Getting Into Ship Shape - Industry Trend or Event

Industry Standard, The, Dec, 2000 by Joshua Hallford

Retailers who bungle fulfillment can lose customers and revenues fast.

Online retailers who want to keep customers need to have their shipping act together. This holiday season, 78 percent of Web shoppers will weigh past shipping experiences when deciding whether to return to a site, says Gartner Group analyst Geri Spieler.

Online customers want it all -- low shipping fees, on-time delivery and hassle-free returns. All that service can be pricey: 27 percent of e-tailers spend over 10 percent of revenues on fulfillment, reports Jupiter Communications.

But Web shops can find ways to save. Picking and packing items in-house can trim the cost of fulfillment by nearly half. And processing orders electronically can slice expenses from a high of up to $25 per order to a high of $4 per order, Gartner says. One practice most retailers will leave untouched: allowing returns to brick-and-mortar stores.

Fulfillment Costs Drain Revenues
Share of E-Tail Revenues Spent on Fulfillment
Less than 5%   38%
5% to 7%       24%
8% to 10%      10%
11% to 14%     17%
15% to 20%      7%
More than 20%   4%
FROM A SURVEY OF 30 ONLINE RETAILERS.
SOURCE: JUPITER COMMUNICATIONS, JUNE 2000
Note: Table made from pie chart
Most Web Retailers Allow In-Store Returns
Availability of Offline Fulfillment Options
In-store pickup for online orders
Never       20%
Don't know  27%
By 2002     20%
Today       33%
Note: Table made from pie chart
In-store returns for online orders
Never        7%
Don't know  77%
By 2002     13%
Today        3%
FROM A SURVEY OF 30ONLINE RETAILERS.
SOURCE: FORRESTER RESEARCH, JUNE 2000
Note: Table made from pie chart

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