Season’s Gratings: Holiday Shopping Glitches

PDF DownloadSteve Golub, a New York software developer, got caught this holiday season between the physical and virtual stores of consumer electronics retailer Best Buy.

His misadventure: Trying to use a gift certificate to buy Hoyle computer games in early December on, part of Best Buy’s Musicland Group. Then, when that failed, he attempted to use a replacement certificate at a Sam Goody store. That failed as well, until a benevolent manager stepped in.

Online retailers sold more than $13 billion worth of goods this holiday season, according to estimates by the Goldman Sachs Group and four other research firms. Yet desktop shoppers such as Golub faced their own form of holiday fatigue: days or weeks spent untangling transactions gone wrong.

E-commerce still may be a mere 1.3% of total retail sales, according to the U.S. Census Bureau. And, if the 2002 Christmas season is any indication, the gap between physical and digital worlds is still wide. Routine transactions are sometimes difficult—even if you’re only trying to use a gift card. Plus, processes that customers in the physical world take for granted—such as laying away products, or paying for items with small amounts of cash, or canceling unsatisfactory orders—may be difficult or impossible online.

At many big retailers, complaints about merchandise not being shipped on time, or not being available at all—even after online systems have confirmed the order—is a symptom of Web commerce systems relying on electronic replicas of store inventory data. The replica databases may be outdated, leading online users to be told that a product is in stock when it’s already sold and out the door.

One of clothier J. Crew’s technical goals is to eliminate its pre-existing inventory system so that store, Web and catalog sales all run against a single, unified database. Currently, the Web site, catalog and store inventory databases are synchronized frequently enough that there have been few customer service problems, says director of Internet development, Madhu Alla.

Yet there can be instances when the online inventory records are wrong—perhaps because of a delay between the time the last item was pulled from the shelf and when that action was recorded in the system—although J. Crew has the processes in place to deal with those instances. “If something is sold out, the customer service representative calls back right away to let the customer know,” Alla says.

J. Crew has a strong tradition of direct sales via catalog, allowing it to master many of the same logistical and customer service issues that arise on the Web. Physical stores are a growing part of J. Crew’s business, but the apparel firm is starting from a much different position than retailers scrambling to learn the intricacies of mail-order fulfillment because they now sell over the Web.

Companies like Best Buy face a steeper challenge in coordinating databases because they must adapt the channels that keep their stores stocked as well as serve customers online, says Bruce Temkin, an analyst with Forrester Research.

Overall, Temkin suspects that when customers complain, it’s because retailers are trying to stretch their Web-selling capabilities. Best Buy, for example, ran TV ads telling customers they could buy products online and pick them up in local stores. “Wedidn’t see this season as a breakdown, but the online retailers continue to push the envelope by providing even more last-minute access to shopping. They were able to solve more customers’ last-minute needs, but when you do that there are also going to be some amount of miscues,” Temkin says.

Even premier online retailer had some trouble providing e-commerce services for its partners with physical stores, although the company reported record sales of $1.429 billion for the December quarter and a net quarterly profit of $3 million, its second quarterly profit ever. Some Target customers reported trouble in early December with, which uses e-commerce services—including search capabilities and check-out—from Amazon. One customer, who asked not to be named, had both his gift card debited and his order canceled before Target customer service intervened and re-ordered his merchandise. Target declined to comment. Amazon did not return calls seeking comment.

Best Buy, for instance, has been working with software partners i2 Technologies and Retek since 2000 to make its supply chain more efficient. The goal is to be able to track products from the factory through to its stores, to stock both the Web site and stores based on the profiles of customers who shop there, and to identify the same product with the stock-keeping number regardless of where it’s for sale.

This, for instance, will enable Best Buy to price products more accurately. By next fall, the company says, employees will have access to the same inventory information as Best Buy headquarters, with a lag time of no more than 30 minutes, for their own store and stores within a radius of around 150 miles. Best Buy tested the system, which includes in-store kiosks for customers, in Minneapolis over the holidays. Integration with will come later.

In Golub’s case, his online order exceeded the gift certificate’s value by less than a dollar. He was instructed to put the balance on his credit card. But American Express refused to process it.

Then, he may have gotten in some corporate crossfire, when Best Buy folded the group on Jan. 9, closing 90 of its 740 Sam Goody stores in the process. Sam Goody issued him a new gift card. But when he returned to the Web site a few days later, the CDs were no longer in stock. Golub called tech support, to no avail.