Executive Briefings

Unified Multi-Channel Commerce for a Complete Shopping Experience

E-commerce in the retail industry continues to be a gold mine for retailers looking to drive sales. However, disparate systems and operations across channels can lead to poor customer service. By aligning retail business and processes across all marketing channels, retailers can create a unified multi-channel customer experience, thereby maximizing revenue, lowering costs and improving customer loyalty.

Retailers often regard multi-channel commerce as the journey that leads to a unified view of the entire business, including inventory, orders, customers, etc. It is also frequently viewed as an investment made to ensure a seamless customer experience. However, most retailers have achieved multi-channel commerce by integrating data across all systems even as organizational structures and processes remained siloed and single-channel in nature. Although earlier this form of multi-channel enablement was sufficient to accrue in visible benefits, it does not provide retailers with the enhanced benefits critical today, such as improved inventory planning and uniformity of business rules across channels.

Some of the key drivers that necessitate an efficient multi-channel marketing strategy are the changing economic times and its savvy consumer.

The New Times

While the causes of the economic upheavals of the past few years are a matter for debate, economists unanimously agree - well, nearly - that the economic landscape will never be the same again. These new times and the end of the recession has brought with it new economic theories. Economists now say unbridled consumerism is not an economic growth strategy as consumers are wary of spending for the sake of spending.

The New Consumer

Today's consumers are wise spenders. "Needs" still need to be bought, but at the most competitive price. The consumer still wants his or her "wants", but they also want the best deal when purchasing them. The best available deal can be made because of the copious information available to assist them in making an informed buying decision. For instance, a consumer looking to buy a product visits a store and checks out the price. Then, he or she whips out a smartphone to check the product's price elsewhere and sees that it costs less online. The story from here on is a familiar one, right? The order is just made online, and the store loses a sale. 

The New Ending

However, the transaction ending we want is quite different. Retailers seeking to drive revenue must be able to create a customer experience that integrates all channels. If the above customer were to walk into a store with a well-integrated and unified multi-channel process, the exchange between the sales associate and the customer would be very different. The sales associate would do a price match for the product against the online price and ensure that the customer gets what they want at the price they want, thus satisfying his or her requirements and building their loyalty. The price match will systemically flow to merchandise planners - those who manage merchandise across all selling channels - who will then conduct a quick verification of the competitor price and then trigger price updates to all their existing selling channels. Now, the next customer doing an online price check or visiting the store immediately gets the benefit of the new updated price. Really. Really?

The Reality

In reality, most brick-and-mortar retail stores follow a different pattern when faced with the above example. Once the sales associate conducts a price match and the customer praises the positive customer service, every other customer asks for the reduced price. The sales associate must match the price each time. However, the online product prices are not yet updated. In case this information trickles to the merchandise planners, and they agree to a price change, they can only do so in the channel for which they are responsible i.e., the stores. If they are interested enough, they may inform the online merchandise planning team (those web guys) that does the online pricing that a particular item is overpriced in the online store. Further, the operational systems may not support real-time propagation of price information across all channels.

The Cause

Businesses are not integrated. Processes are not integrated. The customer can buy anywhere, the retailer can fulfill from anywhere and the customer can return anywhere but the information is disparate and the flow of information is tactical. Channels are not integrated with respect to people and data. The handling of inventory is a prime example.  Most customers espouse the motto "wait 'til the sale" instead of "rush or it will run out". Buyers buy based on their forecasting models (or crystal balls) and then stock up a bit more, and a little bit more. In the end, it goes on discount or clearance. And since clearances hit margins, the margins have to be protected with higher retail prices and more inventory that ensures the customer sees a filled aisle, so the number of full-price sales can be maximized. It's a cycle, and retailers need to break out of this roundabout of higher inventory and lower margins. 

The Road Map

There are several milestones to achieving unified multi-channel commerce as detailed below: 

• Merchandise - Customers must have the same view of merchandise irrespective of the channel. The customer need not understand why the same
item has different price points online and in the store. Most customers may not ask for a price match and instead choose another retailer with consistent prices to shop with. Some retailers overcome this challenge by offering a price guarantee. Differential pricing can work well if properly planned. For instance, "online-only price" will draw customers if it is lower than the store price. Similarly, "go to our stores for our store-exclusive price" is an attractive offer if stores are offering a better deal. In this way, retailers must align merchandise buying, positioning and fulfilling across all channels. The key to fulfillment lies in having stock and global inventory visibility and fulfillment.

