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Roadmap to Multi-Channel Integration
By Alana Okun — July 27, 2006
The Internet has opened a faster, more convenient world of shopping for consumers. Every day more retailers are jumping on the multi-channel bandwagon with Web sites that provide product information, price comparisons, store locations and the opportunity for consumers to shop without leaving their living rooms. Retailers benefit from increased sales, improved customer loyalty and the ability to up-sell and cross-sell to customers who shop online as well as visit the brick-and-mortar stores. In order to achieve a high degree of brand and inventory visibility, retailers must fully integrate systems and processes thereby enabling a single view of inventory and customer data.
What It Means
Prior to the advent of the Internet, few retailers chose the multi-channel business model and operated in single-chennel mode or, if channels were added, they were bolted on as separate operations. With todays growing online sales, however, traditional independent channel operations are no longer an option.
Best-in-class retailers typically operate in three channels: stores, the Internet and call centers/catalogs, says Paula Rosenblum, vice president, retail research for Aberdeen Group, in The Multi-Channel Retail Benchmark Report. The proliferation of in-home broadband connectivity, coupled with improved search engines like Google, has created an enormous jump in Internet usage for product research and discovery. For all practical purposes, if a retailer doesnt have an Internet presence, the retailer doesnt exist. The rumored deaths of retail catalogs and call centers also have been greatly overstated. Call center sales have leveled off the past two years, and the catalog itself has reasserted itself as a valuable selling tool for retailers, with some leading retailers creating electronic versions of their print catalogs.
Whats At Stake
The ability to successfully integrate multiple sales channels will determine if a retailer sinks or swims in todays marketplace. The Internet can no longer be ignored: total Internet spending for 2005 reached $143.2 billion, up 22 percent over the $117.2 billion spent online in 2004, according to comScore Networks 2005 Year-End Online Spending Summary.
While some retailers may be successful bullying their way to multi-channel effectiveness, as cross-channel buying and delivery increases as a percentage of total sales, more and more money and productivity will be squeezed from their enterprises, says Rosenblum. Worse, they could find themselves with dissatisfied, disappearing customers, and affecting their top-line sales.
Multi-channel retailers must be prepared for defining moments that can ultimately create winners or losers for years to come, Rosenblum adds.
How To Succeed
Effective multi-channel retailers view their channels as one entity, not stand-alone units. In order to increase customer satisfaction, multi-channel retailers must fully integrate their systems and processes and enable a single view of inventory, customer data, vendors, orders and pricing from a holistic organizational perspective.
Best-in-class retailers are focused on improving operational excellence across all channels, and are more concerned about consistency than their competitors are, says Rosenblum. They are more likely to have consistent cross-channel performance metrics, and are less concerned with cross-channel cannibalization than their competitors. They are changing their organizational structures to be brand-specific rather than channel-specific.
Answering the multi-channel challenge, Aerosoles has committed to systems integration and consistent policies across all customer interaction channels. A seamless shopping experience is a top priority for the 700-employee womens footwear retailer, says Andrew Scott, Aerosoles CIO. Aerosoles operates more than 110 Aerosoles retail stores, a catalog and an e-commerce site, and sells its shoes in thousands of department and specialty stores throughout the United States and Canada.
Its especially important, as a multi-channel retailer, to make shopping as seamless as possible, says Scott. This can only be achieved by providing management with a transparent view of sales and product knowledge via a centralized database.
Using CommercialWares CWDirect, Aerosoles is able to view inventory from every store and warehouse. If a customer is shopping on the Web site and selects a pair of shoes that are not in stock in a particular warehouse, we can locate it and ship it to the customer, explains Scott.
CWDirect is integrated with the order entry, customer service, merchandising, fulfillment and warehouse operations to manage the Web and catalog business. The e-commerce module enables Aerosoles to take orders online efficiently, better promote products and enhance customer service capabilities. In addition to improving its Web site, which is providing customers with a real-time view of inventory, the retailer is looking to further integrate systems to fully take advantage of the CommercialWare application.
New Web site capabilities will let customers see which stores carry the inventory they are looking for, says Scott. Improved integration will allow us to give customers a more definitive answer about when a purchase will arrive. If we do a better job we will achieve our goal to ultimately focus on CRM.
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