Keeping Up With Growth

The recent enviable growth of The J. Jill Group (formerly DM Manage-ment) has been one of this year’s catalog success stories. Second-quarter results for 1999 showed that sales were up 31 percent over the prior year, while operating income was up 43 percent. With catalog sales going strong to the tally of $143 million for the first half of 1999, The J. Jill Group has planned new initiatives: an expansion into e-commerce in August 1999 and retail stores in 2000.

The Tilton, NH-based specialty women’s apparel direct marketer has gotten much attention for the lifestyle marketing approach to its two catalogs, J. Jill and Nicole Summers. Receiving less attention is the back end, but it was a regrouping of fulfillment last year that enabled J. Jill’s rapid expansion and extension into new marketing channels.

Building From the Ground Up

Only last year, J. Jill was using an order-taking and fulfillment system that had been rebuilt so many times the bolts were showing.

Says Randy Dow, J. Jill’s vice president of information systems, “The system we had was used by Orvis. We bought it about 13 years earlier and had modified it close to 100 percent. There was almost nothing left of the system we bought.”

With such a patched-together system, ensuring Y2K compliance would be an exercise in futility. Even without the added pressure of the coming millennium, J. Jill’s software was stretched to the limit.

“They were ready to move from the little league to major league in terms of order management and fulfillment systems,” says Donny Askin, COO of CommercialWare, the software company whose fulfillment software J. Jill chose. “They were doing this at the same time they were growing 100-plus percent, they were moving into a brand-new distribution facility, they were integrating new warehouse management systems and they had a lot of other initiatives on the table for which they need a very strong foundation to build upon.”

With the opening of a 585,000-square-foot distribution center, the time was right for an overhaul of back-end computer systems. At the time, however, Web site compatibility was not a major issue.

Says Dow, “E-commerce was something we were considering, but we didn’t think our customer was on the Internet.”

A year later, J. Jill’s target audience of affluent women has made significant inroads on the Web, and J. Jill’s back-end system was already prepared to serve them with the adoption of CommercialWare’s Mozart application in July 1998. While J. Jill choose Mozart for its order-taking and fulfillment strengths, the software has integrated e-commerce capabilities.

Says Askin. “One of the best-kept secrets here is the strength of direct marketing ordering and fulfillment software and its ability to service e-commerce. E-commerce until now has been viewed as: a) a separate channel, and b) a retail channel. In fact, it’s a direct marketing channel in the strictest sense.”

Serving Customers

J. Jill’s goals for its August e-commerce launch are mostly customer-centered, although Dow admits that J. Jill’s stockholders and analysts are clamoring for e-commerce. (“Every time we have a meeting, everyone asks,” he says.) However, launching e-commerce with the primary goal of extending customer service, says Dow, could be “a double-edged sword.”

In other words, extending the channels by which a customer could order and check status was the goal of e-commerce, but without solid back-end integration, introducing e-commerce could actually turn into a customer-service headache. While it’s possible to cobble together catalog and e-commerce order-taking and fulfillment systems in a unified system, it’s not always advisable. J. Jill has addressed this concern with its integrated solution from CommercialWare.

Explains Askin, “The vast majority of folks are doing this on a piecemeal basis, and I think they’re experiencing pain on account of it. Some of that pain was experienced last Christmas season when 14 percent of online shoppers said they wouldn’t buy that way again. A lot of companies create a separate group for the Web, and set up a whole e-commerce channel disconnected from their normal business channel.”

Askin recounts a story of a businessman who ordered holiday gifts for his clients through a well-known food catalog’s Web site. Although the catalog was renowned for first-rate customer service, the gifts never arrived. They were back-ordered until March, but the Web site never informed the frustrated buyer.

“Now you know as well as I do that this would never have happened through the company’s traditional catalog channel,” says Askin. The goal for multichannel sales, he explains, is “the ability to service your customer when, where and how she wants to be serviced in a consistent manner so you can start your transaction on the Web and seconds later call up and talk to a human.”

This is something Dow made certain would be available when J. Jill launches its Web site in August.

“We can do real-time item availability,” he says. “You can do order inquiry based on last name and order number, moments after the order is placed.”

The unity between Web and phone order-taking systems extends from consistent item numbers to warehouse fulfillment.

Says Dow, “There’s only one customer record. If you place an order on our Web site, we do a duplicate detection to find your name and address in our customer database. We want to get to the next step of customer registration. We want customers to be able to look at their whole purchase history.”

Two-Step Payment Processing

Another important factor for J. Jill was the availability of multiple payment types, including J. Jill’s credit card, a private-issue card managed by SPS. J. Jill uses Paymentech for its catalog bank-card processing, so the company was a good fit for the Web site as well.

