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#Fail: Online Retailers Tell Us What Happened When It All Went Wrong

Reading Time: 6 mins
By Published On: March 20, 20190 Comments

It's unavoidable. If you're in business, things will go wrong, whether it's something major or something minor, something within your control or totally outside of it. Here, online retailers tell us what happened, and how they responded when the proverbial sh*t hit the fan.

While many brands and retailers celebrate their wins, it’s rarely that we see the inner workings of a company that has to constantly fight fires, overcome obstacles and face failures of varying degrees at every turn. But the reality is, that a company of any size or age is constantly having to manage these elements. Some manage to turn a business fail to their advantage, others are able to apologise with grace without losing face, while the consequences for others can be dire.

It sounds counterintuitive, but it’s often massive success that sets companies up for failure. “The biggest and most painful experience we had was when we were growing at 300 percent early on just after my brother and I took over the business,” says Dean Salakas, ‘Chief Party Dude’ at The Party People. “The business was growing so fast we couldn’t cope with the volume. We didn’t have the staff or capacity for the increased volume nor did we have efficient processes to enable us to hire staff and have them become productive quickly.”

“When we took over the business it was still run like a family business, without systems, and everything was managed by the owners. I distinctly remember our website picking slips just simply having the product name and no other product info because the owners picked the orders and so knew every product. But staff were unable to pick using those picking slips given we had over 15,000 products at the time,” he explains.

“As volume grew we found ourselves unable to pick orders received each day. Lucky for us we had captured information from customers on their event date and so we managed orders in priority, starting with express orders, then working through earliest event dates to latest,” Salakas tells us. “We communicated our delays to customers and any customers wanting orders expedited we accommodated.”

“We eventually got to a point where we realised that within a few weeks we would start to even fail to ship our express and urgent orders on time,” says Salakas. “As such, we shut the website down from being able to take orders where the delivery date was within a two-week period.”

“We estimated our loss in sales for doing this in the hundreds of thousands of dollars,” Salakas tells us. “While it was disappointing for customers who wanted to shop with us, we felt that was the price to pay for ensuring we didn’t have customers who we let down and ruin their parties.”

“As a family business with only a few employees at the time, we called on our extended family and friends to help us out. We didn’t want to, but we were staring down the barrel of completely destroying our business and so we reached out for help. Our family and friends all pitched in and helped out and we eventually got on top of the volume,” Salakas explains. “Certainly growth is a good problem to have, but it can be fatal if not managed properly. If not for our family and friends, we would have lost our business.”

After its all-hands-on-deck approach, the company planned a series of website enhancements and systemisation projects to get the business in a position to scale with volume. “We also took on extra leases and we started to plan and forecast volumes 12-months in advance so we could adequately hire and train,” Salakas tell us.

“I would say I think we handled the situation well, without major damage to our brand, but I would stress that any business should contemplate how they will handle growth. Assume you will be successful and know how you will you handle it if you are. You might want hundreds of online orders per day, but are you capable of processing them?”

Nathan Huppatz, Co-Founder of costumes.com.au and readytoship.com.au also tells us about similar fulfilment and logistics issues he has encountered along the way. “I can think of plenty of small issues, but thankfully not too many larger ones. One I recall was a big pre-order program we did for a very popular brand. We took tens of thousands of dollars in pre-orders, based on some supplier delivery promises. Customers were extremely keen to get their hands on this product,” he explains. In the end, delivery was late (by a few weeks), they didn’t receive the full allocation of stock and some items arrived with damage.

“We phoned every customer (and emailed as well if we didn’t get them on first call),” Huppatz explains. “We advised them that there had been a delay, and offered customers a full refund if they wanted, or to continue to hold their pre-order and ship on a first ordered, first receive basis.”

“However, when we found out that we didn’t get a full allocation of stock that we were forecasting, and some items had some issues, this meant that we had to refund some of the later pre-orders. This did cause some customers to get upset, but in the end all we could do was be proactive. We also offered customers that needed to be refunded some other benefits if they were to order from us in future.”

While Huppatz feels that this level of communication and proactive approach was necessary and that they handled the situation as best they could in the circumstances, the company hasn’t done any pre-orders since.

Last year, Jane Lu, CEO of Showpo, was praised for the way she handled the situation when the company “f’ed up on something seemingly so basic and crucial to an online business.” The customer service nightmare started when a few mini crises “snowballed” into a much bigger problem. A lack of adequate staffing and a glitch with a coupon code during the Easter period meant that the warehouse was failing to get orders out on time or to process returns.

“As a business owner I’m super-embarrassed about all of this,” she said in a video. “When things like this happen we try to be proactive and we emailed all of our customers to let them know, but then of course this saw our email volumes double. Then more issues hit, our website went down, then because our sales volumes kept growing our incoming ticket volumes kept growing as well. Then we also had delays with our shipping. We usually like to respond to emails within the hour, but because there were so many it was taking up to days.”

“To our customers, we promise to do better, and to my fellow business owners I hope that sharing this story with you will help you when you’re going through a tough time,” she said.

“One of the many things that isn’t discussed enough about entrepreneurship and owning a brand is the immense guilt you feel at different stages of your brand’s growth journey due to the natural growing pains that exist with growing faster than your systems and processes have kept up,” wrote Olivia Carr, CEO of SHHH Silk late last year on LinkedIn.

The company came under fire after failing to live up to customer expectations during a 2018 sales event. “This recent Black Friday weekend was a test to the commitment of my amazing team with every staff member packing orders and handling customer service calls, however it was a giant learning curve that our current systems/processes we have in place are not robust enough to handle the sheer volume of orders we received in such a short period of time.”

Carr sent a personal letter to all of her customers. “As we continue to grow and expand, we want to learn from our mistakes and grow to become a brand that our customers trust, respect and admire. We know what we need to action coming into 2019 and beyond to improve our systems, operations and overall level of customer service, especially during our busiest periods.”

Customer service issues, warehousing failures and fulfilment dramas are rife in e-commerce, even if they aren’t always made public. So what can retailers learn? “Forecasting, planning for that forecast and contingency planning for the forecast being more or less than expected are things we should have done back then and now do monthly (some operational planning and forecasting is also daily),” says Salakas.

“If you have an issue that affects customers, communication is of utmost importance. And do it personally if possible. Get on the phone, be honest and upfront, and explain the situation and what you are doing to resolve it. If possible, offer customers a solution,” Huppatz tells retailers. “Don’t bury your head in the sand and wait for customers to contact you. Always be on the front foot, and deal with things decisively.”

Every relationship expert will tell you that communication is key, and this is no different in a brand/consumer relationship. There are times when internal processes and technology will not be able to overcome a business obstacle. It’s the human element that will be able to come to the rescue time and time again.

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