December 13, 1999Grand Illusion
A Web site isn't an excuse for not stocking inventory
As more consumers avoid the malls and shop on-line this holiday season, one thing is becoming apparent: they may be more comfortable buying products sight unseen, but they don't want to wait a long time to get what they pay for.
E-tailers big and small found out the hard way that even though shoppers can't see the products in their cases, the companies still have to make sure items are in stock. Companies that initially slashed overhead by hiring subcontractors to fill orders and ordering products from vendors as needed are now investing in warehouses in some cases, massive multi-million-dollar storage facilities.
Many retailers found their customer service suffered when they didn't stock merchandise, says an article in The Wall Street Journal. An on-line grocery retailer called Peapod Inc. discovered 8% to 10% of items ordered on-line were never shipped to customers because vendors were out of stock. After Peapod built three warehouses, its no-ship rate fell to less than 2%. "We have one rule in this business: Never run out of milk, diapers or bread," Craig Logan, the company's vice president for fulfillment operations, told WSJ.
Of course, small retailers aren't expected to build warehouses, but the lesson is a good one for anyone planning to sell on-line:
- by Stacey King