“We have about six off-the-shelf payment processing options as far as integration capabilities,” says CommercialWare’s Askin. “Depending on who the customer is, they’ll get different negotiated rate structures with the vendor. We want to make sure from our standpoint that we support the particular integration and it’s a reputable player.”

Askin says that payment processors that specialize in catalog clients are often the best fit for the Web. “Quite often, in the direct channel, the transaction processing is quite a bit different than in the retail channel. In a point-of-sale channel, you are authorizing and you are depositing in the same transaction. In a direct channel, it’s two steps.”

He gives the example of hotel registration.

“You authorize the credit card right away,” he says, “but you don’t want them to actually charge the card until you know exactly what’s going on it when you walk out the door. It’s a two-step process, so there are additional charges if the authorization and deposit don’t match up. Paymentech, which has been servicing the direct-sales industry for quite some time, has a really good handle on that kind of process.”

Other CommercialWare partners include Group One for list hygiene, Vertex for tax jurisdictional compliance and reporting and Pitney Bowes and Tracer for manifesting. However, CommercialWare has neither a single partner nor a proprietary platform of its own for the development of a Web site’s front end. Instead, CommercialWare supports other front-end products, preferring to serve as the engine of e-commerce, not the glossy surface.

Says Askin, “Most companies tend to look at the landscape out there and make a personal decision, just as they do when they’re picking graphics for their catalog. What we do is supply the actual Web storefront as a template, and they supply the graphics and the screen flow up to the shopping-cart application around what we’ve given them.”

For J. Jill, the right look is essential to ensure that the site is an extension of the J. Jill image that has been so successful.

“The actual look and feel of the site is being developed by an ad agency,” says Dow. “We wanted to go with the ad agency—Xceed—since they have extensive experience with Web development and best represented our J. Jill brands.”

While retaining the signature J. Jill look, the site had to be easy to use, but Down says that plenty of customer support will be available.

“Our customer service reps are being trained in e-commerce sales,” says Dow. “No matter how much you believe your customers will be computer-savvy, you have to make sure you have support for them. We will be training our own reps to be specialists in e-commerce.”

With the site launching in August, J. Jill is keeping its goals down-to-earth and its focus strictly on customers.

“We’re being realistic,” says Dow. “Sales would be wonderful, but at first, we don’t expect a lot of sales. We’re really looking for usage by customers as an alternative channel to place orders and enhance customer service.”

How to Reduce Charge-Backs with Internet Sales

By Peter Kearney

A charge-back occurs when a Web-site merchant has a credit-card transaction reversed by its merchant bank because the customer’s card was not honored by the card-holder bank. While payment processing for Web catalogs is similar to print ones, sales on the Internet involve several additional issues.

What are the most common causes of charge-backs?

• The card is stolen and used by a thief on a merchant site.

• An invalid card is used and has not been checked by the merchant properly during transaction processing.

• The goods are not delivered by the merchant, or the customer is unhappy with the product and claims for reversal of the transaction.

How can you minimize charge-backs?

• Never ship goods to a customer before checking his or her credit card through your merchant bank by phone, Eftpos device or a real-time payment gateway (if using real-time processing).

• Make sure your merchant bank checks card-number validity, expiration date and balance on the card as a minimum.

• Design your order form so that it includes the appropriate billing questions and make sure the order form will not process unless these are completed.

• Consider real-time processing. The longer you leave the credit-card order checking, the more potential for fraud. For high-volume sales, real-time processing is critical for customer convenience and management efficiency.

• Be very wary of high-dollar-amount sales.

• Use an address verification service (AVS) to match the cardholder address to the address entered into the order form. The next level up from AVS is a system that checks each transaction against algorithms chosen by the merchant. These algorithms gauge probability of fraud based on certain characteristics of the transactions. For example, www.cybersource.com has a sophisticated fraud-checking service, which they claim can reduce fraud levels to very low levels.

• Have a secure server to accept orders. This reduces the potential for hackers to get hold of your customer’s credit-card numbers while they are waiting to be processed on your Web server.

• Store the credit-card details of customers securely. With many real-time payment systems, the merchant does not store these details at all. This eliminates potential for theft and makes the customer feel very comfortable.

Peter Kearney is an e-commerce author and owner of Ecom Publishing at www.ecompublishing.com. His company provides easy-to-use resources, information and services for the Webpreneur and developer. Contact him via e-mail at pfk@ecompublishing.com. Copyright © 1999 Peter Kearney