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Tower Scoring High for Holiday Online Service

5 Dec, 2001 By: Holly J. Wagner

Tower Records & Video's Web operation is earning high marks for fulfilling customer expectations for on-time delivery so far this holiday season.

Internet measurement firm Keynote Systems is tracking order fulfillment from a variety of etailers and reports that for the Thanksgiving week, Tower exceeded customer expectations by 68 percent—although that owes partly to creating reasonable customer expectations, says Keynote spokeswoman Mary Lindsay.

Tower Records, eBags, SmarterKids, JJill and Amazon.com have the best fulfillment records for On-Time Delivery Performance so far this holiday season for retailers shipping orders placed online since Oct. 29, according to Keynote's measurements.

Tower promises orders will be delivered in 11.33 days, but is actually delivering them in 3.64 days, Keynote's research indicates.

Keynote measures performance from the time customers try to access a retail Web site (site performance and availability), through the time it takes to conduct a transaction such as placing an online order to the fulfillment time it takes to receive orders at their doorsteps.

“This metric is generally considered the most relevant to shoppers—as it is a measure of the ability of retailers to fulfill customers' expectations for delivery, based on promised delivery dates,” says Lindsay. “This is not a metric that equates directly with customer satisfaction, although it is a factor.”

It's also important to the Federal Trade Commission, which slapped seven etailers—including CDNow and Toysrus.com—with an aggregate $1.5 million in fines in July 2000 for failing to deliver Christmas 1999 goods on time or notify customers of delays. The Federal Mail or Telephone Order Merchandise Rule establishes regulations for retailer claims about shipment times and notifying customers of delays.

“We have taken a very disciplined approach to providing our customers with the quickest, easiest and most in-depth online shopping service,” says Mark Bressler, managing director at TowerRecords.com. “It's great that everyone agrees, both customers and analysts, that you can count on TowerRecords.com this holiday season.”

Email communication with the customer is widely regarded as an equally important aspect of customer service for online orders. Online shoppers in particular want email notification acknowledging the order and again providing shipment notification—as assurance that the order is being processed and everything is working smoothly—for a purchase transaction that otherwise has no personal interaction.

Nearly every online retailer tells shoppers how long it will take for their orders to ship. Keynote has tracked these stated expectations since Oct. 29 and compared them to actual performance to generate on-time shipping performance rankings. Using real time inventory systems, some retailers adjust shipping expectations on a product-specific basis. This helps shoppers decide whether or not to purchase an item or which shipping method to use, based on their target delivery dates. On-time shipping performance tests how well retailers keep their promise to shoppers.

Tower Records leads in On-Time Shipping Performance as well as Online Delivery, beating its seven-day expectation by 85 percent, shipping orders in about a day.

The most disappointing retailer on Keynote's list was the one that missed customer expectations by the largest margin. That company—a major toy retailer whose name Keynote kept under wraps—“was not being realistic,” Lindsay says. “The business promised that orders would, on average, ship in 1.32 days, when they actually took almost four days, missing expectations by 201percent.”

So far this holiday season, the fulfillment performance of the average retailer has slowed by about half a day compared to last year, while the slowest retailer has improved and the fastest retailers' performance has remained about the same, Lindsay says.

McKinsey reported that $11 billion in e-commerce revenues were lost in 1999 because of product fulfillment errors and Datamonitor contends $3.2 billion was lost due to poor online customer service, for a combined estimate of $14 billion in revenues lost due to customer dissatisfaction.

Keynote will continue measuring fulfillment from e-commerce sources through the holidays, Lindsay says.

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