Lessons from the Holiday 2013 Hacking and Shipping Fiasco

Now, that the dust has settled on the 2013 holiday shopping season, let’s take a look at two major problems that have impacted millions of shoppers.
As we all know, there were a lot of unhappy shoppers this past holiday season. Many were dismayed about the Target hacking problems that breached the accounts of millions of shoppers. And many others were upset about the snafus that caused UPS and FedEx to miss the delivery dates for some packages.
With regard to Target, Fox 40 in Sacramento reported today that: 
“The data breach at Target was significantly broader than originally reported. The company said Friday that 70 million customers had information such as their name, address, phone number, and E-mail address hacked in the breach. Target said the personal data stolen could affect its past shoppers — not just those who have visited the store recently. Customers who shopped in the weeks following Thanksgiving may have had credit or debit card information stolen, with as many as 40 million people affected. Target said it would try to reach customers for whom it has E-mail addresses to inform them of the breach. It cautioned that it would not ask customers to provide any personal information and warned customers not to respond to any e-mail claiming to be from Target.”
In terms of the holiday shopping snafus, Scott Mayerowitz and Bradley Klapper reported for the Associated Press  that:
“Santa’s sleigh didn’t make it everywhere in time for Christmas this year because of shipping problems at UPS and FedEx. The delays were blamed on poor weather and overloaded systems. The holiday shopping period this year was also shorter than usual, and more buying was done online. That doesn’t quell the frustration. Barry Tesh of Jacksonville, Fla., said: ‘A lot of these employees keep saying, It’s the weather or It’s some kind of a backlog. Well then why, all the way up until the 23rd, were they offering next-day delivery? That guaranteed delivery was 80% of my decision to buy the gift.’ Neither company said how many packages were delayed. But many gift-givers were left with little or no time to make alternative plans.”
So, what lessons can we learn from these two events? Here are some of them:
  • Consumer trust must be earned each day; and even though things may go right 99.9% of the time, that 0.1% can have a devastating effect for both retailers and their retailers. Prompt, truthful, and detailed COMMUNICATIONS with affected parties are key.
  • It is virtually impossible for events such as these to always be avoided. Hackers worldwide cause trouble every day. And there may be unexpected shipping delays. Thus, all companies need to conduct SCENARIO ANALYSIS and CONTINGENCY PLANNING for every major activity in which they engage. With scenario analysis, the firm anticipates and prepares for the best, worst, and most likely results in the future. With contingency planning, the firm has in place alternative courses of actions to take if snafus occur in a certain area.
  •  Go ABOVE and BEYOND when snafus occur. For example, Target could have offered a free credit report for all customers whose data were stolen. And UPS and FedEx could have made deliveries on Christmas day. Yes, this would have been expensive. But there would be two positive results: (1) Unhappy customers would feel more appreciated. (2) There would have been tremendous positive media coverage  because companies are rarely so responsive to problems.
  • Do NOT create unrealistic expectations. For example, several years ago, when online shopping first started to grow, companies typically set a closing date for an order that was at least a week in advance, such as December 17 for delivery by December 24. Now, that date has been knocked down to a couple of days, which leads to a shopping frenzy. 
  • Companies request and retain too much sensitive information in their databases. They need to do two things: (1) DO NOT ask for information that is not essential. (2) Set up FIREWALLS between types of data. For example, keep telephone numbers, dates of birth, etc. separate from data used in transactions. 
  • The situation with the Target data breach is really bad news for store retailers. A large number of people have avoided shopping online because they worry about identity theft and loss of privacy. They felt more secure in a store setting. Now what? At the very least, data and shipping policies need to be clearly stated (with remedial courses of action) at the store and at Web sites.
  • There are significant opportunities for store-based retailers in terms of the shipping snafu. Consider these two, which should be actively promoted!!!! (1) More bricks-and-clicks retailers should offer a BUY ONLINE AND PICK UP IN THE STORE as a shopping option. (2) Stores should emphasize a SEE IT, BUY IT, TAKE IT, AND USE IT IMMEDIATELY message in their advertising.

Please comment on this post. Do YOU have any other tips?

 

This entry was posted in Online Retailing, Part 1: Overview/Planning, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer, Privacy and Identity Theft Issues, Technology in Retailing and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

3 Responses to Lessons from the Holiday 2013 Hacking and Shipping Fiasco

  1. Pingback: Lessons from the Holiday 2013 Hacking and Shipp...

  2. Pingback: For Holiday 2014: Will Shippers Be Able to Avoid Last Year’s Problems? | Retailing: From A to Z by Joel Evans

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