We've all heard the expression, "talk's cheap." In the case of e-commerce, it may not just be cheap, but smart especially when the talk in question occurs between marketing and logistics.
Although no e-tailer can guarantee 100% accurate delivery, I suspect many could have avoided their most embarrassing and expensive delivery lapses if their marketing professionals had just taken the time to confer with their logistics and fulfillment professionals. With that in mind, here are five key reasons why I think e-tailers' sales, marketing and logistics professionals need to do a better job of dot-communicating.
Although the Web has given rise to some of the most creative marketing campaigns ever conceived, many of these bright ideas have generated not only orders but logistics chaos because logistics professionals were among the last to know about the special promotions. The results have been missed deliveries, disgruntled customers, bad press and in some cases hefty Federal Trade Commission fines for false advertising.
By setting up cross-functional meetings between logistics and marketing professionals when plans for a promotion begin, e-tailers can effectively kill two birds with one stone: they can give their logistics professionals ample time to staff and get supplies in for the potential surge in demand, and they can ensure whatever delivery windows the marketing department is proposing are truly achievable.
Of course, even with the best advance planning, there are some campaigns so wildly successful even Santa Claus wouldn't be able to make all the deliveries on time. That's another reason why it's so important to keep the sales, marketing and logistics lines of communication open.
No one knows a supply chain's limits better than the logistics professionals who manage and work it everyday. Thus, no one is better equipped to advise marketing professionals when a tactic they're proposing, such as sending out coupons over the Web to millions of people at once could result in a situation where the orders dramatically outweigh the available product and paralyze the fulfillment operation. Supply chain management professionals may not be able to come up with the big ideas that drive traffic to a Web site and sell the product located there, a firm grounding in reality could serve as a useful acid test for whether the idea can be executed all the way to a customer's doorstep.
During the early years of the Web, two of the most popular words in marketers' lexicons were "free shipping." Ironically, those same two words were just as unpopular in logistics and fulfillment circles. With the price of shipping a five-pound package starting at $4 for standard, non-expedited delivery not including the expenses associated with receiving, storing and handling the product while it's at the distribution or fulfillment center it's not difficult to figure out why that tactic eroded so many e-tailers' profit margins. Although it is important for marketing professionals to use competitive shipping prices to attract customers in fact, research says they should it is equally important for them to avoid losing their company money each time an order goes out the door. And no one can be a bigger help to them in that respect than logistics professionals because no one is better acquainted with all the nuances of shipping and handling costs.
While we're on the subject of money and profitability, it's important to note that a successful e-commerce marketing campaign hinges not only on outbound logistics efficiencies but inbound too. If e-tail marketing professionals are planning a lengthy or aggressive promotion but neglect to keep their company's logistics professionals in the loop, they run the very real risk of not having enough inventory to support outbound shipments. Just as important, they risk substantially increasing their company's overall logistics bill because their logistics professionals might have to use expensive expedited delivery services to get "emergency" replenishments. Plus, they could miss out on the potential transportation savings that come from coordinating and consolidating shipments well in advance. While these extra costs may not negatively impact the marketing department's budget, they could be the straw that breaks the camel's back for a dot-com with a tenuous hold on profitability.
So much has been written about the negative marketing effects of bad e-commerce logistics that it's almost easy to forget the other side of the equation: good e-commerce logistics actually could become a marketing advantage. If you look at it realistically, every e-tailer is actually selling two things: products and convenient delivery right to a customer's doorstep. If your company is one of the exemplary ones that manages to deliver in a reliable, timely and cost-effective fashion, then you could have what marketing professionals call a unique selling proposition. And with the right marketing spin, it could be worth its weight in gold. That doesn't necessarily mean that a company has to provide the fastest order fulfillment or the cheapest. (In fact, consistency, not speed, is king.) It just means it has to live up to what it advertises.
Better lines of communication between marketing and logistics professionals will ensure that marketing professionals do the most accurate job of promoting their dot-com's order fulfillment capabilities, resulting in more satisfied customers and more repeat business.
In writing these things, I do not mean to imply that communications between all dot-coms' marketing and logistics professionals are inadequate or remedial. There are many e-tailers that do an outstanding job of integrating all of their business functionalities and it shows. However, in the ever-changing world of e-commerce, where business can change in the blink of an eye, I firmly believe it's virtually impossible to communicate too much or to underestimate exactly how closely related logistics and marketing really are.
Todd Carter is senior vice president of customer solutions for GATX Logistics Inc., one of North and South America's providers of logistics services. GATX Logistics owns GATX eLogistics, which provides end-to-end e-logistics services. To learn more, log-on to www.gatxlogistics.com or www.gatxelogistics.com.