It smacks of a now classic (but not beloved) holiday tale: A hopeful young woman placed an order with an online toy retailer on Dec. 6 for two items listed as in stock, only to have it arrive half-filled a week later. An e-mail query drew a response saying both items had been shipped USPS Priority Mail. Subsequent e-mails to the firm’s customer service center went unanswered. Calls to the company’s toll service numbers resulted in hour-long waits on hold, or a recorded message saying the company could not accept calls at the time and that the company’s voice message box was full.
The punchline is that in post-holiday surveys consumers listed the company in question, Santa Monica, CA-based eToys, among the top online retailers in several categories, along with Paramus, NJ-based Toysrus.com. But both companies also earned the top two spots in Ernst & Young’s list of most disappointing sites, with consumers citing out-of-stock merchandise and delivery failures, along with difficulties loading and navigating the site as the primary reasons for the low rank.
Toysrus.com and eToys weren’t celebrating their blue Christmas alone. Universally, e-tailers seemed to underestimate the amount of traffic their sites – and therefore their fulfillment and customer service operations – were going to generate in the last five weeks of 1999.
“Mistakes at a critical time period when the volume is going up tend to compound themselves,” says Thatcher Wine, founder and CEO of Feedback Direct, a facilitator between consumers and online customer service departments.
ON-TIME RATES DROP
A study by online shopping evaluation firm Bizrate.com showed on-time delivery rates falling from 80% in 1998 to 74% in 1999 among a sample of sites. And only 74% of those customers experiencing difficulties would give a site another chance. Among the toy e-tailers, 42% of those shopping with Toysrus.com said they wouldn’t return, as did 12% of those doing business with eToys.
Customers who had problems with eToys won’t be bowled over with mea culpas from the company, which shies away from coupons and gift certificates. In contrast, Toysrus.com, which had significant delivery problems, offered $100 gift certificates to customers who received orders after Christmas.
eToys is taking steps to beef up its fulfillment operations. The company has expanded its distribution capacities, tripling the number of such facilities and septupling the total square footage. Additionally, it will be taking over more of the pick and pack operations from its fulfillment partner, Fingerhut.
Inventory preparations for holiday 1999 began immediately after Christmas 1998, according to eToys spokesman Jonathan Cutler. “If you don’t take care of that early, you may as well forget about the holidays.” He does note, however, that eToys’ total staff grew from 350 to 500 during 1999, and that the customer service staff “significantly ramped up.”
MAKING UP
For Toysrus.com, the gift certificates it offered may be the beginning of the reparations it makes to disappointed customers. A class-action lawsuit filed in King County (WA) Superior Court by Seattle-based attorney Steve Berman alleges that the company accepted orders for presents it knew it could not deliver. If approved as a class-action suit (unresolved at deadline), it would cover all consumers who purchased items between Nov. 22 and Dec. 14 (Toysrus.com’s cutoff date for Christmas delivery), but did not receive them by the 25th. According to the suit, the heavily promoted site attracted 1.75 million visitors weekly, partly with the promise of holiday delivery.
Of course, most e-commerce sites did anticipate substantial jumps in sales this year. Redwood City, CA-based Fogdog Sports, a sporting goods site, approached the holiday season with preparations in place for a 500% increase in traffic over its 1998 holiday levels. But Fogdog’s sales for 1999, only its second holiday season in existence, zoomed up 750%.
Fogdog, according to director of customer service Mike Guerra, was able to maintain satisfaction levels among its customers, an opinion substantiated by Feedback Direct. This was despite Guerra’s admission that by waiting until December to pump up customer service lines to 24-hour support, “we pulled the trigger on going 24/7 a little late.” But, says Guerra, even near Christmas there were few to no calls between midnight and five a.m. Pacific time.
The lack of calls might have been due to Fogdog’s posting recommended UPS holiday shipping guidelines for its customers, allowing them to determine – based on UPS’s own estimations – when their packages would arrive. Additionally, order confirmations e-mailed from the company contained a tracking number and a direct link to UPS’s tracking site.
Fogdog’s customer service representatives, who according to Guerra were screened for “great verbal and written skills” were also empowered to issue credits or comp shipping costs without managerial approval. “There are guidelines, but I would prefer that they be able to take care of the customer rather than have the customer ask for a manager.”
Like Fogdog, Santa Monica, CA-based eHobbies, an online model and hobby enthusiast site, had very aggressive fourth-quarter sales projections – and exceeded those estimates by 30%.
In order to stay on top of its pick-and-pack operations, eHobbies, which leases space from fulfillment center California Distribution, had its own employees working alongside those of California Distribution at every level.
RAMPING UP
eHobbies established a work schedule at the beginning of December, just before its sales tripled. Management and support staff knew they would be called on to go to the fulfillment center and pack boxes. Employees put in several hundred extra man-hours at the plant: As they all held stock options, they knew that their efforts would have an immediate personal benefit.
Vikki Yaller, eHobbies’ customer service director – the first hire after the company was formed – says, “Our concentration was to prepare for the worst. If there was going to be a delay, our customers were contacted. There were under 100 [such customers].”
The fulfillment center itself was electronically linked to the company’s Web site. The company handles inbound fax and e-mail customer service entirely in-house. Telereps who had completed two months of training were available on-site as well; as a niche product provider, eHobbies did not want customer service providers unfamiliar with the hobby industry starting cold on its phones.
In mid-December it switched inbound telephone coverage back to 12 hours a day from 24/7 support; it is investigating returning to that level of coverage.
The company’s Web site encouraged customer reactions. During the holidays it featured a prominently located feedback button, and the customer service team saw a stream of response analyses reports throughout the holiday season.
Online shoppers have high standards. Here are the bars they set for various services:
Delivery: More than three shipping options; no charge for standard S&H
Customer Service: Average wall under one minute; same day 3-mail turnaround
Product Information: Customer reviews; editorial from experts
Recommendations: Suggestions based on detailed input by consumer
Returns: No time limit; vendor pays for return shipping; invoice includes return authorization
Easy order tracking: Confirmation e-mail links directly to the package’s tracking page
Source: Forrester Research Inc.
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