The New Back End
Before 2000, every aspect of back-end support operations for the direct marketing industry was tailored to meet the needs of typical catalogers and their customers. In the 1970s and ’80s, direct marketing was limited to the mailbox. The costs and requirements for information systems, fulfillment operations, inventory management and transportation functions were limited by technology and developed exclusively to meet the expectations of catalog customers.
Consumer catalog orders were generated over a 12-week selling season. Inventory planning was based on historic patterns of sales and procurement, with sufficient lead time to forecast needs, buy products, transport them to the fulfillment center and fill customer orders. Back orders, delayed shipping and high customer service call-to-order ratios were fairly typical.
In the 2000s, merchandising on the Internet has changed the rules. E-commerce support operations learned some hard lessons in 2000, and they were challenged to predict and accommodate the new demands placed on all aspects of operations. The direct marketing operations providers who developed their services to support catalog and DRTV businesses now are rethinking the process from order acquisition to package delivery.
New Customer Expectations
Some e-commerce marketers are creating new customer expectations by advising customers of the exact day that an order will arrive at their home, and consistently doing it! Internet marketers have the advantage of quickly changing product offerings to ensure rapid fulfillment of in-stock items. Online access to shipment status information increases customer interaction and confidence. Delivering what you say you will, when you promise, has become the most critical success factor in developing repeat customers.
Rethink Fulfillment Process
Mature fulfillment operations with large-scale investments in automated storage, multi-item picking, packing and sortation systems are finding that “state of the art” for the catalog business isn’t as effective in meeting e-commerce customer demands. Traditional catalog fulfillment facilities are designed to accommodate an average order of 2.5 items from an inventory of up to 1,200 average SKUs per catalog. Products are purchased in bulk without packaging. Order picking and packaging systems are designed to combine multiple items in one shipment.