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The actual cost of e-commerce fulfillment errors: lost customers

The actual cost of e-commerce fulfillment errors: Lost customers

For years, brick-and-mortar retailers have carved out their niche by providing excellent in-store customer service. But for those now entering the e-commerce fulfillment arena - and providing customers with the option to buy online and pick up in stores (BOPIS) - the challenge of preserving their hard-earned reputation just got bigger.

To say that online customers are demanding is an understatement. One order error is often all it takes for online shoppers to permanently take their business elsewhere. Retailers risk not only losing their online customers, but also eroding the loyalty of their existing clientele. 

There's no question that e-tail giants have raised the bar for e-commerce fulfillment. Today's consumers expect nothing less than 100 percent order and inventory accuracy. According to a 2015 study by IDC, multichannel shoppers are 30 percent more profitable over the lifetime of the customer than traditional shoppers, making the potential impact of getting orders wrong even greater. Here are a few online customer characteristics to keep in mind when considering their importance to your business:

  • They are less loyal than traditional customers
  • They expect fast delivery time, and will jump to a competitor if the predicted delivery time is too long
  • They are very price-conscious and can perform price comparisons quickly at no cost
  • They expect a flawless customer experience at every touch point, or they will choose another retailer

Atoning for order mistakes can also cut into retailer profitability. Let's examine an order pickup scenario that is more common than it should be. An online customer shopping for a tool set confirms that the item he's looking for is available at a local home improvement store and will be ready in 2 hours. Once at the store, the shopper discovers that the order was 'shorted' the tool set, as there is a disconnect between what the online system thinks is on the shelf and what is actually on the shelf. To make up for the inventory mix-up, the store manager grants the shopper a discount on a larger tool set - making it even cheaper than the original item and reducing or eliminating the profit on the item.

Let's add up the full costs of this botched transaction: the time the store associate searched for the item; the discounted price of the more premium tool set; and the loss of confidence by a customer who has many other retailer options.

So how can retailers fix this problem? By combining a voice-based task engine with labor management software, retailers can gain visibility to inventories on hand and add efficiency to all in-store fulfillment processes. By checking the SKUs for each item picked or put away as item movement occurs, there is greater synchronization between the online inventory and the physical inventory, in real time.

Honeywell Intelligrated's Store Solutions is designed to do just that. With Store Solutions, retailers can validate the activity of each SKU with every transaction - whether that's stocking, picking or returns - resulting in a view of actual items in inventory that can drive order accuracy levels to as high as 99 percent. The benefits of meeting online customer expectations are gaining their all-important loyalty and securing their repeat business. And with the efficient management of labor, retailers can add predictability to all in-store order fulfillment processes. 

To learn how Honeywell Intelligrated combines voice and LMS to help retailers drive order fulfillment accuracies, please visit the Store Solutions section of our website.