Self-Service: Inside The Enterprise & OutSelf-Service: Inside The Enterprise & Out

The name Harry and David might conjure up images of a mom-and-pop mail-order enterprise, but the facts couldn't be more different. Since the company began selling its specialty fruits and gift baskets online in 1997, its customer base has grown tremendously. On its peak day last year, for example, the company received more than 6,700 orders by mail. Compare that to 30,000 orders placed over the Internet that same day.

Harry and David's online customer base represents 40% of its total orders. Within a few years, the company expects more than half of its business will be done via the Web—without the involvement of call centers, says Bill Baumbach, VP and CTO at Bear Creek Corp., which manages the Harry and David brand. Already, of the orders received online, over 98% go through the system without a customer representative or call center.

The real test will come this month and next when the company gears up for its busiest season. Not only are customers increasingly opting to buy products via the Web, but they're shopping later in the holiday season, putting more burden on the delivery mechanisms to ensure that gifts arrive on time.

"The disparity between peak and off-peak season volumes is one of our biggest challenges," Baumbach says. "Approximately 65% of our annual sales occur between mid-November and the week prior to Christmas. And with many customers submitting multiple orders during that period, shipment transactions can run as high as 300,000 per day."

It's a huge departure from 70 years ago, when brothers Harry and David started a small, family-owned orchard. Since then, the business has grown to more than 150 stores nationwide.

Online self-service customers, like in-store customers, want superior service, even during peak seasons, and customer intimacy is tantamount to success. Baumbach says that's why the company decided not to outsource its call centers serving catalog customers; all call centers are based in Oregon.

Customers increasingly order online instead of from a catalog or by phone for the flexibility of service and increased level of control they get. Harry and David's customer recipient lists make it easy to reorder the same or similar products. Customers also can track the status of each shipment from the moment it leaves the warehouses to the point of arrival.

The self-service model gives the company the data it needs to adjust its product mix so that products are available when needed. It also boosts cross-selling capabilities, Baumbach says.

Like most businesses, it's critical for Harry and David's systems to offer 24/7 operation with complete reliability. To deal with fluctuating capacity needs, the company uses an on-demand model—renting additional horsepower and infrastructure from IBM as needed. "We estimated that if we had to buy the infrastructure, we would have added $5 million to our IT budget," Baumbach says.

The company grows all its fruit and plants itself. Last year, it harvested more than 13,000 tons of pears and 7 million rose plants. Since an orchard often takes several years to be productive, the company must forecast demand a couple of years in advance—even down to varieties and colors. Supply-chain management software from i2 and an internally developed algorithm calculate projected demand. A business-intelligence database developed in-house helps the marketing department forecast customer needs and interests, and evaluate expectations for a product based on buyer-loyalty and other data.

At its core, self-service is all about the individual. Commitment to the customer requires Baumbach's team to ensure that the technology is constantly evolving. "IT has become an integral part of our business. If you can't provide great customer service and a fast, convenient way for customers to shop, they'll seek out others that can."—Anne Donker