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Story URL: http://www.silicon.com/retailandleisure/0,3800011842,39169533,00.htm

Leader: Missing Xmas parcels highlight online fulfilment dangers
Will the increase in demand backfire on retailers?

By silicon.com

Published: Wednesday 02 January 2008

It can't be denied that the holiday period has been a bumper haul for internet retailing. One early poll put increases in customers at 27 per cent and increases in revenues at 46 per cent compared to the same period in 2006. This suggests not only are more people shopping on the internet, but they are spending more money too.

It appears that the economic doom and gloom of the past few months was forgotten, for a while at least, with retailers such as Marks & Spencer launching their latest sales on midnight Christmas Day, ensuring consumers would not stop shopping even on the 25 December.

Against this positive news for retailers however, is a worrying trend. Along with the rise in sales comes a rise in fulfilment problems. Many online shoppers had the convenience of buying goods at home offset by having to queue at postal depots to recover the goods they bought. A straw poll of the silicon.com editorial team found one online shopper had a gift arrive six days after Christmas Day and this is undoubtedly not the only example of goods arriving late.

Retailers face a real danger of becoming the victims of their own success, with growth in sales actually damaging brand loyalty if they don't pay more attention to fulfilment of orders. In fact, it may be more likely the parcel delivery services are at fault, but customers won't see it that way. They will be more likely to blame the retailer they purchased the late (or in some cases never) arriving gift from.

It seems the retailers getting it right more often are the dedicated online companies, ahead of established brands with internet channels as well as a high street presence. Perhaps the dot-coms have more to lose if online shoppers come away with a bad experience at Christmas. More power to them and if there is a customer backlash on multi-channel retailers, they deserve what they get for not grasping a business opportunity when it is handed to them.