Built to scale

By Mark Leon, InfoWorld |  Software

  Integration tales of woe  
 

Those who have not backed up their Web sites with integrated logistics and fulfillment systems are quickly learning to regret it. "[Logistics and fulfillment] is the single most differentiating factor in determining success or failure for online retailers," says Martha Bennett, an analyst at Giga Information Group, in Windsor, England.

Take Argos as an example. All the Milton Keynes, England-based consumer electronics company wanted to do was offer an online special on television sets. To accomplish this, the company used a spreadsheet to populate the Web site with prices. But the data was entered manually and no control processes were in place to check the work, according to Bennett.

The result was that television sets sold for three pounds, or about five American dollars. Thousands of orders ensued, and Argos almost went bankrupt.

"[Argos] would have gone into receivership [bankruptcy]," Bennett says, "but they were saved by an arcane point in English precedence law."

Another case Bennett cites involved a German online drugstore, and this one resulted in a $300,000 box of disposable diapers. The error occurred because, after the customer placed the order, the price had to be rekeyed by hand into the order fulfillment system.

"It is incredible that this error got as far as it did," Bennett says. "The customer's account was actually debited."

Bennett says these examples show how badly some online retailers have miscalculated what it takes to do business on the Web.

"Companies are behaving as if the normal control processes don't matter online," Bennett says, "when just the opposite is true."

 
"Warehouses and wholesalers know how to ship pallets," Hennings says, "but they have a terrible time with 'eaches.' This is the problem that direct marketers, such as L. L. Bean, solved a long time ago."

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