People who buy in a hurry expect the goods to be delivered in a hurry too. This is no problem for digital products like music, software and images where delivery can be made electronically. It’s harder when you have physical goods to be shipped to the customer. Distribution is an area where bricks and mortar companies may even have an edge. If you already have a warehouse and make mail-order sales, then you are better placed than a startup company that only has a web site.
As a merchant, you need to be clear with your customers what you offer and then live by it. If you outsource, be aware that you can’t outsource responsibility. Buyers don’t care why you have failed or whose fault it is – all they care about is getting what they have paid for. And if you or any of your staff ever tell your customer that a delivery problem is their fault because they didn’t read the small print, this will guarantee that they will never buy from you again, and will tell their friends likewise.
So here are some tips for making a success of your distribution.
Make sure that you are appropriately resourced for expected demand. For many companies this involves seasonal planning but you also need to gear stock levels and the warehouse for promotions if they are likely to produce a big response.
Every customer wants answers to two questions about delivery – what does it cost and how long does it take? You must clearly answer these questions, preferably on the home page, with links from every other page.
You must also be clear about the options – do you offer expedited/next day delivery, timeslot or weekend, deliver to work, gift wrapping and messaging? Are there any special conditions e.g. you need a signature, you can deliver “round the back” or “To the neighbor on the left, looking at the house”, can I track online? Amazon tell you that a book ‘normally ships in 2-3 days’ so you aren’t too upset if it takes four. If you offer ‘24 hour delivery’ then when do the 24 hours start? What are the time constraints, e.g. ‘Orders received by 4pm normally ship the same day’.
Pro-actively check on the status of deliveries so you know about problems first and you tell the customer if delivery commitments won’t be met. Provide helpful support for failed, late or attempted deliveries. Monitor customer satisfaction with delivery.
Experiment with the balance between delivery charges and product cost – try to encourage larger orders
Make sure that you calculate shipping charges as part of the whole deal. You may need to charge by weight, by volume or by value of order. If you offer free shipping on orders over a certain value, make it clear whether that value includes tax. Clearly notify any delivery terms and conditions e.g. where you can’t deliver, times you can’t deliver.
Back orders are a fact of life if you accept fax or mail-orders, so expect them in Internet selling too. Allow the buyer the choice of waiting for a complete shipment or taking part orders. Only charge shipping once – it is irritating being charged extra shipping when it is the merchant’s fault that the item was not in stock. If this can’t work economically, cancel back orders and inform the customer. Make it clear on the site how you will deal with these sorts of situations.
Placing an Internet order may feel risky for the buyer. Make sure your buyers are told that you have received their order, and keep them up to date with its progress. If you have to make a back-order, let the buyer know when the rest of the order is expected.
Pick a reliable carrier. There are lots of carriers and they compete heavily. Value reliability over price. A lost buyer will probably cost you more than the difference in shipping cost. Pick a carrier that can track goods online. Give the tracking reference to your customer as part of the order processing feedback. Monitor the performance of your carriers. Ensure your postcodes are accurate to help carriers to perform. Be PAF accurate on labels. The label should carry any delivery advice e.g. “Leave around back”, supplied by the buyer.
Sadly, some of your sales will come back to you. Some may be your fault but others may be beyond your control. Publish your returns policy and include it as part of the ordering process at the web site. Be clear in your terms and conditions about who will pay for return carriage. By default, it will be you and if it is, make sure your carrier can collect.
Don’t over-promise. Repeat customers are much more valuable than one-offs. Make it clear when you will deliver and then stick to it – even if it costs you more. Customers appreciate merchants who go out of their way to meet their commitments.
There are all sorts of pitfalls to exporting. Who is responsible for any duty or taxes on the goods? In Europe, the EU Directive on Distance Selling sets out a legal framework for shipping within the EU. The good news is that shipments within the EU are free of duty. In the US, Congress banned new Internet taxes - but government policy can change. Most large carriers can collect duty on goods when they arrive, but you need to be clear about who is going to pick up the tab. Generally it is the buyer’s responsibility. Make sure they know. If it comes as a surprise to them when the goods are delivered, you are the one they will blame. There is a whole section later on international; orders.
Customers usually have to go to work, so there may be problems in receiving your goods. Some companies are experimenting with deliveries to workplaces or to known drop-off points like petrol service stations. If you can offer this, make sure that you can deal with goods that ‘go missing’ en-route. Another approach is to offer delivery within more precise time periods.
Outsourcing fulfillment can be attractive – letting a warehousing company store and ship the goods. Make sure it is clear who bears the risk of stock in the warehouse, both for fire and theft. If the warehouse contents vanish, who is left with the bill? If rats nibble your books, who pays? Check that you are properly insured if it’s your risk. Insure it anyway if it’s theirs – who knows if they have paid their premiums? Check on their performance – it is your reputation at stake.
Depending on the nature of your business, you will have a higher or lower rate of returns. For instance, it’s not unknown for clothing suppliers to face a 35% return rate. Depending on this factor, the cost of shipping goods relative to product cost, and what your overall proposition is, you may wish to make it incredibly easy to return goods in order to reduce your customer service cost. Or alternatively you may elect for a straight-forward and fair system. Remember though that people returning goods are generally unhappy and can easily cost a lot of money. There can be many reasons for a change of mind including wrong product, damaged or defective goods, not what was expected, not fitting or simply a change of mind. Your returns process should be planned appropriately. Obviously, your statutory obligations under the distance selling directive must be met.
Remember every contact with the customer costs money. Possible approaches are to send a “returns ticket” with the order making it easy for the customer to return or substitute goods, asking the customer to register returns on the web site, deciding if it’s cheaper not to return goods and just refund them, especially if the claim is that they are damaged. Obviously this needs close monitoring for fraud. The steps in the returns process are initial contact and returns authorisation, physically getting goods back, processing the return, making an appropriate refund, placing goods back into stock or quarantine, replacing goods and retaining the sale.
If you are a multi-channel business you may decide to allow returns through any channel. Remember that returns to a store provide the opportunity to sell a replacement, while potentially creating further logistics issues. Returns by courier may be difficult to track and by post impossible. It’s also worth considering that if the returns process is too easy people may exploit it, if it is too hard people will resent and it may end up costing more. Finally, ensure that once returns have been received you deal with the efficiently and quickly. You need procedure to make sure if they go back into stock, are returned to suppliers if faulty, are scrapped, are sold at a discount price or are refurbished as quickly as possible.
One company had a customer who always ordered at least two dresses of different sizes and then returned one. This was great for them but terrible business for the merchant. If you get someone to who does this it may be better to refuse their orders. Anti-fraud systems may also help as someone with a refund for every order is likely to be flagged as a potential fraudster.
Monitor the returns process as this can be expensive. There’s not only the cost of processing and delivering the original order, there’s the service time spent on the return and the cost of re-processing or discarding returned goods. It’s a good idea to report Distance Selling Regulations (DSR) returns, no quibble guarantee returns, faults in goods, errors in despatch or fulfilment, change of mind returns but always ask for a reason for the return, it didn’t fit, description wasn’t accurate etc. Check if certain items are returned more frequently as you may need to drop these or discuss with them with the supplier. Yo0u may also find that improved packaging of outgoing and returned goods can make a big difference to numbers of returns and the likelihood of being able to put them back into stock.