Integration Tale 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."

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