practices in 2000 so that real-time data was available to consumers. In Forbes, Kent Anderson, president of Macys.com, explained the retailer rebuilt its entire order management process and developed a more timely, effective e-mail management system for communicating with customers.

Along with Macys.com, other retailers made enhancements and improvements to their fulfillment systems. However, according to Warehousing Management, Accenture's annual U.S. E-fulfillment study revealed that the 2000 holiday season was fraught with many of the same mishaps. The study, which included Web sites run by mail-order catalog companies, retailers with both brick-and-mortar stores and Web sites, and pure-plays (retailers who do business exclusively on the Web), found that 12 percent of deliveries were not delivered in time for Christmas, and 67 percent were not received as ordered.