Early last year I came across an Israeli designer, Ronen Kadushin, who started Open Design inspired by the Open Source software movement; Ronen develops "blueprints" for products and then posts them on the internet for anyone to put into production. I loved the idea and thought something similar could be done with e-commerce.
So I am going to attempt a bit of "Open E" and share with you some of ModernTribe's challenges. Delving into e-commerce has been a fascinating learning experience for me and I thought many of you may enjoy hearing about this wild-west frontier of retail.
So here goes the first installment of a series of "Open E at MT."
A dose of e-retail-ality: third party warehouses make money by making mistakes.
When I started this business it was only me -- and necessarily, I hired a third-party warehouse to store and ship our products to you. Order fulfillment is a lucrative and growing industry but finding a good one is like finding a good builder (good luck!)
Our warehouse considered themselves industrial systems geniuses because they stuck SKU (stock keeping unit) stickers everywhere (and to my dismay, right across our logo). Even so, several times, they sent "My Own Chanukah Set" instead of "My Own Shabbat Set" and the washing cup instead of the kiddush cup. It came astonishingly clear that the warehouse was rewarded every time it made a mistake. Each re-shipment resulted in more revenue for them: another set of "pick" fees (per item charges for picking products off the warehouse shelves), pack, and ship fees, and also customer service time.
Our warehouse charged for customer service in increments of 15 minutes, like a lawyer. So if I picked up the phone to tell them to re-send the correct product ("the Shabbat set has 'S-H-A-B-B-A-T' written on the box...") we had incurred 15 minutes customer service time. Of course I tried to dispute the charges but we are talking about thousands of transactions all billed at the end of the month. Business school grads will appreciate this factoid: our warehouse and fulfillment charges were 1/3 of our gross sales for December, 2007. Hard P&L pill to swallow, yes?
When Erica joined ModernTribe our own warehouse seemed within reach. Several working weekends later we created our ModernTribe warehouse and have been very pleased. We even found a warehouse manager, Tiffany, who has experience in e-commerce working for another niche business, an Australian catalog. Now you can get more flexibility regarding your requests for changes to orders or shipping service -- just call or email us. And now you can tell when your MT order arrives because the box has ModernTribe on it instead of the name of the third-party warehouse. Yes, we still make mistakes -- but at least our incentive is to try very hard not to! Then we can make corrections more quickly and include a consolation free-be without incurring an additional "pick" charge!
More Open E at MT coming soon! Tell me what you think about Open E-- like it/hate it/meh?