Thursday 6 September 2012

DELIVERY - When to Outsource

In just over two weeks time, my husband and I are excepting our first child to make her grand arrival. As much as I would like to outsource this part of my pregnancy, this isn't a decision I have much choice in, except for the quality of the experience I expect to have.

All the furniture, toys, clothing and random important things that will surround our little one when she arrives on the other hand, will have been mostly ordered online and will have been delivered by a delivery service. 

The one exception is the very large suitcase of memories past that arrived with 'grandma' on her summer visit. 

If there is a delivery gold standard for baby brand companies to live up to it is definitely the 'grandma standard.' Clean and smelling fresh, minimal packaging, on time, packed with loving care and everything arrived intact and in good condition.

I like writing blogs with examples of what works and what doesn't and when it goes disastrously awry and I have a personal experience with it, it can unravel and reveal a story that has taken years to create, thus a great blog topic emerges. Moreover it humanises the brands, which YOU are likely to be competing with for business. It gives you an opportunity to review each step of your logistics from a customer point of view and make the changes that will keep your newest customer loyal.

My first delivery example is Becky and Lolo. I have ordered two items from this small and nursery decoration company. One is the wall sticker above and the other is a colourful painted wooden ceiling mobile with leaves and bugs. The wall sticker arrived with lightning speed and is waiting for installation...once the nursery furniture arrives. The mobile also arrived by superhero transport. The bee's wings on the mobile unfortunately doesn't fit into its slot. A quick phone call to explain the problem and a subsequent check of their entire stock revealed that none of the bees' wings fit on any of the mobiles. While we are awaiting resolution, I am not worried about it as quality of the customer service was high, the issue is slightly bigger than us and I am left feeling confident that a new set of bee's wings will be in the post to us shortly.

In contrast, our Mamas and Papas nursery furniture set delivery has turned into a saga that has taken up quite a bit of my time to resolve. As in all online ordering, we had choices of nursery furniture sets to select from. We selected the set from Mamas and Papas because I strongly feel our baby is coming any day because my body is telling me she is coming soon and waiting four to six weeks wasn't going to work with our baby's arrival schedule. 

Mamas and Papas promised delivery "within 14-days". 
That really should have been the end of it from a customer perspective. 
An order is placed and an order should arrive on a date that is arranged by the company delivering within the window promised by the company.

M&P have great 2-day delivery for small items and that included up to the size of a baby bathtub. Where its delivery goes awry is in their furniture delivery. As I mentioned above, the delivery of furniture is promised "within 14-days". Every pop up window and mention of delivery states this. We added 'assembly' to our order as it was inexpensive and seemed to be a luxury that both save us time and make us feel taken care of by Mamas and Papas. 

Even then the pop up window make no mention of additional time for assembly and nothing before the final 'place order' button indicates this. The fine print at the end of email order confirmation that comes a day after you place your order, is the first place that suggests that the company has 4-weeks to call you to set up the 'week commencing' delivery for which your order will be assigned followed by another 'week commencing' phone call a week later for the company that will come by and assemble the furniture for you...if you are lucky. 

So 2-weeks becomes 6/7-weeks and your furniture order is automatically taken out the "within 14-days" delivery system. They don't deliver it, because I am assuming that they don't want customers to call and cancel the 'assembly' portion of their order once they receive the furniture and realise that it will sit in boxes for the next 4-weeks.

I found the small print 10-days after I placed the order, promptly followed by 5-days straight of phone calls attempting to get the 'assembly' cancelled and our furniture delivered. I was told on the Tuesday of the 5th day of phone calls that warehouse would deliver the furniture to the 'delivery company' by the end week. It was all part of their 'week commencing' policy and that people needed time to do their jobs.

With Mamas and Papas, when your order leaves their warehouse you will receive an email confirmation. By Friday, that didn't come and I called again and again and was finally able to get one of the customer service agents to get permission from her manager to call the warehouse to see why 17-days after we placed our order, the warehouse hadn't managed to process it. One would have thought they were authorised to call and would have made a call the first time I called. Not taking on board the effort I had already put into the issue, the agent was a little indignant and I was told that she was "trying to help me" and that I would just have to trust that she would call the warehouse and I didn't need a phone back to confirm the warehouse would take care of it. 

Trust was not the word that was floating in my mind as I contemplated my customer relationship with this brand at this exact moment.

At their busy times, a phone queue is 20-40mins, which solidified my resolve to stay on the phone until progress was made. Twice I had to refuse to hang up, just to get the agents to move beyond "sorry it has been an inconvenience for me."

