Integration Tale of Woe

By Mark Leon, ITworld |  Opinion

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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