June 30, 2006, 12:00 AM

Multi-Channel E-Commerce

Retailing in multiple channels is nothing new. Merchants have been doing it extensively at least since the dawn of catalogs, and you could argue that retailers since the beginning of retailing itself have probably used multiple ways or channels to reach their customers.

But the concept of retailers selling through multiple channels is not necessarily the same as true multi-channel retailing, which began with web-technology-based systems that process customer, product and shipment data across multiple channels to effectively turn multiple channels into a single, customer-focused retailing environment, experts say. “When we see advanced multi-channel programs like that, merchants can call themselves true multi-channel retailers, rather than just retailers operating in multiple channels,” says Jim Okamura, senior partner with retail consultants J.C. Williams & Co.

Good news/bad news

The road to true multi-channel retailing, meanwhile, is becoming easier in some ways but still marked with obstacles, Okamura and others say.

The good news is that web-based technology-including e-commerce and store operating systems built from the ground up with web technology, and older systems that use XML and other elements of web services to integrate disparate applications-is making it easier for retailers to integrate multiple channels with critical data flow and visibility. So a clerk at a store POS terminal or a customer service agent in a contact center, for example, can see real-time updates of a customer’s shopping activity across channels and engage in pertinent advisory or cross-selling communications. Just as important, the true multi-channel environment can provide real-time updates of inventory levels, so customers shopping in any channel will know if what they want is really available.

Moreover, the web environment makes it possible to upgrade technology features across channels much faster than in non-web-enabled environments. “The two-year technology upgrade cycle doesn’t work for e-commerce,” says Ken Burke, CEO of web site developers MarketLive Inc. “In e-commerce, we want to see what works fast and get it into the hands of retailer customers as soon as possible.”

The bad news is that even as multi-channel e-commerce technology evolves, hurdles remain in pushing it to the forefront of many retailers’ list of priorities. With the web channel itself accounting for a small percentage of sales at many multi-channel retailers, merchants are often hesitant to invest in the web technology systems that integrate their web sites, stores, contact centers and other supportive operations like loyalty programs.

Management obstacles

“I usually find that it’s not the technology that’s the biggest barrier to true multi-channel retailing,” Okamura says. “It’s the internal management organization and processes that must be overcome. The technology side has to wait for the money to open up.”

In other words, he adds, someone has to make the business case that migrating to an effectively integrated multi-channel retailing environment will be worth the investment through improvements in sales, profits and customer relationships.

More retailers, however, are making the case. At fashion apparel retailer InterMix, for example, a new e-commerce platform from MarketLive supports a new web site that integrates with store POS and inventory data to provide for a consistent shopping experience for multi-channel customers, says director of e-commerce Don McNichol. The platform’s merchandising tools also support his staff’s ability to coordinate online displays with the offerings in stores, he adds.

Redcat Motors, a wholesaler and retailer of products for off-road vehicles, recently deployed JunctionMCR, a web-enabled multi-channel ERP suite from Junction Solutions that provides sales and inventory data across multiple web sites as well as a network of several hundred retail locations. Among other things, the system supports customer service and inventory visibility across channels, allowing each retail location as well as the web site operation to forecast sales and track inventory availability, says Brian Carpizo, CEO of Junction Solutions.

A broadening definition

The definition of multi-channel retailers continues to broaden, as the multiple component grows even within the web channel alone. Retailers are learning to sell through RSS feeds and blogs, for example, and they’re learning new ways to sell through the growing number of comparison shopping engines.

In some comparison shopping engines, for instance, retailers pay a pre-set range of pay-per-click fees for each product category, without the ability to bid separately for particular SKUs within those categories, says Scot Wingo, CEO of ChannelAdvisor Corp. If SKUs don’t perform well, retailers’ only option to improving their return on investment is to delete those poorly performing SKUs from the product data they feed the comparison sites, he says.

But on comparison shopping sites such as Shopzilla.com, NextTag.com and PriceGrabber.com, retailers can use ChannelAdvisor software that lets them pay separate prices for different SKUs within the same product category. The result is the ability to sell a wider range of products within a targeted ROI. “We figure out what they’re spending as a percentage of their sales, so retailers can tell us they’re willing to pay, for example, PPC prices that are 2% or 7% of their selling prices,” Wingo says.

Multi-channel retailers must still rely, of course, on server infrastructure that’s up and running reliably as well as supporting channel integration. USinternetworking Inc., for example, provides on-demand data centers to support full-featured web sites, including analytics, shopping carts and back-end integration with enterprise applications for financial and inventory management. But since retailers represent a broad range of infrastructure needs, USi offers customized services that let merchants select the infrastructure and service that supports their particular capacity needs.

New demands

As e-commerce technology evolves with better multi-channel integration and better shopping features, it can also lead to new demands on site monitoring-a crucial step in assuring consistency in brand image and customer service on the web as well as in stores and catalogs.

Indeed, as web technology evolves with more interactive features presented in a simple, easy-to-use interface, the need to maintain back-end infrastructure can actually increase, says Ken Gross, CEO of AlertSite, a provider of site performance monitoring and security vulnerability scanning products and services. “Online retailers have cut down the number of steps to checkout, but there are many re-directs and scripting going on in the background that can go wrong,” Gross says.

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