A Fulfilling Holiday
The guarantee was to take, fulfill and ship all orders the same day for delivery the following day, right up until 3 p.m. EST on Christmas Eve. The offer was 25 roses if customers didn’t receive their orders the following day.
Ashford.com, a luxury gift e-tailer, sent just 400 bouquets. Considering the volume of orders and the fact that Ashford delivered on its promise regardless of why the late delivery occurred, the number is remarkable.
Ashford.com offers a wide variety of high-end products: diamonds, more than 20,000 styles of new and vintage watches, jewelry, fragrances, leather accessories, ties, scarves, sunglasses, writing instruments, home and lifestyle products, and corporate gifts. Orders usually average several thousand dollars. On a typical day, Ashford.com provides complimentary overnight shipping and gift packaging, a 60-day money-back guarantee on all new watches and a 30-day money-back guarantee on all other merchandise.
Few companies can afford to approach customer service the way Ashford does every day, let alone touch its holiday promise. Even fewer companies have a fulfillment and inventory system on par with Ashford’s. Its 19.1-percent profit margin allowed it to provide an unusually extravagant apology for late deliveries during the 2000 holiday season: The bouquets came from Martha Stewart and cost more than $100 a pop. But more importantly, it didn’t rely on the apology. It relied on a proprietary inventory and fulfillment system to achieve a 99.9 percent on-time delivery rate during the holidays.
The fully automated database reorders when volumes are low, removes out-of-stock products from the Web site’s offerings based on rules, changes ship times to reflect inventory levels and predicts inventory needs.
Ashford set out to provide its customers with a truly luxurious holiday experience. The idea was to convince its existing customers that it was an on-time, reliable e-tailer even in peak season and to convert first-time buyers into loyal customers. It didn’t want to just promise same-day shipping, but guarantee it. The company offers free next-day shipping through FedEx everyday because it completes its image as a luxury retailer to the customer. It sent roses to any customer who received a wrong order, late order or who was just dissatisfied. The caveat to the company’s plan was that it had to fulfill its guarantee regardless of the reason for late arrival, such as slow shipping from either FedEx or the USPS, which provided Sunday delivery, even on Christmas Eve.
One of the key challenges for Ashford, especially during peak times, is maintaining the quality of picking and packing. While customers are disappointed when they get the wrong merchandise, in the gift business the present is typically shipped directly to the recipient gift-wrapped, which presents an embarrassing situation for the gift-giver if the wrong present is shipped. At Ashford, emphasis is placed on making sure the right product is sent. It uses a bar code scanner to make sure the SKU is right, then workers physically carry the product to a computer screen to conduct a visual check.
“I think for us the most challenging thing is maintaining the same level of quality on packing and presentation of items in periods of very high volume,” says Bill Hensler, COO of Ashford.com. “At that pace, we make sure we focus on [quality] so the customer has a really first-class experience.”
Ashford hires extra help during peak times and reviews the previous day’s picking and packing times, shipping and number of orders at a daily meeting.
Using a detailed mathematical model, Ashford projects the daily order volume to predict the number of workers it will need. Employees are encouraged to focus on the quality of packing rather than speed. The data are used to highlight bottlenecks to provide adequate staffing and to make sure fulfillment operates at peak efficiency. It implemented the system in March 2000 and trued the model throughout the year and more frequently in the third quarter. To meet demand, it added 40 additional people.
The fulfillment goal was 20 minutes from the time the order was submitted.
“We did this partly because of all of the bad publicity generated last year as a result of some companies’ [poor fulfillment],” says Hensler. “We knew that we could do it. By going overboard not only were we willing to say it, but we guaranteed it.”
In addition to meeting its fulfillment time goals, the company brought the average call wait time down to 36 seconds during the holiday season, compared to two minutes in the 1999 season. The company also significantly reduced its average e-mail response time from 1999’s average of 24 hours to answering 46 percent of customer e-mails within two hours.
Jewelry is one of Ashford’s largest business lines, which it recently expanded with the acquisition of Watchnetwork.com in March. Ashford spares no attention to detail in the watch department; one of its most lucrative product lines, with watches in the $10,000 range. It has its own inventory system, which is programmed to re-order only when levels are extremely low.
“If you buy 50 percent more than you need, that’s a lot of money tied up in merchandise,” says Hensler.
Before leaving the warehouse, watches are inspected for scratches, a new battery is put in, and the watch is set to the time zone to which it is being shipped.
Because of the disastrous fallout of the 1999 holiday, with many companies being fined for not delivering on promises, most dot-coms turned to third-party fulfillment houses and returned to focus on core competencies. Ashford is one of the few dot-coms that kept its fulfillment in-house.
Hensler says it is important for the company to retain control over that end of its business to ensure quality and contain costs.
“Because Ashford deals in expensive products, it is very important that it doesn’t over-project the number of products needed,” says Hensler.
Extravagant Customer Service: Ashford.com sells $25,000 watches, which are managed by an elaborate inventory and fulfillment system that never leave a customer disappointed.