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E-Commerce Brings Change to Delivery Services

A new industry report predicts that as e-commerce grows, the demand for order fulfillment solutions will reshape the delivery business as suppliers evolve to serve the small-package needs of commerce sites.

Online orders from consumers and businesses will soar past the two billion per year mark by 2003, the report from Forrester Research (FORR) says.

As online sales move out of the experimental phase, three factors -- an expanded selection of products sold online, the need to move a large volume of small parcels, and rising customer expectations -- will combine to put new pressures on order fulfillment systems, the report states.

"No one is prepared for the exponential growth in parcel deliveries that online sales will generate," says Stacie S. McCullough, business applications research analyst at Forrester. "Firms that fail to attack order fulfillment with the same vigor as online selling will experience customer defection, funding attrition and distribution nightmares."

The report says companies can meet the demands of online selling by developing a fulfillment system that delivers end-to-end logistics, which Forrester defines as: package visibility and service continuity from buy button to final destination.

Firms need to keep customers informed with up-to-date information about order arrival and empower them through self-service solutions that address common fulfillment problems, the report says. Meanwhile, manufacturers and distributors need to shift their focus from shipping in bulk to stores to delivering packages to individual consumers.

"With residential deliveries expected to exceed 2.1 billion by 2003, a strategic battle over the consumer doorstep is under way," says McCullough. "Shippers have figured out that whichever vendor establishes an ongoing relationship with the consumer becomes the online retail gateway."

For the report, entitled "Mastering Commerce Logistics," Forrester interviewed 40 vice presidents of operations from retail, Internet, and manufacturing companies that have an online presence.