The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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But while it`s important to get visibility into how customers generate orders across channels, it`s just as important for Golfsmith to share cross-channel inventory information with shoppers to promote a cross-channel order and fulfillment environment. By providing near-real-time visibility on Golfsmith.com into available inventory in its stores as well as in its distribution center, for instance, the retailer makes it more likely shoppers will place orders rather than abandoning its site if a desired product is no longer in stock in the distribution center.
Retailers can boost sales even more by integrating order management and fulfillment with web-based transportation management systems to let shoppers know of new inventory being shipped from suppliers instead of indicating a product is out of stock, says Bryan Kinsella, order lifecycle product manager for Manhattan Associates Inc., a provider of a cross-channel order management and fulfillment software suite.
Producing such an inside look into inventory stocks is best served by a web-based system that can access information from multiple points as well as make it available to shoppers on the web, agents in contact centers and clerks at store POS terminals, experts say.
"The key thing is accurate inventory going in, and being able to allocate that information in an order management system," says Mark Clendenin, director of consulting at Fry Consulting Services, a unit of e-commerce platform and web site design firm Fry Inc. While many legacy systems may report only aggregate chainwide store inventory, integrated web-based systems can more easily be coded to show inventory status at each store, he adds.
Maintaining inventory and order records, along with related information on product pricing and promotions, in a centralized web-based system can improve overall customer service, experts say. "If order taking took a customer service rep three to five minutes before because she had to check multiple computer screens, it can now take about one minute because she sees all the information about customers, product details and promotions, and inventory status on fewer screens," says Sahir Anand, senior retail analyst at Aberdeen.
On the drawing boards
Not surprisingly, many retailers have cross-channel order management and fulfillment at least on their drawing boards. "Retailers have been hyper-focused on a consumer-facing online presence focusing on search, navigation and checkout, but as they look to a next-generation system for consumer-facing applications there will be two priorities: cross-channel inventory visibility and order fulfillment, and cross-channel merchandising and demand planning," says Rob Garf, vice president of retail strategies at research and advisory firm AMR Research Inc. "For example, by the end of 2010, 72% of multi-channel retailers will provide access to web orders via self-service or assisted selling on in-store kiosks."
Web-based systems not only provide more flexibility in order management, but also speed because orders can be more quickly routed to back-end fulfillment.
Several developments in the technology market in recent years, meanwhile, support the deployment of cross-channel order and fulfillment systems. The extensive use of web-based integration technologies including XML and different versions of web services can centralize cross-channel order data in a single database and automatically route each order, based on business rules set by the retailer, to the best available supply of inventory to produce the fastest and most efficient delivery.
Escalate Retail, for example, is addressing the market need with version 10 of its e-commerce platform, due for beta release this summer and designed with web-enabled technology to better support a cross-channel environment. The new platform is designed to make it easy to forward online orders for in-store pick-up to a store employee`s Blackberry device or cell phone to ensure the order gets fulfilled on time, says David Bruno, director of product marketing for Escalate Retail.
Newer order management systems let shoppers choose a different shipping option as well as shipping destination for each of several items in the same order, says Kelly O`Neill, product manager at ATG Inc., a provider of an e-commerce platform that includes cross-channel order management and can integrate with third-party systems for handling complex back-end fulfillment.
Among vendors offering that level of order flexibility is Sterling Commerce, which is recognized by analysts as having a comprehensive front-end order management to back-end order fulfillment software suite, one popular with large Tier 1 and Tier 2 retailers. Bengier says the company can serve retailers as small as $100 million in annual revenue.
IBM Corp. also has been developing cross-channel order management for large as well as mid-size retailers, and it partners with Manhattan Associates to integrate Manhattan`s distributed order management system with IBM`s WebSphere Commerce platform.
There are several vendors focused on the mid-sized retailer market, including CoreSense, Sigma-Micro Corp., Micros Retail Systems Inc., CrossView Inc., Vcommerce Corp. and Epicor Software Corp. Among those serving smaller retailers are Stone Edge Technologies Inc., OrderMotion Inc., Zoovy Inc. and Dydacomp Development Corp.
Each vendor`s technology offerings have their unique range of functionality, and many partner with other vendors to provide a complete front-end to back-end order management and fulfillment system, Anand says. And while some vendors like Sterling and CoreSense have their roots in serving store chains that bring in web and catalog channels, others like Sigma-Micro have focused more on the web and catalog channels-something retailers should consider when choosing a vendor, he adds.
Although many retailers are using some form of integrated order management and fulfillment system, according to analysts and vendors, a lot of merchants have yet to maximize its full potential. In a survey of 220 retailers in February and March this year, "Technology Strategies for Multi-Channel Integration," research and advisory firm Aberdeen Group found only a third had attained some level of cross-channel integration across order management, inventory, fulfillment, and customer-serving data like pricing, promotions and loyalty programs.
What makes a winner
The top 20% of best-in-class performers realized notable benefits: a 12.8% year-over-year rise in comparable channel sales, an average 22% improvement in customer conversion rates, and an average 25% increase in cross-channel contribution to gross profit margins.
Retailers with less effective order management and fulfillment systems experienced average cross-channel sales increases of 1.7% to 5%. These retailers` order management systems lacked flexibility in legacy operating systems and processes, leaving retailers without visibility into cross-channel orders or integration between front-end order management and back-end fulfillment systems, says Aberdeen, a unit of Harte-Hanks Inc.