OPERATIONS

Apr 01, 2005 10:30 PM  By

Nowhere is the effect of the Internet on the industry clearer than when looking at how orders are received. The respondents to this year’s Catalog Age Benchmark Report on Operations received a mean 35.5% of their orders via the Internet. That’s a 47% jump from the mean 24.1% received online among respondents to our previous operations benchmark, conducted two years ago. Go back another two years, and only a mean 11.7% of orders came in via the Internet. To put it another way, within just four years, online orders as a share of total orders more than tripled.

The telephone still accounts for the plurality of orders: a mean 42.0%, down from 48.4% two years ago. And as for mail, it brought in only 11.7% of respondents’ orders, down from a mean 16.0% in 2003 and 22.0% in 2001. Before you know it, the term “mail order” will have as much relevancy as the phrase “dial the phone.”

The rapid rise of the Web as an ordering channel could also be why nearly 7% of this year’s respondents didn’t have a telephone ordering line, compared with fewer than 3% of the respondents in 2003. In fact, more respondents this year offered Web ordering (96%) than phone ordering (93%). Two years ago 16% of respondents still didn’t have an online ordering function.

Among this year’s survey participants with phone ordering lines, only 16% offered 24-hour ordering, down from 21% two years ago. One-fifth of this year’s respondents didn’t take phone orders overnight, up from 15% two years ago.

Forty-one percent of the respondents with phone lines had separate ordering and customer service lines. Among that 41%, a mean 69.8% of calls to the order line actually resulted in orders. Among those without separate lines, a mean 53.6% of calls resulted in orders.

Regardless of whether respondents have separate ordering and customer service lines, cross-training in the call center is the rule, not the exception: 84% of respondents cross-train their order-takers to handle customer service. Nearly two-thirds (65%) of respondents said their order-takers also input mail orders; 50% have them perform name and address verification, 46% have the order-takers make outbound calls, and at 20% of the companies the order-takers conduct surveys as well.

You could argue that the influence of the Internet — in particular, its sense of immediacy — has led multichannel merchants to fulfill orders quicker. That’s one explanation for why the mean number of orders shipped within 24 hours has increased 14% among survey participants during the past two years. Respondents to this year’s survey shipped a mean 56.6% of their orders within 24 hours. In comparison, among respondents in 2003 a mean 49.6% of orders shipped within one day. This year’s respondents had the mean percentage of orders shipping in 30 or more days down to 1.8%, compared with 4.5% among the previous survey’s participants.

The backorder rate, meanwhile, held all but steady: A mean 11.7% of orders among this year’s respondents resulted in backorders, compared with 11.6% two years ago. The percentage of respondents achieving final fill rates of 95%-100% also remained virtually the same: 62% this year compared with 61% in 2003.

Nor have return rates changed significantly. Among this year’s respondents, a mean 5.1% of items were returned; two years ago the mean was 5.7%. The mean percentage of returns that resulted from internal errors, rather than customer dissatisfaction, did change significantly, however — for the better. This year pick/pack errors, clerical mistakes, and other internal mishaps accounted for an estimated 4.4% of returns. Two years ago, they were the cause of 8.2% of returns.

For two-thirds of this year’s respondents, return levels had stayed about the same over the past year. Another 24% reported a decline in return levels, with the rest admitting to an increase in year-over-year levels.

Percentage with separate ordering and customer service lines

Consumer respondents 43%
B-to-b respondents 33%
Respondents with sales less than $1 million 21%
Respondents with sales of $1 million-$9.9 million 28%
Respondents with sales of at least $10 million 59%

Mean call abandonment rate

2005 3.3%
2003 3.2%

Percentage using computer telephone integration (CTI)

Consumer respondents 15%
B-to-b respondents 27%
Respondents with sales less than $1 million 16%
Respondents with sales of $1 million-$9.9 million 12%
Respondents with sales of at least $10 million 25%

Percentage whose transactional Websites are integrated with their catalog management system

Consumer respondents 54%
B-to-b respondents 47%
Respondents with sales less than $1 million 33%
Respondents with sales of $1 million-9.9 million 39%
Respondents with sales of at least $10 million 70%

Percentage with separate staff to handle e-mail orders/correspondence

Consumer respondents 36%
B-to-b respondents 33%
Respondents with sales less than $1 million 15%
Respondents with sales of $1 million-$9.9 million 33%
Respondents with sales of at least $10 million 57%

Percentage using an outside service for fulfillment

Consumer respondents 20%
B-to-b respondents 0
Respondents with sales less than $1 million 15%
Respondents with sales of $1 million-$9.9 million 11%
Respondents with sales of at least $10 million 13%

Level of returns compared with last year

Increasing 9%
Decreasing 24%
Staying about the same 67%

Methodology

On Dec. 14, 2004, Primedia Business e-mailed invitations to participate in an online survey to 2,543 Catalog Age subscribers with job functions of president/owner, fulfillment management, operations management, and general management. The invitation included a link to sent respondents directly to the questionnaire online. Respondents were offered a chance to be entered into a drawing for one of four $50 Amazon.com gift certificates. Follow-up e-mails were sent on Dec. 21, 2004, and Jan. 13, 2005. Of the 2,122 deliverable surveys, 76 completed surveys were received, for an effective response rate of 3.6%

Interested in the complete results from Catalog Age’s exclusive Benchmark Survey on Operations? To purchase the full report, go to www.CatalogAgemag.com and click the “Research Store” link on the left-hand navigation bar under “Resources,” or contact Lynn Adelmund (913-967-1891; ladelmund@primediabusiness.com).

“When do you remove a customer from your list because of returns?”

After 2 or 3 returns 16%
After 4 or 5 returns 15%
After more than 5 returns 7%
Never 63%
Total exceeds 100% due to rounding

“Do your inhouse phone order-takers upsell?”

Yes, with good results 51%
Yes, with poor results 14%
No 34%
Total does not equal 100% due to rounding

“Do your service bureau phone order-takers upsell?”

Yes, with good results 26%
Yes, with poor results 19%
No 56%
Total exceeds 100% due to rounding

“Have you increased your warehouse space during the past 12 months?”

Bought/leased additional space 13%
Moved to a larger facility 7%
Added on to existing facility 11%
Installed a mezzanine 4%
No 77%