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BUSINESSWEEK ONLINE: Business Week ebiz | |||||||||||
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The Delivery Dilemma Could Box In E-Commerce Few E-tailers worry enough about onerous shipping charges and how to get all those containers of consumer goods to busy buyers. They ignore the problem at their peril So much of the E-commerce community is focusing on "out of the box" thinking that the prosaic cardboard container is getting lost in the shuffle. But the box -- or more particularly, moving it around -- is looming as a potential roadblock to widespread acceptance of E-shopping. Everything from how much it costs to ship, to how convenient it is to receive, is critically important to the consumer experience. Yet few E-companies are taking the box dilemma seriously. And that could well stall the stampede of shoppers to the Internet. Shipping and handling charges are an old consumer complaint, but they are alive and well and thriving in cyberspace. I ordered a book from Amazon.com last week: 101 Things To Do With A New Baby. It's for my son, who will become a big brother this summer. Throughout the shopping and ordering process, I was pleased as could be with Amazon.com. I was shopping during a free moment at work. I was finding the book I wanted. I was ordering with ease. Everything was lovely. Then, gotcha! The very last thing I saw before I confirmed my order was the shipping charge: $3.95 on a book that cost $3.96. Now, instead of pleased, I'm steamed. NOT A REVOLUTION. E-commerce companies are wrong to assume they have the same leeway as catalogers to charge shipping and handling fees. Fact is, when catalogs first arrived on the consumer scene, they often brought goods and services to shoppers who could never get access to them otherwise. That bought them a loyalty base. "The Sears catalog was once the link to retail civilization," says retail consultant Kurt Barnard. "Few Internet retailers can make that claim" in the infancy of cyber selling. Internet merchants might also be mindful of the fact that catalog retailing hovers around 10% of total retail sales. That's a niche, but not a revolution by any means. Forward-thinking E-commerce companies are realizing this. Cyberion Outpost Inc. and Onsale Inc., two Internet retailers, have dropped their shipping fees to lure shoppers. That's smart. E-retailers are happily marketing themselves as faster, better, and more convenient than stores. That rep won't survive if the cost of getting the goods is onerous. But shipping fees are just one problem raised by the box. There's yet another that has no obvious solution: how to get all those boxes to buyers. At this stage in Internet retailing, it's hardly a crisis. Even the most enthused E-shoppers are getting just a handful of packages a month. But the E-prophets have much bigger plans. They'd like to see us buy our groceries, our prescription drugs, our music and videos, our clothes, and more via the Internet. PACKAGED-GOODS DEPOT. Now we're talking lots of boxes. And it's not at all clear how we're going to get them. I live in New York City. Leave those packages on my doorstep while I'm at work, and they're history. Send them to me at my office, and then I have to figure out how to get my groceries home on the F train. And this is not just a city problem. Most working people, whatever community they live in, will find it difficult to arrange for the receipt of multiple boxes every week. We're not home during the day. And few bosses will smile when the workplace turns into a packaged-goods depot. What's worse, consumers may be surprised to hear that the residential delivery problem is not keeping shipping executives up at night. Companies such as Federal Express and UPS confess they are far more interested in tackling E-commerce solutions for their business customers. It's no surprise. Profit margins in the business-to-business segment are great. Residential delivery, on the other hand, is not where the money is, says Jeffrey Kauffman, an analyst with Merrill Lynch and one of the authors of E-Commerce: Virtually Here. "If the residential delivery marketplace is to become a reality of the E-commerce revolution, then most companies will be required to service it," he says. Delivery problems keep consumers from seriously considering a shift of their store shopping to the Internet. While companies pour dollars and energy into marketing, Web page design, search-engine prowess, and merchandise selection, they'd be wise to consider the lowly box. It's a small item that could trip up an entire industry.
Ellen Neuborne covers marketing for Business Week in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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Ellen Neuborne is Business Week's Marketing editor | ||||||