• Inventory - Inventory needs to be visible to and sellable from all channels. Before deciding which fulfillment channel to use, retailers must define the cost of fulfillment holistically to factor in the cost of the merchandise, margin and cost of fulfillment. The level of service and special services must be aligned across channels. Visibility is directly tied to messaging. For instance, a website displaying the message, "Your store has inventory, pick it up now!", pushes customers to stores. Consider this example: Last weekend, I was buying a tricycle for my toddler. An internet search led to a leading brick-and-mortar retailer's site, which gave me a link that said, "Check at your local store". I clicked; the site knew where I was (geo-location or maybe cookies) and showed me that my local store had it. We drove down, giving my toddler a lesson in
"unbridled consumerism". Thus, the sales associate must use the online channel, thereby making it a possible cross-sell point. This requires alignment of goals and incentives along with their expected consumer behavior.

• Sales - Ensuring that the selling experience is uniform requires a significant behavioral change, especially at the store level. When a customer buys a camera online all information about that camera is at their disposal. On the other hand, when they visit the store, a small 6X4 display card is their buying aid. The store sales associate must be able to leverage the information available online to help the customer decide. The back of the store kiosk, which you need a GPS to locate, needs to go. For instance, each aisle can hold a display showing customers the online assortment for that department. For sales associates, every sale they make irrespective of the channel used should be "their" sale. In the instance where there is an online special, and the customer is in the store, if the sales associate points the customer to the online deal, helping him or her order online, won't it lead to enhanced customer loyalty? Aligning incentives is the largest behavioral driver to ensure that sales associates look beyond their stores at every item that the retailer sells. To do this, the key is the ability to analyze data as a collective rather than as fragments across the organization.

• Data - The number of site visits and the number of store foot falls are the same metric. Right? Maybe not, but both are tied to a conversion ratio. A higher conversion across any channel leads to a higher top-line. Now that is the same metric. When data across all channels hits the books eventually, why must channels be evaluated and measured in isolation? Retailers need to start looking at all their stores (physical and virtual) as part of a huge distributed global store. Every data point must be globally available. When the salesperson rings you up at a store, what if they said, "You just bought 'A' online. How was your experience?" Would you not shop there again? To do anything like this, all information must be churned as one. 

Retailers who have focused on true multi-channel enablement have reaped the rewards of higher sales, optimum inventory and reduced costs. It is not an easy journey and requires organizational alignment and focus. It leads to organizational unification across channels and a common experience for customers, suppliers and employees; the unified multi-channel experience.

Source: Infosys Technologies

E-commerce in the retail industry continues to be a gold mine for retailers looking to drive sales. However, disparate systems and operations across channels can lead to poor customer service. By aligning retail business and processes across all marketing channels, retailers can create a unified multi-channel customer experience, thereby maximizing revenue, lowering costs and improving customer loyalty.

Retailers often regard multi-channel commerce as the journey that leads to a unified view of the entire business, including inventory, orders, customers, etc. It is also frequently viewed as an investment made to ensure a seamless customer experience. However, most retailers have achieved multi-channel commerce by integrating data across all systems even as organizational structures and processes remained siloed and single-channel in nature. Although earlier this form of multi-channel enablement was sufficient to accrue in visible benefits, it does not provide retailers with the enhanced benefits critical today, such as improved inventory planning and uniformity of business rules across channels.

Some of the key drivers that necessitate an efficient multi-channel marketing strategy are the changing economic times and its savvy consumer.

The New Times

While the causes of the economic upheavals of the past few years are a matter for debate, economists unanimously agree - well, nearly - that the economic landscape will never be the same again. These new times and the end of the recession has brought with it new economic theories. Economists now say unbridled consumerism is not an economic growth strategy as consumers are wary of spending for the sake of spending.

The New Consumer

Today's consumers are wise spenders. "Needs" still need to be bought, but at the most competitive price. The consumer still wants his or her "wants", but they also want the best deal when purchasing them. The best available deal can be made because of the copious information available to assist them in making an informed buying decision. For instance, a consumer looking to buy a product visits a store and checks out the price. Then, he or she whips out a smartphone to check the product's price elsewhere and sees that it costs less online. The story from here on is a familiar one, right? The order is just made online, and the store loses a sale. 

The New Ending

However, the transaction ending we want is quite different. Retailers seeking to drive revenue must be able to create a customer experience that integrates all channels. If the above customer were to walk into a store with a well-integrated and unified multi-channel process, the exchange between the sales associate and the customer would be very different. The sales associate would do a price match for the product against the online price and ensure that the customer gets what they want at the price they want, thus satisfying his or her requirements and building their loyalty. The price match will systemically flow to merchandise planners - those who manage merchandise across all selling channels - who will then conduct a quick verification of the competitor price and then trigger price updates to all their existing selling channels. Now, the next customer doing an online price check or visiting the store immediately gets the benefit of the new updated price. Really. Really?

