*E-Business Emphasis on Fulfillment Evident at NCOF Show

ORLANDO — Last holiday season's well-publicized e-fulfillment failures have forced top executives to focus more on back-end issues, according to speakers and exhibitors at the National Conference of Operations and Fulfillment, which wrapped up here yesterday.

The conference drew a record attendance estimated at more than 1,900. The interest was due to the belief that fulfillment is one of the major keys to establishing customer loyalty and an online market share, direct marketing and software executives said. DMA president/CEO H. Robert Wientzen, speaking at a conference luncheon, said the number and makeup of those attending was testimonial to direct marketers' recent Internet-induced change of attitude toward the back end.

Just a decade ago warehouse managers and other low-profile department directors made up the brunt of the conference's registry, but now the NCOF also attracts executives who once bypassed fulfillment analysis for the sexier marketing worries of ad campaigns and product development, he said.

“For the most part, unless there was some sort of major cost spike or significant service interruption,” Wientzen said, “CEOs and marketing gurus didn't spend a lot of time stewing about inventory, freight and delivery services and all that nuts and bolts stuff that helps keep businesses going.”

He said problems with online orders during the holidays illuminated the importance of accurate packing and shipping, and helped push e-fulfillment to the center stage. Wientzen also said company executives were paying more attention to fulfillment because year-round online shopping was skyrocketing, which has generated an unprecedented consumer and industry concentration on the accuracy and speed of delivered goods.

“Today, everyone from company presidents to the customer seems increasingly interested in how a product that has been ordered by the customer goes from purchase point to the buyers hands,” Wientzen said.

Growing interest in marketing back-end processes was evident at the conference in the number of traditional retail firms pitching their outsource-based fulfillment programs, as well as software firms seeking prospects for their front-to-back end e-commerce systems.

Nancy's Notions, a sewing products retailer that until recently only handled its own fulfillment, showcased its EZ Fulfillment system after adding the program to its business model last fall. The Beaver Dam, WI-based company now offers third-party warehousing and shipping services, as well as telemarketing and customer service.

Paul Shonts, vice president of operations, said his firm decided to expand last year and the growing e-fulfillment market was too attractive to leave alone.

“It was already 90 percent of what we do in terms of fulfilling our own business,” Shonts said. “We understood fulfillment and knew the market was growing, so it just made sense.”

E-commerce software firm Smith-Gardner, Delray Beach, FL, said that it had packaged its Web design software with its fulfillment and customer service systems to prepare for increasing competition in the fulfillment services market. The company's Ecometry program features an e-mail response program that's designed to attract Internet retailers looking to personalize customer relations through e-mail.

“We expect customer service to become one of the main battlefields for BTC e-commerce,” said John Marrah, COO at Smith Gardner. “From a BTB marketing standpoint, we knew that integrating our front-end system to our back-end system would give our product a better value. [E-tailers] that don't have fulfillment aspects like customer service tied into their front end will probably have a tough time.”

Wientzen said consumers' appetite for speedy delivery of online goods has increased and will likely get more demanding due to the proliferation of next-day service within the fulfillment industry. Overnight delivery may become the norm rather than the exception, which would bring new challenges for many companies in terms of operational management and cost control, he said.

He added that a fulfillment warehouse being constructed by real estate firm Trammel Crow Co., Portland, OR, could become a model for managing the increasing velocity required on the back end.

The warehouse “is designed not so much to store goods as much as it is designed to whisk them on a whirring conveyor belt from the online order to the customer's door,” he said.

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