Not all costs of e-commerce fulfillment are direct costs. Some are just casualties of the system, but they’re still money out of your pocket. Indirect costs include things that don’t relate directly to receiving, stocking, picking, packaging, and shipping items. Unfortunately, indirect costs are a reality of e-commerce fulfillment, and they add up quickly if you aren’t paying attention to them.
Customers are the only reason a retailer exists, and loyal customers help grow a brand. But for a customer to become a loyal customer, customer service has to be excellent. If there are any negative experiences when dealing with customer service, a customer will happily find another place to spend his or her money. When it comes to e-commerce fulfillment, there are three primary responsibilities for customer service.
1. Resolving an Inaccurate Order
It’s the nature of the business: on rare occasions, a customer is shipped an incorrect item. If an order is fulfilled incorrectly, it becomes the job of the customer service representative to make sure the item is fixed. That means tracking the order through the return process all the way through the customer receiving the accurate item (or a refund, depending on the customer’s preference). The amount of time spent tracking an inaccurate order means time that could be spent on other important work.
2. Resolving Late Shipments
In some cases, a warehouse may experience some lag time, whether due to high order traffic or because of inefficiencies on the floor. These lags result in shipments going out later than they were promised. A late shipment may not always make a difference, but some customers order items for time sensitive events, and any delay in shipping can cause issues. Customer service representatives are then responsible for making sure the late shipment is resolved, whether that means refunding shipping costs or handling an order cancellation.
3. Resolving Unexpected Backorder or Requesting Order Exceptions
Any time something unexpected happens with inventory, it means that some orders could go unfulfilled. Say, for example, that you have sold a large number of a specific item, but you discover that those items are actually damaged in some way. Without any additional stock, the item suddenly goes on backorder, and order exceptions have to be put in place for every item that isn’t able to ship immediately. This happens frequently if a warehouse is slow or inaccurate at receiving inventory or processing returns.
In short, any time that a customer service representative has to spend fixing problems that were originally caused by inefficiencies on the warehouse floor is misspent time, and misspent time means misspent money.
Some costs associated with e-commerce don’t have anything to do with the customer or even the building itself, but it takes a lot of turning wheels to make a warehouse and distribution center run smoothly. That includes making sure that inventory is exactly where it’s supposed to be, as well as making certain that administrative tasks are being taken care of outside the floor of the distribution center.
So what’s your take? Do you have a handle on your customer service costs? How much does it contribute to each shipment you make? For more information on this topic, download our white paper.