The Reality

In reality, most brick-and-mortar retail stores follow a different pattern when faced with the above example. Once the sales associate conducts a price match and the customer praises the positive customer service, every other customer asks for the reduced price. The sales associate must match the price each time. However, the online product prices are not yet updated. In case this information trickles to the merchandise planners, and they agree to a price change, they can only do so in the channel for which they are responsible i.e., the stores. If they are interested enough, they may inform the online merchandise planning team (those web guys) that does the online pricing that a particular item is overpriced in the online store. Further, the operational systems may not support real-time propagation of price information across all channels.

The Cause

Businesses are not integrated. Processes are not integrated. The customer can buy anywhere, the retailer can fulfill from anywhere and the customer can return anywhere but the information is disparate and the flow of information is tactical. Channels are not integrated with respect to people and data. The handling of inventory is a prime example.  Most customers espouse the motto "wait 'til the sale" instead of "rush or it will run out". Buyers buy based on their forecasting models (or crystal balls) and then stock up a bit more, and a little bit more. In the end, it goes on discount or clearance. And since clearances hit margins, the margins have to be protected with higher retail prices and more inventory that ensures the customer sees a filled aisle, so the number of full-price sales can be maximized. It's a cycle, and retailers need to break out of this roundabout of higher inventory and lower margins. 

The Road Map

There are several milestones to achieving unified multi-channel commerce as detailed below: 

• Merchandise - Customers must have the same view of merchandise irrespective of the channel. The customer need not understand why the same
item has different price points online and in the store. Most customers may not ask for a price match and instead choose another retailer with consistent prices to shop with. Some retailers overcome this challenge by offering a price guarantee. Differential pricing can work well if properly planned. For instance, "online-only price" will draw customers if it is lower than the store price. Similarly, "go to our stores for our store-exclusive price" is an attractive offer if stores are offering a better deal. In this way, retailers must align merchandise buying, positioning and fulfilling across all channels. The key to fulfillment lies in having stock and global inventory visibility and fulfillment.

• Inventory - Inventory needs to be visible to and sellable from all channels. Before deciding which fulfillment channel to use, retailers must define the cost of fulfillment holistically to factor in the cost of the merchandise, margin and cost of fulfillment. The level of service and special services must be aligned across channels. Visibility is directly tied to messaging. For instance, a website displaying the message, "Your store has inventory, pick it up now!", pushes customers to stores. Consider this example: Last weekend, I was buying a tricycle for my toddler. An internet search led to a leading brick-and-mortar retailer's site, which gave me a link that said, "Check at your local store". I clicked; the site knew where I was (geo-location or maybe cookies) and showed me that my local store had it. We drove down, giving my toddler a lesson in
"unbridled consumerism". Thus, the sales associate must use the online channel, thereby making it a possible cross-sell point. This requires alignment of goals and incentives along with their expected consumer behavior.

• Sales - Ensuring that the selling experience is uniform requires a significant behavioral change, especially at the store level. When a customer buys a camera online all information about that camera is at their disposal. On the other hand, when they visit the store, a small 6X4 display card is their buying aid. The store sales associate must be able to leverage the information available online to help the customer decide. The back of the store kiosk, which you need a GPS to locate, needs to go. For instance, each aisle can hold a display showing customers the online assortment for that department. For sales associates, every sale they make irrespective of the channel used should be "their" sale. In the instance where there is an online special, and the customer is in the store, if the sales associate points the customer to the online deal, helping him or her order online, won't it lead to enhanced customer loyalty? Aligning incentives is the largest behavioral driver to ensure that sales associates look beyond their stores at every item that the retailer sells. To do this, the key is the ability to analyze data as a collective rather than as fragments across the organization.

• Data - The number of site visits and the number of store foot falls are the same metric. Right? Maybe not, but both are tied to a conversion ratio. A higher conversion across any channel leads to a higher top-line. Now that is the same metric. When data across all channels hits the books eventually, why must channels be evaluated and measured in isolation? Retailers need to start looking at all their stores (physical and virtual) as part of a huge distributed global store. Every data point must be globally available. When the salesperson rings you up at a store, what if they said, "You just bought 'A' online. How was your experience?" Would you not shop there again? To do anything like this, all information must be churned as one. 

Retailers who have focused on true multi-channel enablement have reaped the rewards of higher sales, optimum inventory and reduced costs. It is not an easy journey and requires organizational alignment and focus. It leads to organizational unification across channels and a common experience for customers, suppliers and employees; the unified multi-channel experience.

Source: Infosys Technologies