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Home for the Holidays

E-tailers vow to get merchandise to customers on time, even if it means scaling back expectations.

Just a year ago, E-tailers were warming up for a rousing chorus of “It’s Beginning to Look a Lot Like Chaos,” but as the holidays approach, companies are singing a new tune. The past 12 months have given them time to expand the technological and logistical underpinnings of their operations, as well as to change critical business processes. This year, they say, Christmas Eve will be a silent night indeed, free of the customer complaints that rained down like pine needles from a month-old tree.

Consumers sure hope so. According to Boston Consulting Group, 24 percent of orders placed online shipped late last year, and 16 percent never shipped at all; of those that did ship, 40 percent were incorrect. Consumer complaints led the Federal Trade Commission to fine seven E-tailers a total of $1.5 million for providing inadequate notice of shipping delays or making promises about fulfillment they couldn’t keep.

In response, many companies have made quick and fundamental decisions regarding their fulfillment processes. Toys “R” Us, for instance, last year’s most well-publicized disaster case, initially spent heavily to beef up its fulfill-ment operations, before changing course this past summer and striking a partnership with Amazon.com that will leave much of the heavy lifting to the online veteran. Other companies, such as Hallmark, which is plunging into the flower business with a sophisticated Web operation that will allow customers to order flowers until 8:45 p.m. (est) for next-day delivery (www.hallmark.com), have also spent millions on new or expanded systems and fulfillment operations. Says Steve Bellis, president of Hallmark Flowers, “We feel we need to own it and manage it ourselves, because that’s the only way we can guarantee quality products and service.”

In addition, companies are helping themselves by simply promising less. Ken Hite, chief information officer of CornerHardware.com, says, “We plan to market Christmas specials heavily in November, but cut them off by December 12. That way, we avoid committing to last-min-ute deliveries.” He’s not alone. Many com-panies are refining their advertising and promotion strategies, and the verbiage on their Web sites, to discourage last-minute shopping. And analysts expect customers to cooperate as well. “Consumers will shop earlier,” says Robert LeBatt of Gartner Group Inc. “They’ve learned that the online channel is not the place to be on December 23.”

Frosty Receptions

Perhaps the most critical lesson learned from last year, however, is the heavy price corporate reputations pay for such meltdowns. Eric Meerschaert, executive director, customer service and fulfillment, at Organic Inc., an Internet services firm based in San Francisco, says that reinforcing the brand image and enhancing product differentiation have emerged as the logical next steps for companies that have mastered customer service and fulfillment, but “even the ones that address service and fulfillment issues do so defensively, making sure they do no harm, versus finding ways to truly extend the brand online.”

Successfully enhancing a brand online, says Meerschaert, doesn’t necessarily require much in the way of technology. In fact, technology sometimes works against the goal. “Many companies will generate an automatic response to customer E-mail,” he says, “but never follow up with a substantive answer. Sure, they responded, but they may do more harm than good.”

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