E-Stores Hindered by ‘Logistics Chaos’

According to a new report from Forrester Research, Inc. (Nasdaq: FORR), the “logistics chaos” of fulfilling online orders remains a serious liability to virtual retailers and the industry as a whole.

The early success experienced by online retailers — as well as traditional businesses that have expanded onto the Internet — will beget more difficult shipping issues as companies expand the variety of items they offer. “Most net sellers have limited the number of products offered on their sites and executed fulfillment in-house,” the researcher says. However, expanding product choices, growing volumes of small packages and rising customer expectations will make fulfillment more challenging as the stores head into the fall selling season.

Of the 40 retail, Internet and manufacturing executives that Forrester interviewed, less than half make a profit on each shipped package and few accurately measure the total cost of fulfillment. The researcher said that 85 percent still do not fill international orders because of confusion about customs and tax issues. Of those not shipping abroad, three quarters said that their systems are not designed to register international addresses or estimate total delivery cost.

Another Wave of Shoppers

Online merchants would be wise to remedy their shipping problems quickly, because another recent study shows that a significant segment of the non-shopping population is moving closer to electronic purchases. E-commerce companies are in an all-out charge to improve online privacy and consumer data, answering the top two worries of respondents in a survey by NFO Interactive.

Trust that an online site will keep personal information confidential and assurance that the site offers a secure shopping environment are the top qualities current and potential online shoppers are looking for, NFO says. The company’s “Online Retail Monitor: Branding, Segmentation & Web Sites” study of more than 4,500 Internet users concludes that shoppers want their online store to resemble the reliability of their neighborhood retailer.

In addition to privacy protection, which the study notes is never questioned at traditional stores, would-be shoppers look for a technically reliable Web site with up-to-date information and quick delivery. Nearly 2,000 of the survey respondents have never purchased an item online. About 70 percent ranked ‘an assurance of privacy’ as the number one reason why they would join the online buying craze. That factor was more important than price discounts, which rated second with 65 percent of the vote, and the ability to return a product to a local store, which garnered 28 percent of the vote.

Personalized customer service, through Internet telephony or a chat page, made a difference to only 20 percent of non-shoppers and to even fewer shoppers.