Magazine Article | April 1, 2000

Can Your Supply ChainSupport E-Retailing?

Source: Innovative Retail Technologies

The exponential growth of online shopping has lured many retailers to the Web. But, do retailers have the infrastructure necessary to fulfill online orders?

Integrated Solutions For Retailers, April 2000
The aphorism, "Never promise more than you can perform," has definitely held true in the world of e-retailing. The lure of selling online has been hard for retailers to resist. The last few years have witnessed entrepreneurs starting e-retailing ventures, and brick-and-mortar retailers launching dot com versions of their companies. However, many e-retailing sites have not lived up to consumer expectations.

E-Retailing Lessons Learned
The stories about the Christmas 1998 Web debacle still linger. During that season, more buyers went online than predicted. So, e-retailers, such as, lacked the inventory and the delivery methods to fulfill some customer orders. A survey of 1,000 online shoppers found that 28% encountered Web glitches during Christmas 1998, according to Jupiter Communications Inc. (San Leandro, CA).

By the 1999 Christmas season, e-retailers had capitalized on past problems with television and radio commercials guaranteeing product delivery. E-retailers had spent the year building product distribution infrastructures to support these advertising claims.

In fact, 39% of retailers planned to replace their transportation/logistics systems by the end of 1999. At the same time, 42% of manufacturers intended to replace their warehouse management systems (WMSs), according to a supply chain study by the Retail Systems Alert Corp. (Newton Upper Falls, MA).

However, the remaining e-retailers have not made improvements to their supply chains. So, the horror stories about online shopping continue. Twenty percent of online customers still report unsatisfactory experiences, such as late deliveries, billing errors, and delayed refunds, according to a recent study by the Gartner Group (Stamford, CT).

The Benefits Of Supply Chain Improvements
Designing a more efficient product distribution infrastructure (supply chain) provides retailers with more than just improved online order fulfillment. A Meta Group (Stamford, CT) report found companies that have applied technologies, including Web-based e-commerce and communications, to their supply chains have found the following:
  • 43% boost in hard-cost savings
  • 30% increase in improved productivity
  • 16% boost in customer retention
  • 12% increase in revenues
In this issue, Robert Toatley, executive VP and general manager of Lawson Software's Retail Business Unit, addresses the technology challenges that today's e-retailers face. Toatley says that, in order for e-retailers to deliver product effectively, they need enterprise application integration (EAI) tools. There are other articles in this issue about how non-retail manufacturers, distributors, and businesses are applying technology to improve their operations. The editorial staff at Integrated Solutions For Retailers believes you can learn from their lessons, too. That's why we're committed to providing technology stories from all types of industries, including retail.

Questions about this article? E-mail the author at