The reality is that it is just 4 items in a warehouse, flat-packed in boxes. It really isn't any different than a box with a baby bathtub with a 2-day delivery promise that arrived without drama. 

I also had a email string going with another agent that was convinced that the ordering section of their website informed us of the la-di-da delay that comes with 'assembly'. My husband thinks I pressed the nuclear button by replying with a creative a mock order email with screen captures of each step of the ordering process proving that I was correct in my statements.....the agent didn't write back.

Our order did finally leave the warehouse a day after the last M&P customer service call initiated by me and 4-days of further phone calls to the final 'delivery company' I managed to get a morning delivery slot for today. 

Unfortunately, the delivery van is 3-hours past the 4-hour delivery slot and the delivery van driver has had his phone turned off so his company couldn't reach him. It turns out he has broken down. The driver didn't think it was important to report it to his company and they don't really know when our delivery will come today, if it will come at all.

My zen in this is that I am able to tell you that each part of this story describes a breakdown in the delivery process for furniture items at one particular baby brand. If we had not selected the 'assembly' button this story may not have even happened, but we did and it has.

  • The website is false advertising delivery/assembly wait times, which the customer service agents are unaware of. (I understand this issue has since been fixed on their ordering system)
  • The assembly scheduling team instead of hiring more outside assemblers, are simply not booking deliveries and assemblies because they don't have the man power to complete the orders. It is not seen as a problem in their company by the customer service agents because another team is in charge of assembly.
  • No one is in charge of reviewing orders that should be automatically flagged in their ordering system when they are in danger of lagging behind in delivery and following them to expedited resolution.
  • Customer service agents are not authorised to call the warehouse to check on a delivery without permission, rendering their authority to resolve issues ineffective.
  • A customer service agent is only truly doing their job when they are able to resolve a problem with an order while through an email or phone call with the customer. A return email or a call that result in an apology without resolution, doesn't help brand image and doesn't inspire brand loyalty, it only results in further communication by an unhappy customer.
  • There isn't a 'maximum allowable customer dissatisfaction quotient' that flags to a senior customer service manager that their is a problem with an order and it isn't being resolved. It could be that the customer has called twice about the same issue that prompts a flag on the system. 9 phone calls and 4 emails initiated by a customer is too many, especially when the calls are to a 0845 number and the phone queues are 10-40 mins.
  • There are 2 delivery services involved. One from the warehouse to the delivery company and then from the delivery company to the customer. There is no way for the brand to know that is taking a minimum of an extra 7-days to deliver the order once it leaves the warehouse. This outside company reflects a less than stellar brand image back onto the baby brand. There could be just one company that picks up order-byorder instead of a lorry full of items weekly. The cost saving may be costing valuable brand loyalty.
  • The email confirmation stating that an order has left the warehouse says that it will arrive "within 14 days," is a great idea, however is doesn't take in account that the order has been ignored by the warehouse team for 18-days already. This should be flagged to management immediately, but I doubt that it is.
  • At each step the transparency that could be in the delivery system simply isn't there. It is understandable that people want to keep their jobs and most feel the best way to do so is to stay under the radar. The customer is the ultimate loser in a brand culture where transparency in the delivery process amongst all the logistically teams involved, is missing.
Someone kindly gave me the name and email address of the Director of Operations for Mamas and Papas and once my order left the warehouse and my spiking hormones and frustration were put back into its box, I nicely emailed him outlining the step-by-step issues that had made the delivery of my furniture order goes fantastically awry. Furniture is a big ticket item for companies like Mamas and Papas, they can't afford to lose this business, so as a brand creator and fixer I think these are important issues to point out to a Director of Operations.

If it took 6 phone calls over 8-days to get a customer service agent to ask their manager if they could have permission to call the warehouse and remind them that my order hasn't been touched by their team, but it stands to reason that a story like mine would never be revealed to the Director of Operations.

Within a day of my email, the assembly lead times were fixed on the Mamas and Papas website. I understand the rest of my points are under review by a couple of top people in operations. Good for them and I hope a boost in their bottom line is reflective of the changes in the coming quarter.

So take an afternoon to sit down with your logistics/operations team and find the glitches in your system which cause customer frustration. Give your teams the encouragement to pipe up with comments that can turn your business around without having it be reflective of their abilities and tarnish their image within your company. You are all in this together, so it is better to have transparency inside your brand even if you carefully cultivate and control your brand image to the public.

