Winning the Last Mile of E-Commerce

As the holiday season drew near, e-commerce retailers were either working anxiously to get their in-house processes ready or were double-checking with partners and service providers on order-fulfillment operations. Fears of revisiting the previous year’s fulfillment problems hounded them during their preparations for the projected high sales of Christmas 2000.1 “This is the season when the last mile will be the most crucial element of e-business,” one observer declared. “Sellers who come up with creative ways to deliver will secure enormous consumer loyalty.”2 What went wrong the preceding year? Online sales were at an all-time high in 1999, but many e-tailers found themselves unable to make timely, cost-effective deliveries. Late deliveries, broken promises and unmet expectations left both consumers and investors dissatisfied.3 In part because of that disappointment, stock prices plunged. E-tailers simply had not had operational processes capable of filling customers’ orders. By 2000, many still did not.4

It is true that e-commerce has improved the efficiency of placing orders. Trading partners communicate, coordinate, share information and manage inventory better as well. But in the future, e-businesses that can deliver the goods and services at a reasonable cost will have the edge. Order fulfillment can be the most expensive and critical operation for both the online and offline businesses of companies engaged in e-commerce. The ability to fulfill and deliver orders on time could determine an e-tailer’s success.

A few companies have come up with innovative ways to apply order-fulfillment strategies. The secret lies in making good use of information and leveraging existing resources to coordinate order-fulfillment activities. The principles are not new, but Internet technologies enable them to be applied in new and expanded ways.

E-Fulfillment Concepts

The two core concepts for making e-fulfillment efficient are: First, make more use of information flows than physical flows and, second, capitalize on current physical pipelines and infrastructures as much as possible for the last mile of delivery. The core concepts are tied to five strategies: logistics postponement, dematerialization, resource exchange, leveraged shipments and the clicks-and-mortar model. (See “From Concepts to Strategies.”)

From Concepts To Strategies

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From Concepts to Strategies

Filling online orders efficiently begins here.