A new forecast from Forrester Research credits greater online spending by Canadians, lower shipping costs and more selection for the spending increase.
They may seem to be an application only a techie could love, but web services are one of those foundation blocks that can change how a retail organization operates.
Cross-platform integration has been the dream of retailers ever since retailers adopted technology. But as legions of programmers will attest, the ability to link store sales data to customer data to replenishment systems is Nirvana that’s hard to attain. Programming in such a way that different systems can talk to each other, as well as the cost of hardware to house all the programs, have proven an insurmountable obstacle to many.
REI Inc., the multi-channel retailer of outdoor sporting goods, knows the problems first-hand. It long has harbored a vision of linking in-store kiosks to product manufacturers so a customer desiring an out-of-stock brand of cross-country skis, for instance, can use the kiosk to order them directly from the vendor for in-store pickup free of shipping charges then use the same kiosk to purchase an admission pass to a snowy national park.
REI already offers in-store kiosks for special orders, but the system has been difficult to build, because each vendor connection has required a separate in-store computer with its own network connections. For REI’s IT staff, that meant deploying more computer servers and spending many additional hours writing programming code to make REI’s ordering system communicate with each supplier’s fulfillment system. “It took a lot of work and caused a lot of consternation,” says Ernest Hughes, director of technical services for the Seattle-based retailer.
And so REI is one of a number of retailers looking at web services technology, touted by many researchers, consultants and vendors as the antidote to cross-platform integration headaches. Such headaches can thwart many an integration project, because companies often figure it’s too costly and time-consuming to deploy enough hardware and write sufficient code to make disparate systems communicate. “Web services give us the flexibility to do that,” Hughes says.
Indeed, web services technology sharply changes the integration game. It’s based on several Internet protocol standards with acronyms like XML, SOAP, WSDL and UDDI (see sidebar) that enable disparate software applications not only to integrate, but actually tell each other in real time what data they need to share - such as when a retailer’s POS system tells an inventory system that a store needs more of a hot-selling product. Web services can also be used to exchange purchase orders, invoices and other documents in an automated exchange between computer systems. And because web services technology is automated, it saves on manual data entry, resulting in more accurate data transmissions. Finally, because they operate in an open-standards environment, web services can be made to integrate with legacy applications regardless of whether they’ve been modified with their own web services infrastructure.
Web services technology comes packaged in platforms and application suites such as Microsoft Corp.’s .Net, IBM Corp.’s WebSphere, Sun Microsystems Inc.’s Sun One, BEA Systems Inc.’s WebLogic and SAP AG’s NetWeaver. Using Internet protocol standards that support universal integration among disparate applications, regardless of whether they’re running on an operating platform from Microsoft, IBM, or another technology provider, web services provide for integration that is faster, easier and cheaper to build, Hughes and others say.
The bright future that web services promise has been enough to persuade some retailers to invest in web services infrastructure and development tools even though they don’t yet know what they would use them for. In fact, a recent study by IDC showed that 18% of retailers planned to invest in web services in the coming year, with some not even clear as to why. “Some respondents that said they were considering doing something with web services within the next 12 months still weren’t sure of its capabilities or what they would do with it, but they said they think it’s something that would make sense for their organization,” says IDC analyst Christopher Boone.
But the optimism may be warranted as REI and other retailers say they have deployed commerce projects, or are planning ones, that they would not have considered if not for the advantages of web services:
- In a cross-channel alliance project connecting online retailers with manufacturers such as Panasonic and Sharp Electronics Corp., more than 100 e-retailers have increased sales of products to customers who began their product search on suppliers’ web sites before being transferred to a retailer’s buy page for the particular product they wanted. Thanks to web services from Channel Intelligence Inc. running on Microsoft’s .Net technology, shoppers see near-real-time updates of each retailer’s inventory, helping to drive up consumer confidence in the manufacturer-retailer shopping route.
- For internal application integration, Vancouver, B.C.-based pharmacy chain London Drugs Ltd. is using web services to extend real-time visibility into inventory levels to six new stores without increasing IT staff.
- In a project that provides wireless access to back-end data, PerformanceProducts.com, a niche retailer of custom auto parts, is planning to use web services this year to link its IT staff’s handheld computers to web site performance data, enabling them to access real-time updates on visits, sales and other key metrics. IT Director Kirk Palmer says his company’s top executives are next in line for the web services-powered handhelds, which should keep them from calling on his IT staff so often for data.
All these projects could have taken place to at least some degree without web services-but at much higher cost and requiring far more development time because each integrated connection would require special coding and in many cases additional servers. “We could have built custom programming for a wireless connection to download web site performance data to our handhelds, but because of the time and resources we would have had to invest, we wouldn’t even have considered it,” Palmer says.
Hands across the network
Because PerformanceProducts doesn’t have a policy of buying similar handhelds for its employees, Palmer’s project will have to build an interface with multiple handheld operating systems. That’s relatively easy with web services technology, he says, because it’s designed to integrate with disparate systems. “Without web services, everyone would have to be on the same kind of handheld device,” Palmer says.