There are companies like Shutl in the UK that can take care of most of the headache for you if you cannot resolve your retail delivery processes in a timely matter.

Good luck!

Tuesday 6 March 2012

START-UP FUNDING : Keep your equity and get a loan!


Cash is KING. If your dream is even marginally past the glass ceiling in the UK e-commerce market, at some point you’ll need to devote your full effort to the endeavour. Even if you don’t need money to live on while you build your brand, your brand will need money to take its first breathes of life.
A some pivotal point, nascent start-ups and the individual talents will need to make the leap from moonlighting and  bootstrapping their organic business growth into the phase of a thriving brand. This needs to be a short transition, or you won’t make it.
You need the cash to implement your launch strategy in the shortest amount of time. This is why cash is KING.
I like Paul Graham’s of Y Combinator, start-up cash strategy. “A typical start-up goes through several rounds of funding, and at each round you want to take just enough money to reach the speed where you can shift into the next gear.”
So if you haven’t broken down your start-up strategy into manageable, obtainable and sequenced short term goals, you should do it right away to understand how much capital you truly need to complete your first goal and get traction with customers.
Many are confused about the terminology surrounding funding for start-ups. If you truly need the money to develop an idea that is the fundamental core of your new business, then you are looking for Seed Round Funding.
Angel Round Funding comes after Seed Round Funding, so for the moment, please park your dreams of a large monetary cash sum pegged on your suave presentation charisma and your 10 slide power point presentation. Think first about ‘proof of concept.’
‘Proof of Concept’ is road testing your idea in your slice of the marketplace. However minimal your service or product offering is, get out there and sell it. If you found your gap in the market and it pours money, then you have proof that you can make money on it. At this point you and your partners still own all the equity of your business, have a trading business and a way to determine valuation.
It is wise to establish a trading business before giving away a sizeable chuck of future worth to an Angel. Why not boost your confidence and work out the brand kinks with a start-up business loan to backup the valuation and give your brand a position of negotiation for your Angel Round?
So, how much money do you need for your SEED ROUND of funding? If is under £10K then it is possible to obtain a line of credit attached to your business banking account and your interest rate will be anywhere from 10.5% to 17%.
If the high street banks think you are too risky to invest in, there are two UK start-up lending sites (AKA investor-to-entrepreneur or peer-to-peer lenders) that find Angels of all varieties and they will broker a loan for you at a lower rate than the high street banks.
These are the non-bank business loan options I’ve found operating in the UK.
ONLINE CREDIT BROKER SITES IN THE UK
#1

YouAngel.com is “an internet based social lending community where people can lend money to small and medium-sized businesses, sometimes referred to as peer-to-peer (P2P) lending.” www.youangel.com
Insights: Your minimum loan amount at YouAngel is £25,000 and your fixed interest rate will be between 6% and 10.5% depending on your credit rating. You’re loan will be between 6months and 3years.
YouAngel asks you to pitch your business cash-flow sheets for the past two years with future projections along with what your brand is offering and what you need the cash for. This is online pitching to Angels and there will be genuine questions asked by the Angels, but if you need more than £25,000K, this may just be the lender for you.
(I was invited to join by one of the founders late last year and as far as I can tell, no loans have been given to date, but don’t let that deter you from trying it out.)
#2
Zopa.com “Zopa, one of the sector's pioneers, enables people to bypass the banks by lending money to other creditworthy people at rates that they agree between themselves. This, it says, enables both borrowers and lenders to get a far better deal than they would get from a bank.” – This is Money
Insights: Trading since 2005, it has been mentioned that Zopa will not leave a footprint on your credit rating just for inquiring. Loans are offered for up to £15,000. This may be your least expensive option if you haven’t been trading for two years, but you’ll need to prove income for loan repayment and a trustworthy credit history. You’re loan will be between 3years and 5years. www.zopa.com
#3
FundingCircle.com is “an online marketplace to help businesses find low cost loans quickly and investors get better returns.” www.fundingcircle.com
Insights: Funding Circle’s loan customer will need two years’ worth of official accounts filed at Companies House and is looking to qualify for growth capital between £5,000 and £100,000. There average loan interest rate is 8.4%, but if your pitch is good, the rate could be bid lower.
Around the world : There is Prosper in the U.S., Smava in Germany and Communitae in Spain who have similar lending offerings.
My advice is read all the fine print of each lender. Make sure you have a viable plan for paying your loan back and you are truly committed to your business. Good Luck.