Web Merchants Assess Damage of Closed Airways

Proflowers.com estimates that it lost $500,000 as a result of the Federal Aviation Administration's decision to close all runways after the terrorist attacks Sept. 11.

Bill Strauss, CEO at the San Diego-based Web retailer, said his company was hamstrung from the morning of Sept. 11 to the afternoon of Sept. 13 by the air traffic shutdown.

“One hundred percent of our business is done through air delivery, so there wasn't anything we could do for much of the rest of the week,” he said. “All we could do was guarantee our customers delivery for the following week.”

Like many Web retailers, Strauss' firm updated its Web site immediately after the attacks to discourage online shoppers from requesting air delivery for their purchases and sent an e-mail to customers explaining that orders may be delayed.

“We also checked with FedEx right away and found out that all of our deliveries that morning (of Sept. 11) were successful outside ones going to southern Manhattan,” he said. “We probably had a few dozen deliveries for that area.”

Internet retailers less reliant on air shipping, not surprisingly, had fewer fulfillment problems.

Fulfillment firm Hanover Direct Inc., Weehawken, NJ, said that nearly all of its 16 catalog/Internet clients sidestepped heavy sales losses because their products required only postal delivery.

Dave Abeloe, distribution center director at Patagonia.com, Portland, OR, said his firm e-mailed and phoned about 350 customers who had requested air shipping during the shutdown. Abeloe said that his company, which offers environmentally friendly clothing, asked customers whether they wanted their shipments rerouted to ground delivery or wanted to wait for air delivery once the FAA halt ended.

“It probably took two to three days for things to get back normal, but we are back to normal,” he said. “The backup in our orders was manageable.”

Meanwhile, retailers from various sectors said that no customer had complained about delays in delivery. Dave Weich, director of content and marketing at book retailer Powells.com, said the public understood the situation too clearly to grumble.

“If this would have been a situation where the carriers were responsible and the customers couldn't see that, then there would have been a lot of complaints levied at us,” Weich said. “This wasn't like that. Everyone around the country has been very understanding.”

Indeed, the Federal Trade Commission last week reported learning of few delivery problems resulting from the terrorist attacks.

Mail or telephone order merchandise rules require that a seller ship merchandise within the time stated in its solicitations. If a merchant cannot do so, it must notify customers that they have the choice of agreeing to a delay or canceling their orders and receiving prompt refunds. The rules also require the seller to provide a prepaid means of exercising that option.

The FTC said potential violations of the merchandise rules that are byproducts of the crisis would be handled reasonably. But as of Friday, the FTC said it had not received an increase in complaints.

Though few companies reported problems, the FTC still advised companies to:

· Be aware of a potential increase in consumers' requests for credit card charge-backs for merchandise not received. Carole Reynolds, a senior attorney at the FTC, said that while each situation is different, “if something is not delivered when it is agreed upon, that is considered a billing error under the Fair Credit Billing Act, and, as a result, consumers can request a credit to an account.”

· Allow extra time for receipt of payment because of mail delays, and grant additional grace periods.

· Establish a dedicated telephone line and staff to handle questions about consumers' transactions during this period.

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