Web Informant #179, 6 December 1999

      The popular press has been full of stories about how lots of holiday shopping is migrating to eCommerce, and how the malls aren't as crowded as last year. Maybe so, but given the frustrating online shopping experiences that long-time reader and friend Paul Hoffman and I have had lately, we are both ready to head back in our cars to the nearest mall.

      Both of us foresee many companies reworking their Web strategies soon. Many of them have blown it big time this year and have possibly alienated current customers forever. The big issue has to do with customer service, and setting appropriate expectations.

      Like most of you, Paul and I buy a lot computer software and hardware. This segment of the retail market is extremely well served by Web sites that will sell you almost any product at a discount. With Paul, his normal mode of operation is to do research on the Web about the products he is about to buy, then call one of the two "dead tree" catalog companies who he has had the most luck with. Paul uses MicroWarehouse and PCConnection. MicroWarehouse often has slightly lower prices but it is harder to get them to credit you for returned merchandise. PCConnection doesn't have as many items, and more that are usually out of stock, but are much friendlier and the phone representatives know more. Both of them have Web storefronts, but both have problems providing information about what items are in stock via the Web ­- it is much easier to just call in your order.

      For his latest purchases, Paul decided to shop from some merchants other than his usual suppliers. Big mistake. For the first purchase (a 4-port keyboard/monitor switch box), he tried Amazon.com's zShops. These are storefronts that Amazon hosts for independent small businesses, a step up from their auction service. The search took him immediately to a store with the product he wanted, and they had it in stock and at a price lower than either of his normal catalogs. A few clicks later and he placed his order.

      Then Amazon e-mailed the order to the merchant, and he didn't hear from anyone for a few days. It took the merchant another day to ship it. Yes, it arrived in pristine shape, and yes, he did save money. But his expectations ordering from the zShop and the reality of waiting a few days soured him on both that store and on zShops.

      Paul went to Egghead for his next order, a hard-to-find piece of software. They had the product in stock, and at a good discount. He placed the order without too much trouble. Then a few hours later he gets e-mail from Egghead that says, in part "Egghead.com will e-mail you with specific shipping and carrier information once your order has been completely processed." OK, that could be acceptable, except that it took them a full two days to "completely process" his order. So now another store goes on his "never again" list.

      The last item was a set of CDs for my daughter. I had a $10 off coupon at BarnesandNoble.com, so off I went to place my order. When I didn't get any e-mail confirming my purchase within 24 hours, I called their customer support phone line, only to find out that the store was experiencing problems. Quickly, I cancelled my order (which I couldn't do over the phone and had to do via e-mail) and placed the same order with Amazon. Amazon promptly sent me e-mail confirmations within minutes, and the actual items arrived within a few days.

      These examples show a big problem that retailers will start to experience more and more. They think that they can attract customers with low prices, items in stock, and a nice-looking Web site. That's probably true; it worked with Paul and I. But poor service is likely to keep people away forever after their first purchase.

      Many of these companies (who must know how bad their service is) think that they'll be blessed with sales. They look at stores like OfficeMax or Staples who move into an area and steal sales from the local office supply stores even though most of these giant chains typically have much worse service than the small stores they replace. The difference on the Web, however, is that dozens of big stores can open up in the same space almost overnight. In the real world, changing stores means walking (or more likely driving) to a different location. On the Web, all it takes is one click.

      If you are operating a Web storefront, make sure you manage your customers' expectations appropriately. If you are going to take days to process an order, say so. If you are going to hedge your bets and display a catalog with many out-of-stock items because you don't have any real-time inventory systems in place, say so. If your systems are down or slow or not operating properly, warn your customers at the front door, not after they have spent time trying to buy something.

      Happy holidays, one and all.